Wilmette’s biggest hurdles are economic: Frenzer
Wilmette Village Manager Tim Frenzer looks over some budget papers with Kathleen Gargano, assistant village manager, in his office on Wednesday, Nov. 7, 2012. | Ryan Pagelow~Sun-Times Media
WILMETTE — With the state and national elections behind us, and the local elections looming ahead in the spring, Pioneer Press took a minute to talk with local village managers to get an unvarnished look at where each stands at the end of 2012.
Wilmette Village Manager Timothy Frenzer sat down to talk top issues, finances and pension reform.
Q. Can you briefly describe the top three issues Wilmette faces?
A. “They directly relate to our long-term economic sustainability.
“How do we maintain the level of public service that makes Wilmette what it is with fewer people and resources?
“How do we grow the Village’s economy and business community in this economic downturn, both to enhance Wilmette’s attractiveness and vitality, and to relieve upward pressure on property taxes – not just for Wilmette but for all the other units of local government?
“How and where do we invest in maintaining and improving public infrastructure to address the community’s long-term needs, again in the face of diminished resources?”
Q. Given the economy, how would you describe Wilmette’s fiscal situation?
A. I would say stable — Moody’s Investors Service rates us AAA with stable outlook — but presenting significant challenges for the long-term.
Demands for public services know no downturn in the economy. We still need to do all the critical things that we do, whether in public works, engineering, police or fire. Some sorts of services and demands actually increase in a recession like this. The snow still falls, the trash still has to be picked up, the sewers still need to be cleaned and people still get sick and need medical attention. The infrastructure does not take a break from decaying due to a recession.
The result is that we have considerably diminished revenue and diminished staffing to address undiminished needs. Wilmette must tightly focus on core functions: public safety, public services, infrastructure, and economic development. We now have as few full-time, benefit eligible employees as we did in 1987 — a 25-year low. We work with other municipalities to reduce staffing, share resources, and cooperatively bid purchasing and public contracts. We analyze every personnel position and vacancy to see if it can be outsourced without compromising service, and employees spend time working in multiple departments, to maximize what personnel we still have.
In some non-property tax revenue areas, we have seen encouraging increases. While this is an improvement, it must also be placed in its historic context. Our non-property tax revenues are still below pre-recession levels. Compared to those peaks, sales tax revenue is down 12 percent, utility taxes are down 10 percent, permit fees are down 11 percent, real estate transfer tax is down 44 percent, and the local share of state income tax is down 11 percent (the State keeps all of the income tax increase).
When one examines Wilmette’s principal sources of non-property tax revenue, which account for about 50 percent of General Fund revenue, except for growth in license revenue and service fee charges (which are used only to fund specific programs), these other revenues have declined by 7.7 percent since 2008.
Q. How is the state’s pension crisis affecting Wilmette?
A. Wilmette’s employees are in locally funded plans, but that has not stopped Springfield from creating problems for us. First, the State only causes confusion when it talks about a “pension crisis” in a monolithic sense. There is no one “pension crisis” because there are many pension funds in Illinois, many of which suffer in various ways due to the actions of Springfield, and Springfield’s refusal to learn from what works and what doesn’t.
Our full time employees are covered by locally funded pension plans — not State of Illinois pension plans. Most participate in the Illinois Municipal Retirement Fund — IMRF, which accounts for about 20 percent of our annual pension costs. IMRF is financially sound. The reason is simple – the General Assembly has kept its hands off IMRF for upwards of 30 years. IMRF employees have to work longer to retire, rules prevent salary “spiking” in later years of employment, the retirement benefit formula has not increased, and municipalities have to pay as they go. The result is a relatively well-funded and stable plan that is not in crisis.
Roughly 80 percent of the Village’s annual pension costs, the portion that has exploded in cost, covers a minority of our employees — are in police and firefighter pension plans. When the State’s Committee on Governmental Finance and Accountability (COGFA) analyzed Wilmette’s police and fire pension plans as part of a study on underfunded pension plans, results showed that the biggest negative impact on the costs of these plans came from multiple pension benefit increases all passed by the General Assembly, but paid for by local taxpayers. The report found that, in Wilmette’s case, the adverse impact of the General Assembly’s actions was bigger than that of the stock market collapse and investment losses at the beginning of the Great Recession.
In 1996, we spent about $1.05 million on all our employee pensions. Our FY 2013 Budget for pension expense next year is just under $5.3 million — an increase of over 400 percent since 1996. Of that $5.3 million in 2013, 80 percent of it, over $4.2 million, will cover employees in the fire and police plans.
Anytime one unit of government, such as Springfield, can give out benefits that another unit of government has to pay for, there will be problems. IMRF shows that when officials refrain from increasing benefits at some other unit of government’s expense, and where the employing agency has direct financial responsibility for the cost and, therefore, is usually deterred from playing salary games or spiking, then the system can be stable and successful. When these practices are abandoned, then we are left with mounting costs and employees in the affected plans are left with uncertainty.
Q. What is Wilmette doing to promote economic development?
A. The Village is working hard to both promote our existing businesses and to recruit and help establish new businesses in Wilmette. This is a high priority to the Village Board.
While we have had to cut expenses in many areas, one area that we are not cutting back is business promotion and development. Our business promotion and advertising budget has actually increased. Wilmette’s business vacancy rate is only 5.5 percent.
Aside from the Village’s membership in the Wilmette-Kenilworth Chamber of Commerce, and our direct support of its major public events in the business center of the Village, we also promote Village businesses in social media through our Wilmette Biz page on Facebook and Twitter, web advertising, advertising on public transit and in print, and by providing improved holiday lighting. We also produce video segments featuring local businesses that can be featured on cable television and posted on the web. We also do our best to be responsive to business needs. For example, we worked with business owners to revamp snow removal in our business districts to improve customer access, and we prioritize snow hauling out of our business districts to maximize customer parking.
We also recruit new businesses to the Village and revitalize our commercial districts. The most dramatic example of this is the Village board’s new Village Center master plan. The plan, funded by a grant from the Regional Transportation Authority and focused on transit-oriented development, will leverage one of Wilmette’s most important assets, its excellent commuter rail service, into new development bringing people who want to live close to public transportation into the Village Center, thereby supporting existing businesses and stimulating the development of new ones. It is the most significant economic development effort by the Village in many years. The board is open to ideas and new concepts. This manifests itself in the opening of new restaurants, re-occupancy of vacancies in Plaza del Lago and Edens Plaza by retailers such as CVS and Walgreens, and redevelopment of commercial property along the Edens Expressway that has been vacant for decades into a Marriott Residence Inn, which will be the Village’s first hotel in generations.
Q. Do you think Wilmette is doing a good job conducting its business transparently?
A. The Village is doing an outstanding job. We are one of the relatively few local governments in the area, and in the nation, that receives annual A+ ratings from the independent Sunshine Review for its disclosure. If you go to www.wilmette.com, and click on the Government tab, you will find a listing of Village departments, personnel, ordinances and organization, bidding documents, employment listings, and all our financials, including budgets and audits for multiple years, as well as all of our proposed budget materials. There is also a specific page for Freedom of Information requests. We also use our Wilmette e-News subscription e-mail service to provide residents with important information, a weekly news report and links to items of interest relating to Village Board meetings and agendas.
Our Village board meetings have all agenda materials on line the same day they are made available to our elected officials. We broadcast our board meetings on cable television, we live stream them on the Internet and keep them available in an on-demand video library available through our web page. I think we are one of the best around.