CITY COUNCIL AGENDA ITEM
ACTION REQUESTED:
title
Receive the preliminary 2024 year-end financial report
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DEPARTMENT: Finance Department
SUBMITTED BY: Raymond Munch, Finance Director
BOARD/COMMISSION REVIEW:
N/A
BACKGROUND:
This report provides a preliminary, unaudited review of the City’s 2024 budget through December 31. The report provides a high-level overview of the budget and details areas where revenues and expenditures outperformed or did not meet expectations.
The report includes revenue and expenditure activity recorded through Feb. 7, 2025. There will continue to be minor changes to the numbers presented as the City continues to pay outstanding 2024 invoices and finalizes year-end accounting entries in preparation for the annual financial audit.
The accompanying PowerPoint presentation will be distributed on Monday, March 3 with the Q&A.
DISCUSSION:
In 2024, the City benefited from generally favorable economic conditions. Strength in the state and local economies supported general operating revenues that met or exceeded expectations in most cases. However, as staff expected, the sharp revenue growth rate of the pandemic years, partly fueled by inflation and changing consumer behaviors, began to slow down. Historically high inflation subsided throughout the year and ended 2024 below 3% nationally.
In some areas, including utility equipment and capital construction projects, ongoing supply chain constraints and resource competition continued to drive higher prices. Those challenges remained manageable, and the City's overall financial outcomes were positive.
Summary by Fund
Across all funds, total expenditures of $571.03 million exceed revenues by $11.36 million. While the budget included the strategic use of reserves in some funds, there were some unexpected variances in others.
In the General Fund, revenues exceeded expenditures, adding an estimated $5.2 million to the already healthy cash balance.
The Water Utilities Fund had a loss of $1.86 million due to expenses exceeding revenues; however, that is offset by a larger than anticipated reserve in the Water Capital Fund, which finished the year with an estimated balance of $13.76 million.
The Electric Utility Fund continued to experience a declining cash balance, with revenues falling below projections and expenses higher than expected. This resulted in an estimated $11.7 million loss. That will be partly addressed through a Q2 2025 bond issuance to reimburse some 2024 capital expenses.
The Self-Insurance Fund also experienced a decline in cash balance due to higher-than-anticipated health insurance claims and the multi-million-dollar judgment against the City in the Amor case.
|
|
Beginning Balance |
Revenues |
Expenses |
Margin |
Ending Balance |
|
Maintenance & Operating |
|
Commuter Parking Fund |
2.45 |
1.25 |
1.76 |
(0.52) |
1.93 |
|
Electric Utility Fund |
18.85 |
146.58 |
158.25 |
(11.67) |
7.19 |
|
General Fund |
63.35 |
158.14 |
152.98 |
5.16 |
68.50 |
|
Self-Insurance Fund |
10.30 |
29.50 |
37.19 |
(7.69) |
2.61 |
|
Solid Waste Fund |
- |
8.02 |
7.79 |
0.23 |
0.23 |
|
Water Utilities Fund |
3.05 |
77.70 |
79.56 |
(1.86) |
1.19 |
|
Capital & Debt Service |
|
Capital Projects Fund |
36.51 |
21.46 |
36.67 |
(15.21) |
21.30 |
|
Debt Service Fund |
4.76 |
11.34 |
9.57 |
1.77 |
6.53 |
|
Downtown Parking Fund |
9.62 |
2.75 |
0.44 |
2.30 |
11.92 |
|
Motor Fuel Tax Fund |
12.97 |
8.13 |
11.56 |
(3.43) |
9.54 |
|
Phosphorus Fund |
22.37 |
2.53 |
1.91 |
0.61 |
22.99 |
|
Road and Bridge Fund |
3.88 |
2.98 |
1.31 |
1.67 |
5.55 |
|
SSA Funds |
0.11 |
0.35 |
0.34 |
0.01 |
0.12 |
|
Water Street TIF Fund |
0.05 |
0.69 |
0.69 |
- |
0.05 |
|
Water Capital Fund |
(3.02) |
46.61 |
29.82 |
16.78 |
13.76 |
|
Special Funds |
|
CDBG Fund |
0.01 |
0.34 |
0.22 |
0.12 |
0.13 |
|
Drug Forfeiture Funds |
1.36 |
0.64 |
0.34 |
0.30 |
1.67 |
|
E911/ETSB Funds |
2.51 |
6.46 |
5.58 |
0.88 |
3.39 |
|
Food and Beverage Fund |
1.28 |
6.45 |
7.59 |
(1.14) |
0.14 |
|
Foreign Fire Tax Fund |
- |
0.49 |
0.83 |
(0.34) |
(0.34) |
|
Library Funds |
3.17 |
17.84 |
18.53 |
(0.69) |
2.48 |
|
Naper Settlement Fund |
0.63 |
5.50 |
5.14 |
0.36 |
0.99 |
|
Renewable Energy Fund |
0.30 |
0.31 |
0.28 |
0.03 |
0.33 |
|
Downtown Maint. Fund |
2.53 |
3.13 |
2.61 |
0.50 |
3.03 |
|
Test Track Fund |
0.02 |
0.04 |
0.05 |
(0.01) |
0.01 |
|
Grand Total |
$197.13 |
$559.68 |
$571.03 |
($11.36) |
$185.78 |
$ in millions
Revenues by Fund
Below is a comparison, by fund, of budgeted versus actual revenue collected in 2024.
