Budget Meetings Reveal Cook County Commissioners’ Concerns with Proposed Beverage Tax

Cook County Board Finance Committee - Departmental Budget Hearings for 2017 Budget
October 17,2016

Overview of Proposed 2017 Executive Budget
Total  Revenues
FY17 - $3,464.8 
FY16 -  $3,374.8
Difference - Increase of $89.97 (2.7%)

Total Expenditures
FY17 - $3,464.8M
FY17 -    $3,374.8M    
Difference - Increase of $89.97M (2.7%)
When Special Purpose Funds, Grants, and Capital Budget are also included Total Budget is $4.8Billion 
 
Some observations by CFO Samstein on Executive Budget::

• If exclude additional pension contribution, General and Health Funds Budget is essentially flat, with only a 0.2% increase
• That small of an increase is even with the Sweetened Beverage Tax proposed to be effective on July 1, 2016
• The $74.6 million projected to be collected in 2017 from this new Tax covers only 4 months of collection, from August through November.
• Project that in fiscal 2018, the full year collection of this Tax will be $224 million.
• But those additional revenues will be needed to offset further expected declines in some of the existing revenue streams (such as cigarette tax).
• Definition of “Sweetened Beverage” for tax is broad; modelled on similar tax in Philadelphia.
• May be challenged in court (Philadelphia has been).
• Full year of sales tax increase in 2017 projected to result in $470 million.
• General Fund Balance (which some refer to as “reserves”) was about $99 million at end of 2015.  Expect about that at end of 2016.  But would like to have 1 to 2 months of General Fund expenditures in General Fund Balance, and this falls short of that goal.
• Normally provide non-union employees with raises equivalent to those of union employees.  Breaking from that this year and only giving non-union employees an increase of 1.5%, representing cost of living, but some of the higher paid employees capped.  However, step increases are being given

Questions from Commissioners focused on:

• Proposed Sweetened Beverage Tax
• Viability of keeping promise not to raise any other taxes for next 3 years
• Pensions and what plans does President have to propose other legislation since prior plan is stuck (told that starting discussions with key players like unions now)
• Layoffs
• Savings for not treating non-union employees like union for purposes of raises

Bureau of Finance 
Includes Departments of Revenue, Risk Management, Budget & Management Services; County Comptroller; Offices of CFO, Contract Compliance, Enterprise Resource Planning, and Chief Procurement Officer

Proposed Budget: 
FY17 - $23.95 million ($20.79 million + $3.16 million in benefits)
FY16 - $19.79 million without benefits.  
Difference - Increase of $1 million in 2017.

Proposed FTEs: 
FY17 - 230.3
FY16 - 235.7
Difference - Decrease of 5.4 FTEs.

Key Point for 2017 Proposed Budget Presented

• For first time, allocating employee benefit costs to departments
• These include employee health insurance allotment, life insurance, health insurance, dental insurance, unemployment compensation, vision care insurance, group pharmacy insurance
• These previously in separate, county-wide category of Fixed Costs, which is much lower for 2017 as a result
• But this makes it difficult to compare department costs proposed in 2017 to 2016

Questions/Comments from Commissioners for Bureau Departments included:

• Do employees recognize how much County is providing in way of benefits vs. what would receive if went elsewhere.
• Comm. Gainer wants wellness incentives (healthier employees reduce costs, not to mention benefit to employees) to become bigger part of union negotiations.
• As result of new Performance Management Based Budgeting, more offices under other elected officials participating.  Budget Director said 99% compliance.
• Offices not in agreement with Executive Budget are Public Defender, Chief Judge, State’s Attorney, Board of Review, and small variation with Clerk of the Court.
• Have about 720 companies now certified for Contract Compliance, up from 300 a few years ago.
• Roll out of new Time and Attendance system as well as rest of Enterprise Resource Planning going well.  

Commissioners present:  All except Goslin, Schneider, & Silvestri.

County Auditor
Proposed Budget: 
FY17 - $1,156 thousand ($995 thousand + $161 thousand in befit costs)  
FY16 - $925 thousand 
Difference -  increase (excluding benefits allocated) of $70 thousand.

Proposed FTEs:  12 vs. 12 in 2016.  No increase.

Key Information:  Thanks to support of Auditor shown by Board, all County offices cooperating with audits.

Commissioners present:  Moore, Sims, Steele, and Tobolski.

Department of Administrative Hearings
Proposed Budget: 
FY17 - $1.475 million ($1.350 million + $125,000 in benefit costs)
FY16 - $1.308 million
Difference -  increase (excluding benefits allocated) of $42,000.

Proposed FTEs:  9 vs. 9 in 2016.  No increase.

Key Information Presented:

• Facilitates adjudication by Administrative Law Judges (ALJs) of ordinance violations issued by County departments
• ALJs are independent contractors, and over half of budget goes to contracted services.
• Average cost per case is $11.56 in 2016, far below costs of bringing cases to court, and down from $22.14 in 2015.
• Under new state law, will also be able to adjudicate local municipal ordinance violations starting Jan. 1, 2017
• Current 14 ALJs should be able to handle expected increased load
• STAR targets for 2017 goals will improve on all 2016 expected results, and includes customer service satisfaction survey metric.

Commissioners present:  Butler, Moore, Sims, Steele, & Tobolski.

Observer - Priscilla Mims