In a recent government meeting, city officials discussed preliminary budget planning for 2025, highlighting several financial challenges and strategies. The meeting revealed that the actuarial analysis for police and fire pensions will not be available until August or September, prompting the use of earlier preliminary numbers to inform the budget.

For the upcoming budget year, the Illinois Municipal Retirement Fund (IMRF) employer rate is projected to rise from 5.72% in 2024 to 5.81% in 2025. A 2% overall merit increase is planned, alongside a 3% general wage increase for non-affiliated employees. However, the city faces significant financial hurdles, including anticipated reductions in the Personal Property Replacement Tax (PPRT), which is expected to decrease by approximately 28% in 2025. This reduction stems from the state’s efforts to recoup overpayments made to municipalities following the repeal of the personal property tax.

Personnel costs represent the largest expense in the budget, accounting for over 36% of the total budget and 59% of the general fund for 2024. The city is grappling with the implications of contracted wage increases and minimum wage hikes, complicating efforts to balance the budget.

Additionally, the council is focused on reducing the number of funds with negative balances, successfully turning some into positive balances, though challenges remain. A proposal was made to establish a dedicated fund for building maintenance and computer equipment, similar to the existing fleet amortization fund, to ensure that necessary repairs and replacements can be managed without straining the general fund.

The meeting underscored that approximately 74% of the budgeted revenues for 2024 are in restricted categories, adding another layer of complexity to the budget creation process. As the city prepares for the upcoming fiscal year, these discussions will be crucial in shaping a sustainable financial strategy.