|
|
2024 Budget ($) |
2024 Actual ($) |
% of Budget |
|
Maintenance & Operating |
|
Commuter Parking Fund |
1.02 |
1.25 |
122.3 |
|
Electric Utility Fund |
156.59 |
146.58 |
93.6 |
|
General Fund |
157.17 |
158.14 |
100.6 |
|
Self-Insurance Fund |
31.56 |
29.50 |
93.5 |
|
Solid Waste Fund |
7.74 |
8.02 |
103.6 |
|
Water Utilities Fund |
78.25 |
77.70 |
99.3 |
|
Capital & Debt Service |
|
Bond Fund |
11.02 |
- |
- |
|
Capital Projects Fund |
35.08 |
21.46 |
61.2 |
|
Debt Service Fund |
10.11 |
11.34 |
112.1 |
|
Downtown Parking Fund |
2.56 |
2.75 |
107.4 |
|
Motor Fuel Tax Fund |
7.40 |
8.13 |
110.0 |
|
Phosphorus Fund |
2.16 |
2.53 |
116.9 |
|
Road and Bridge Fund |
2.85 |
2.98 |
104.8 |
|
SSA Funds |
0.43 |
0.43 |
100.0 |
|
Water Street TIF Fund |
0.67 |
0.69 |
103.4 |
|
Water Capital Fund |
49.36 |
46.61 |
94.4 |
|
Special Funds |
|
Comm. Dev. Block Grant Fund |
0.54 |
0.34 |
64.0 |
|
Drug Forfeiture Funds |
0.29 |
0.64 |
224.4 |
|
E911/ETSB Funds |
5.68 |
6.46 |
113.7 |
|
Food and Beverage Fund |
6.39 |
6.45 |
101.0 |
|
Foreign Fire Tax Fund |
0.40 |
0.49 |
124.2 |
|
Library Funds |
17.13 |
17.84 |
104.1 |
|
Naper Settlement Fund |
5.44 |
5.50 |
101.0 |
|
Renewable Energy Fund |
0.30 |
0.31 |
102.0 |
|
Downtown Maint. Fund |
2.98 |
3.13 |
105.2 |
|
Test Track Fund |
0.03 |
0.04 |
136.8 |
|
Grand Total |
$593.29 |
$559.68 |
94.3% |
$ in millions
Revenue Summary by Category
State Shared Revenues
• State income tax of $25.4 million exceeded budget estimates by 1.1% and continued to show strong year-over-year growth of 6.3% over 2023 due to low unemployment and strong corporate profits.
• State sales tax of $48.4 million exceeded budget estimates by 2.0% and was 2.7% higher than last year because of stable consumer spending and higher prices.
• State motor fuel taxes of $7.2 million exceeded budget estimates by 5.5% due to strength in the inflation-adjusted Transportation Renewal Fund receipts. However, the flat-rate MFT fell short of budget projections by 4.2% due to declining fuel consumption as a result of the rise in electric vehicles.
Local Taxes
• Home rule sales tax (HRST) of $19.7 million came in just short of budget projections by 0.1%. The revenue saw slow growth of just 1.0% over 2023 compared to the 2.7% increase in state sales tax. This indicates that items not subject to HRST, such as groceries and automobiles, generated more revenue growth than general merchandise.
• Food and beverage taxes of $7.35 million fell 1.0% below budget projections but increased 3.5% over last year. The citywide tax revenue totaled $6.3 million, 3.4% above 2023. The downtown tax revenues of $1.03 million fell 7% short of budget but remained 4.3% higher than the previous year despite the closure of some businesses during the heavy construction season.
• Hotel/motel tax of $3.6 million fell short of budget projections by 5.3% and was 2.4% lower than in 2023. The revenue shortfall can largely be attributed to more delinquent tax receipts in 2024, which are currently in the collections process.
• Local gas tax of $2.4 million was in line with budget projections in 2024 and essentially flat compared to 2023. Staff expects this revenue will remain stagnant or decline in coming years.
• Real estate transfer tax of $4.8 million exceeded budget projections by 6.1%. Increases in the average sale price of both residential and commercial properties largely drove higher-than-expected revenue.
