Vernon Hills presents balanced FY2026 draft budget, keeps AAA rating while adding targeted staff and tech requests

The Village of Vernon Hills on March 4 reviewed a draft fiscal year 2026 budget staff described as balanced and fiscally strong, with a projected FY25 ending general fund balance of roughly $40 million and a maintained AAA credit rating.

Finance Director Tom Lyons said the village projects general fund revenues to finish FY25 at about $37.9 million—roughly $332,000 over budget—and expects the FY26 budget to assume sales-tax receipts above $19 million. "Our current budget is balanced and includes a comfortable surplus," Lyons said, noting fund balances provide more than a year of recurring expenditure coverage.

The draft budget covers the village (excluding the golf fund, which will be presented March 18) for the period May 1, 2025–April 30, 2026. Staff outlined key assumptions: a 3.5% cost-of-living adjustment included in personnel lines, conservative revenue estimates, and $1 million scheduled transfer to capital. Lyons said the village will begin FY26 with a debt balance of about $21.6 million and planned principal paydowns of approximately $3.2 million during the year.

Why it matters: leaders said the village’s reserves and careful budgeting give local officials room to fund targeted program additions while avoiding a municipal property tax. Lyons described shifts in how some costs are shown—moving certain replacement and capital contributions into department budgets and reducing transfer totals—so year-over-year comparisons are adjusted for like-for-like analysis.

Staff detailed several policy changes and revenue impacts the board is monitoring. A state change requiring mandatory use-tax collectors to charge destination sales tax could reclassify about $400,000 of prior use-tax receipts; staff said they conservatively adjusted projections while monitoring actual flows. Staff also reminded trustees that the state-mandated 1% grocery tax is scheduled for elimination effective Jan. 1, 2026 and that replacement options will be brought to the board for consideration.

The draft includes strategic capital and operational items: a $258,000 placeholder to close out the dispatch fund as the village transitions services to LACOM, continued funding for the VERF equipment replacement program, and several capital project placeholders including intersection safety work, storm-sewer cleaning, and a village share for an IDOT intersection project at CDW and Milwaukee estimated at $45,000. Lyons said the capital fund is expected to end FY26 with about $11.5 million, providing multiple years of coverage for planned projects.

Board members asked for finer breakdowns—trustees requested a clearer split of personnel costs (payroll vs. pension vs. benefits) and more detail on grocery-sales tax attribution. Lyons and staff committed to supplying those breakdowns in upcoming materials.

The schedule: staff said the public hearing on the tentative budget will be held March 31, with consideration for approval on April 15. The village manager noted staff are available for further one-on-one briefings with trustees prior to those dates.

The committee adjourned to closed work sessions later in the evening after the budget discussion.