St. Charles committee accepts clean FY2025 audit; staff recommends 3.99% levy estimate amid $100M lead-service-line and $450M capital needs

The Government Operations Committee of the City of St. Charles accepted the city’s financial and other reports for the fiscal year ending April 30, 2025, after a presentation by the independent auditor and city finance staff Oct. 6. The auditor issued an unmodified opinion on the basic financial statements and reported no material weaknesses in internal control. Committee members then continued discussion of the upcoming 2025 tax levy; staff recommended a 3.99% levy estimate to be brought back for recommendation Oct. 20 and formal action later in the fall.

Key audit findings and fiscal totals

Jim Savio of Sikich (city auditor) told the committee the independent auditor’s report included an unmodified opinion — “the highest level of assurance” — and that the audit produced an unmodified report on internal control and no instances of noncompliance in his review of state and federal grants for the year. The audit included implementation of new Governmental Accounting Standards Board guidance (notably GASB Statement 101) that produced a modest restatement related to compensated absences; the auditor noted one audit adjustment related to an IDOT grant but no material weaknesses.

Staff presented condensed fiscal-year totals drawn from the annual comprehensive financial report: total city assets of roughly $628,000,000; current and long-term liabilities of about $288,000,000; and a net position of approximately $340,000,000, an increase of about $27,000,000 during the year. General Fund results were reported as roughly $64,000,000 in revenues and $55,000,000 in expenditures, with an unrestricted General Fund balance of about $31,200,000 (reserves about 47.1% of expenditures and transfers out). Sales tax receipts were reported at about $30,000,000 for the year.

Recommendation on the 2025 tax levy and council timeline

Staff recapped that last year’s levy was about $14,800,000 and explained that actuarial pension funding increases are driving part of the levy need. For the committee’s consideration staff recommended an estimate of a 3.99% levy increase for the October 20 meeting; staff said that equates to roughly a $592,000 increase over last year, with about $265,000 earmarked for police and fire pension funding and the remainder for operations and capital needs. Staff outlined the remaining schedule: recommendation of the official levy estimate Oct. 20, approval of the official estimate Nov. 3, and final adoption of the tax levy ordinance Dec. 1.

Capital needs and lead service-line discussion

Staff provided a one-page summary of capital needs that, when totaled, amounted to about $450,000,000 for a non-exhaustive list of projects. Staff and committee repeatedly highlighted the cost of replacing lead service lines as a major obligation: staff estimates presented to the committee ranged to approximately $100,000,000 for a citywide program, with annual obligations on the order of $6,000,000–$10,000,000 depending on approach. Committee members asked how much a property-tax levy increase would move the needle against those long-term needs; staff said a modest annual levy increase compounds over time and helps preserve capacity to transfer funds to capital projects, while utility-funded solutions will be the principal long-term source for lead-line replacements.

Questions and context from council and the public

Council members asked for comparative information, examples of household impact, and more granular budget materials. Several members asked for and staff agreed to provide: (1) levy impact examples for a typical home (staff said an example for a $350,000 house will be provided at the next meeting), (2) a clearer breakdown of which projects would be funded from general fund levy increases versus utility funds, and (3) an analysis of the year-over-year levy percentages and a proposed multi-year levy approach.

A public commenter, Steve Loeffler, raised the electric fund’s reserves and suggested the city examine enterprise funds when identifying funding sources for large programs; he noted staff’s reported unrestricted net position for the Electric Fund (about $59,000,000) and suggested residents might accept a rebalancing of utility and property-tax responsibilities if explained to constituents.

Next steps and process notes

No levy action was taken Oct. 6; staff will return Oct. 20 with an official levy estimate recommendation and with requested impact examples and additional comparative and departmental breakdowns. Staff and several council members expressed interest in additional budget-facing sessions (quarterly finance updates, dashboard review and possible Committee of the Whole workshops) so council can review departmental trends, reserve-policy proposals and capital priorities before final levy adoption.

Ending

The committee accepted the audit and financial reports on Oct. 6 and continued discussion of the 2025 tax levy. Staff will provide follow-up materials and scheduled presentations ahead of the Oct. 20 recommendation and final ordinance consideration in November–December.