Villa Park projects healthy reserves but warns of multi‑million sewer, road and tech costs

Villa Park City staff told the City Council at a special budget workshop that the city is in a strong fiscal position heading into the FY2026–27 budget process, but identified several large capital projects and outside cost drivers that could affect next year’s spending.

“We are in a very good financial position,” the presenter said, reporting the city is not facing a structural imbalance and that a five‑year projection shows revenues supporting operations. Finance staff said the council’s current-year revenue budget of $6.0 million is now projected at about $6.44 million, roughly $350,000 above budget, while adopted expenditures rose from $7.1 million to $7.2 million and the city underspent by about $1.8 million overall.

That underspending, plus a fund balance carried forward from prior years, leaves Villa Park with sizable reserves: staff said the city has roughly $8.9 million in carried fund balance and projects an ending fund balance of about $9.9 million for June 30, 2026. Undesignated reserves were described as just under $2.7 million, or about 50% of operating budget.

Why it matters: the city relies heavily on property taxes (about 60% of general‑fund revenue) and budgets conservatively—assuming a 3% property‑tax increase that would add about $110,000 next year. Staff warned that outside decisions could change the outlook: county sheriff labor negotiations could raise the cost of the city’s law‑enforcement contract (staff estimated about $17,000 of additional cost for every 1% wage increase), and OCTA recently indicated a possible 28% increase in a maintenance‑of‑effort match that could add about $113,000 of pressure for road projects.

Major capital items and restricted funds: staff highlighted a multi‑million‑dollar storm‑drain and sewer capacity project on Villa Park Road that will require tearing up and rebuilding the roadway; when that occurs the city plans to coordinate median and road repairs to limit repeated closures. Staff estimated median work could cost roughly $290,000–$300,000 and described a patchwork funding plan that may include sewer carryover funds, a hauler contribution, a foundation pledge and grant applications to OCTA and federal representatives.

Restricted revenues and grants were discussed in detail: the city receives a sewer assessment (~$47,000), OCTA/gas tax funds restricted for streets (~$342,000), and smaller AQMD and franchise‑fee technology grants. Villa Park has a $75,000 SB 1383 edible‑food recovery grant with about $56,000 remaining; staff noted the grant expires in early November and unspent funds will be forfeited.

Technology and public‑safety equipment: council members discussed automated license‑plate readers and vendor proposals. Staff said one vendor’s quoted package of 19 cameras would be higher than an alternative vendor’s bid; they also said the county sheriff is pursuing a countywide grant and could fund several cameras, reducing Villa Park’s net cost. The city manager proposed an informational agenda item for residents to review differences between vendors before committing to purchase.

Planning and operations: staff described a possible AI pilot to speed plan reviews and permit compliance checks; a vendor proposed a cost‑share pilot at about $6,300, but staff emphasized accuracy metrics and the need for human oversight. The city also reported pension and retirement funding is roughly 80–85% prefunded and that the city uses a Section 115 trust and an annual contribution policy to steadily reduce unfunded liabilities.

Public comment and local maintenance concerns: resident Chad Zimmerman, who volunteers on the investment advisory committee, urged clearer budget presentations and pressed for faster DG (decomposed‑granite) trail repairs at Santiago and other locations for safety reasons. Staff confirmed some repairs have been completed and more are planned, but cautioned that DG is a recurring maintenance item because it washes away in rain.

Next steps: staff will present updated revenue and expenditure projections at the May 4 meeting with a goal of adopting the budget on June 23 after pending items (sheriff negotiations, OCTA clarifications and any grant awards) are resolved.