Skokie trustees review FY27 budget as staff warns of structural deficit and proposes new revenue

Village staff presented an overview of municipal finance and the proposed fiscal 2027 budget at the board’s budget hearing, stressing that recent one-time revenue gains have improved reserves but that the village faces a long-term structural deficit unless revenues diversify.

Finance Director Julian Betty told trustees that total FY27 revenue is “just shy of $182 million,” including about $5 million of programmed reserve use. Sales tax is the single-largest source, about $42.9 million (roughly 24% of total revenue), and the general fund is projected at about $77.9 million. Betty warned the board that roughly 75% of general-fund revenue is economically sensitive and therefore vulnerable to downturns or state action that could reduce local income-tax shares.

The presentation tied the proposed spending to the village’s five strategic goals — improved village services and public safety, community vibrancy and economic development, accessibility and inclusion, strong governance, and financial stewardship. Highlighted capital and service investments in the FY27 proposal include a resurfacing program (about three miles of streets per year), a lead-service-line replacement program (targeting 688 lines per year by adding two public-works crews), continued water-transmission maintenance, and a next-generation 911 upgrade to accept texts, photos and video from callers.

Water fund shortfall and rate plan Julian said the village projects water revenues of about $23.3 million for FY27 assuming a 14.9% retail rate increase (equating to roughly $1.14 per 100 cubic feet), and noted that even with that increase the water fund will require some reserve use to cover capital (staff estimated about $2.7 million in reserve usage to meet a roughly $14.5 million capital program dominated by lead-line and mains work). Staff warned that multi-year rate increases in the high single- to double-digit range may be needed to keep pace with aging infrastructure and rising replacement costs.

Reserves and long-term outlook Betty described the village’s reserve policy target (25% for the general fund) and said available general-fund reserves are presently near 50%, bolstered by prior ARPA funds and unusually strong sales-tax receipts in 2024–25. He cautioned, however, that those are one-time sources and that current multi-year projections show reserves declining toward and below policy targets over the next decade without revenue changes.

Board discussion and staff recommendations To fund specific new strategic enhancements — notably phasing in a fourth ambulance during peak “power hours” and expanding development-services capacity consistent with the Matrix consultant recommendations — staff recommended raising the amusement and entertainment tax from 2% to 5% and adding streaming services to the tax base. Finance staff estimated the change would yield about $1.6 million, which they said would be sufficient to cover the proposed ambulance peak staffing (initially staffed via overtime) and additional development-services resources.

Trustees debated a package of smaller revenue options as well, including a yard-waste sticker fee, a modest vehicle-sticker increase (trustees discussed regressivity and timing), and a credit-card fee pass-through for some payments. The board generally favored advancing the amusement/streaming tax proposal for the FY27 package and asked staff to research reserve-ceiling options and return with a memo outlining policy choices and implementation steps.

Next steps Staff committed to follow-up: (1) a memo on reserve-ceiling/excess-reserve policies and implementation pathways; (2) a more detailed cost and timing plan for the lead-service-line crews and water-capital schedule; and (3) final levy discussions in December as part of the tax-levy process. Department directors will appear at subsequent hearings for deep-dive reviews of specific funds and capital projects. The board later voted to enter closed session on personnel and benefit matters.