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REVENUES VERSUS EXPENDITURES <br /> Economic conditions in Decatur have begun to rebound, with modest decreases in the local <br /> unemployment rate, and equally modest growth in area jobs and wages.Although the City Council <br /> has deliberately frozen its property tax and utility tax levies to try and decrease the city's reliance <br /> on these regressive and burdensome revenue sources, it must make-up for increases in <br /> personnel, pension and inflationary costs by looking closely at other revenue streams and by <br /> taking money from non-personnel operating expenses. Sales tax revenues remain sluggish at just <br /> over one percent (1%) growth. In the aggregate, General Fund revenues are expected to grow <br /> three percent (3%), while personnel and pension costs are growing at up to three times this rate. <br /> This is an unsustainable situation. Sluggish improvements in revenue are completely offset by <br /> increases in personnel costs. Other factors that erode the city's revenue growth include: 1) the <br /> State of Illinois' overall disregard concerning the financial needs of municipalities{i.e., cuts by the <br /> State in the distribution of the local portion of income taxes, increases in State administrative fees <br /> to collect and remit sales and other taxes, the inability of the General Assembly to address <br /> fundamental pension reform while continuing to add to pension costs(e.g., there were two dozen <br /> changes in police pension laws this year that added to local governments'cost),the steady stream <br /> of costly unfunded mandates pushed on local governments by the State, etc.}; 2) the exodus of <br /> population from the State; and 3)fundamental realignments in the way citizens everywhere make <br /> their retail transactions and purchase communications services. <br /> Historically, the city of Decatur has dealt with these problems with a combination of expenditure <br /> reductions, tax increases, and recalculation of Interfund overhead fees. There is a natural limit to <br /> how much the city can continue to use these strategies when the budget is based on an inherently <br /> flawed structural imbalance. <br /> In other words, even though the Great Recession is over, the city of Decatur's budget remains <br /> structurally imbalanced because negative forces outweigh positive ones. Without structural <br /> change, almost every year the City Council must choose, to some degree, between increasing <br /> taxes and fees, or reducing services or reserves. This situation also creates an ongoing struggle <br /> between the city and its organized employee groups, as the latter works to wrest control over <br /> pensions and insurance from elected officials and lock in benefit levels for both current and future <br /> employees—even though financing these benefits is not structurally sustainable. In 2018 and <br /> 2019, just three expense categories accounted for more than 41% of general governmental <br /> expenses: pensions, group insurance and workman's compensation. For the city to correct its <br /> structural imbalance, this percentage of pensions + insurance + workman's compensation as a <br /> percentage of general government, should be closer to twenty percent(20%). <br /> BUDGET ASSUMPTIONS <br /> The proposed 2020 budget relies on numerous assumptions about spending, new revenues, <br /> projections of existing revenues, and those capital projects and new programmatic initiatives that <br /> should (and should not) be included in the city's spending plan. During upcoming budget review <br /> sessions, council members are free to alter, delete or amend any of these assumptions so long <br /> iii <br />