Service Charges
• Electric charges of $141.3 million fell short of budget projections by 0.7% yet were 1.3% higher than 2023 revenues. Consumption increased slightly in 2024, additionally, rates were higher, and the increased price of electricity drove higher PPA collections resulting in a slight increase year-over-year.
• Water charges of $51.06 million exceeded budget estimates by 3.3%. Revenue growth was driven by water sales and new connection fees being higher than forecasted.
• Wastewater charges of $28.19 million fell short of budget projection by 6.8%. The revenue projection was part of the 2021 rate model that included known errors in budget assumptions, which were corrected in the 2024 rate study. Revenue was 4.1% higher than in 2023.
• Ambulance Fees totaled $8.3 million, coming in 12.5% below budget. The shortfall was due to a continued decline in revenue collected from the third-party ambulance billing provider and a lack of fully realized revenue from the CART program.
Other Revenues
• Commuter parking revenue of $1.2 million exceeded budget projections by 22.3%. Daily parking fees accounted for $1.15 million of revenue and increased by 68.8% compared to 2023. Although commuter parking trends have not fully returned to the pre-pandemic level, there has been significant growth in this area in the last couple of years.
• Building permit and fee revenue of $2.2 million exceeded budget projections by nearly 68%. Residential permits and fees accounted for almost $1 million, showing signs of continued growth and redevelopment.
• Cable franchise and PEG fees continue to experience a steep decline year-over-year. Total revenue across all three cable providers totaled $2.15 million, 15.0% less than budgeted and 11.1% less than the prior year.
• Interest and investment income declined in 2024 compared to 2023. However, between bank interest and investment gains, 2024 revenue still totaled $8.4 million.
Expenditures by Fund
Below is a comparison, by fund, of budgeted versus actual expenditures in 2024. While several funds appear to have exceeded their approved budget amounts, some variances will be corrected through year-end adjustments made as specified by the annual audit.
|
|
2024 Budget ($) |
2024 Actual ($) |
% of Budget |
|
Maintenance & Operating |
|
Commuter Parking Fund |
2.59 |
1.76 |
67.9 |
|
Electric Utility Fund |
156.07 |
158.25 |
101.4 |
|
General Fund |
156.35 |
152.98 |
97.8 |
|
Self-Insurance Fund |
35.76 |
37.19 |
104.0 |
|
Solid Waste Fund |
7.77 |
7.79 |
100.2 |
|
Water Utilities Fund |
78.25 |
79.56 |
101.7 |
|
Capital & Debt Service |
|
Capital Projects Fund |
64.15 |
36.67 |
57.2 |
|
Debt Service Fund |
9.53 |
9.57 |
100.0 |
|
Downtown Parking Fund |
0.80 |
0.44 |
55.4 |
|
Motor Fuel Tax Fund |
10.61 |
11.56 |
109.1 |
|
Phosphorus Fund |
6.56 |
1.91 |
29.1 |
|
Road and Bridge Fund |
1.14 |
1.31 |
114.8 |
|
SSA Funds |
0.34 |
0.34 |
100.0 |
|
Water Street TIF Fund |
0.67 |
0.69 |
103.2 |
|
Water Capital Fund |
49.33 |
29.82 |
60.5 |
|
Special Funds |
|
Comm. Dev. Block Grant Fund |
0.54 |
0.22 |
41.8 |
|
Drug Forfeiture Funds |
0.68 |
0.34 |
49.3 |
|
E911/ETSB Funds |
5.67 |
5.58 |
98.4 |
|
Food and Beverage Fund |
6.64 |
7.59 |
114.3 |
|
Foreign Fire Tax Fund |
0.39 |
0.83 |
214.4 |
|
Library Funds |
18.04 |
18.53 |
102.5 |
|
Naper Settlement Fund |
5.45 |
5.14 |
94.3 |
|
Renewable Energy Fund |
0.29 |
0.28 |
98.1 |
|
Downtown Maint. Fund |
3.47 |
2.61 |
75.2 |
|
Test Track Fund |
0.06 |
0.05 |
87.6 |
|
Grand Total |
$621.24 |
$571.03 |
91.9% |
$ in millions
Expenditure Summary by Category
Salaries, Wages, and Benefits
Across all funds, salaries and wages exceeded budget by $960,443, or 0.8%. Regular pay of $110.32 million was in line with the budget but anticipated savings from personnel vacancies was less than expected.
• The majority of the budget overage was in the Water Utility Fund, with regular pay exceeding budget by 5% and overtime costs by 5.4%. This was due to promotions into positions with salaries higher than budgeted and certain areas where wages and some overtime costs were either understated or not accounted for in the budget. For example, staff failed to properly account for some pay items like shift differential and stand-by pay.
