Hobart adopts 2021 utilities operating budget
By Rich Palzewic
HOBART – At its Dec. 15 meeting, the Hobart village board approved its 2021 operating budget for the water, sanitary sewer, stormwater utilities and tax increment districts (TID) No. 1 and 2.
“These are the final pieces of the 2021 budget,” said Village Administrator Aaron Kramer. “It’s later in the year because I don’t know the TID rates until everyone else’s budget is approved. I try to go as late as I can with the utilities because they are a steady stream – no pun intended – of income with quarterly billings, so we try and get the most recent data.”
Kramer said he wanted to show more transparency in what the TIDs owe and what they’ll bring in next year, so he presented the board with a chart of revenues and expenses.
“Revenues are expected to increase in TID No. 1 despite the mill rate decreasing slightly,” he said. “The overall revenue of TID No. 1 is projected to increase $286,803 to about $3.39 million.”
Kramer said expenses are expected to increase about $600,000, mainly due to increased performance payments for developers and the annual payments on the Sorenson land purchase.
“The TID will pay off about $1.6 million in debt next year,” he said. “We anticipate more debt with the interchange project and the development of the Sorenson project in the next several years as well. TID No. 1 is projected to end the year with a surplus of $113,641.”
TID No. 2 is projected to increase more than $197,000 to about $1.48 million.
“Part of that is because of the increased mill rate in the south end,” said Kramer. “The TID will pay off about half of a million dollars in debt. The TID will end the year with about a $300,000 surplus – again, a positive cash flow.”
With the water fund, the village will see an increase in revenues and expenses.
“Much of our new revenue is from new customers, but that also adds expenses,” Kramer said. “We don’t pump our own water, and we don’t have our own utilities – we are a pass-through. The water utility is projected to end the year with a deficit of about $80,000. Of course, that can change with the weather, but that’s what I’m anticipating now. In light of that and the debt payments, we have to be reasonable – there will likely be a rate increase with the water. We don’t determine that, but we’ve started a review with the PSC (Public Service Commission). We don’t pull out a number and say that’s what we’re going to do. This isn’t being driven because we’re doing some wild project. It’s from the day-to-day operations of the village.”
Kramer said the village received complaints from residents through the third-quarter billing with their water and sewer utilities bills.
“I was one of those people (complaining),” he said. “It was dry, and I didn’t realize how much I was watering my lawn. My bill went through the roof, but that was because I used the water. We want people to be aware of that.”
The sanitary sewer utility is projected to have about a $97,000 deficit, so Kramer said a rate increase will likely be needed in 2021 to solidify the financial stability of the utility.
“The biggest reason for the projected deficit is a project in Indian Trails,” said Kramer. “We need to repair a major sewer line projected to cost about $160,000, and we’d like to pay it off without borrowing. We don’t want to take on any more debt with the sewer fund. Some of the older parts of the system are starting to need some tender loving care. As of now, we’re not recommending a rate increase, but there likely will be one in the first quarter of next year.”
Village President Rich Heidel said using cash to pay for projects without borrowing will most likely cause rate increases, but Kramer said it’s better that way.
“You are correct,” Kramer told Heidel. “But, it’s still cheaper to pay cash and raise rates than borrowing the money and having to increase rates more to pay the money back with interest. We’re not 100 percent against borrowing, but long term, it’s cheaper for the user. We don’t want to get in the habit of adding to our debt.”
Kramer ended his presentation with a bit of good news.
“There will be a 10 percent decrease for residents in the stormwater fee in 2022,” he said. “That’s across the board for everyone. For the average household, it’s a savings of about $7.”
The fee will decrease from $70 annually to $63.