• General Fund salaries and wages exceeded budget by 0.8%. Some of the 2024 budgeted positions were filled at higher than anticipated salaries, and payouts of vacation and sick time at retirement continued to negate any vacancies throughout the year.
• Electric Fund salaries and wages were 1.0% over budget. Regular pay and overtime were below budget; however, anticipated vacancies factored into the budget were less than expected.
Benefits associated with payroll, including pension contributions, payroll taxes, and employer insurance contributions, were also slightly over budget at 1.1%.
• Pension benefits of $24.8 million were 1.3% more than budgeted. Fire and police pension contributions exceeded actuarially required amounts due to higher food and beverage tax contributions.
• Employer insurance premium contributions for health, dental, workers' compensation, and life insurance benefits were about 1.1% over budget at $18.76 million due to changes in individual employee plan selections and higher-than-expected retiree plan costs.
Healthcare
The City’s healthcare and related insurance expenses increased in 2024. Though the City continues to see healthcare expenses below national averages, higher-than-estimated costs were realized last year.
• Healthcare claims in the medical plans totaled $14.87 million, 15.9% over budget. The overage is a result of high claimants under the PPO plan. The plans’ administrative costs were 5.2% below budget and totaled $3.43 million.
• Dental insurance claims and administrative fees ended the year 4.8% below budget, at $1.07 million.
• Prescription drug program costs totaled $2.9 million, which is 20% under budget due to larger than anticipated rebates through our pharmaceutical rebate program.
Purchased Items
This expenditure category includes all items purchased from third-party vendors, including purchased electricity and water.
• Purchased electricity from the Illinois Municipal Electric Agency totaled $108.63 million, which exceeded the budget by 4.9%. This is attributed mainly to a decline in the City’s cogeneration credit on the IMEA bill. The full anticipated amount was included in the budget; however, INEOS cogeneration operations ceased in January, resulting in a significant decline in the credit the City received and a budget variance of $3.6 million.
• Purchased water from the DuPage Water Commission totaled $27.66 million, 8% below budget. The budget forecast was based on actuals from the prior year, and the utility experienced a substantial decline in non-revenue water from leaks and main breaks in 2024.
• Other purchased items totaling $23.74 million were under budget by 6%. Natural gas, salt and chemicals, and technology hardware costs were a few categories that realized lower-than-estimated costs.
Purchased Services
Expenses related to services provided by third parties ended the year 20% under budget at $48.81 million.
• Architect and engineering services related to capital projects totaled $6.2 million. While spending in this category remains below budget, it nearly doubled in 2024 compared to the previous year as more projects got underway.
• Several other categories within the purchased services, including operational, HR, and other professional services, came in under budget. The anticipated need for certain services, particularly temporary staffing, did not materialize.
• Legal services exceeded the budget by 76%, totaling $1.3 million, primarily due to litigation costs associated with outside legal counsel.
• Administrative services fees totaled $2.68 million, exceeding the budget by 6.3%, primarily due to credit card and banking services fees.
Capital Outlay
Expenditures related to capital outlay totaled $89.96 million, which is 67.4% of the budgeted amount.
• Transportation-related projects experienced significant growth compared to 2023. A productive construction season allowed for the completion of the downtown streetscape, two MFT resurfacing programs, and the Columbia Street reconstruction.
• The Water Utilities continue to advance capital projects, with spending up 12% over last year. This growth reflects the City’s ongoing commitment to reinvesting in water and wastewater infrastructure. Water capital costs totaled $26 million in 2024, including early work on several Springbrook projects and water main replacement on River Road, Washington Street, Columbia Avenue, and Sylvan Circle.
• The Electric Utility spent $15.9 million, or 92%, of its capital budget in 2024. The Utility made significant investments in underground cable replacement and purchased several heavy-duty vehicles overdue for replacement.
• Technology project spending remained lower than expected in 2024, totaling $3.7 million, or just 30% of the budget. Most expenses were related to the initial implementation of the public safety radio network and CAD/RMS upgrade.
Looking ahead to 2025
As noted during the 2025 budget discussions, several issues were identified throughout 2024 that could impact the City’s budget over the next few years. These include moderation of post-pandemic revenue growth, ongoing maintenance and replacement of aging City assets, elimination of the state grocery tax on Jan. 1, 2026, internal review of employee compensation and classifications, and the global economic environment.
The Budget Team continues to monitor actions at the state and federal levels and gather information that provides greater clarity around these issues. Quarterly budget updates to the City Council this year will focus on revenue growth analysis year-over-year, capital project updates to assess future budget impacts, and state and federal economic policies. Staff is currently gathering data related to the impact of the state grocery tax elimination for presentation to the Financial Advisory Board in April and City Council in early summer.
Fiscal Impact:
N/A