City of Fairview Heights audit provides positive results
By RANDY PIERCE
[email protected]
Increased income and reduced expenses, a positive indication concerning any business or financial ledger, were among the items presented from the City of Fairview Heights’ most recent audit report for the fiscal year which ended on April 30, 2024.
As accepted by the city council at its final meeting of the calendar year last month and summarized for one of its committees prior to that action, the audit, as required by state and federal law, actually consists of multiple components including scrutiny of the overall general budget and three Tax Increment Financing districts in Fairview Heights.
Representing the certified public accountant firm of Scheffel Boyle, which has an office in Belleville, Brian Otten presented a thorough and comprehensive explanation of the findings, as spelled out in great detail in dozens of pages, for the city council administration committee finance committee chaired by Alderman Pat Peck.
Having been filed with the appropriate agency in Springfield in late December, the audit, according to Otten, shows that the city’s overall “net position” for the time period examined rose by $7.9 million to a little over $85 million.
This is due, at least in part, to an increase in sales tax revenue, which accounts for 26 per cent of the city’s total income. When shoppers purchase tangible products at local businesses, they pay an additional sales tax, on top of the price of the items with a share coming back to the city through a program administered by the Illinois Department of Revenue.
Unlike the vast majority of the municipalities throughout the state, Fairview Heights is one of only a handful which does not collect a real estate tax from local property owners because its sales tax has, since the city’s incorporation in 1969 and its implementation, not long thereafter, been sufficient to help fund day-to-day operations of the local government along with other sources of financial support.
The audit showed an increase about $500,000 for the current year over the previous one, according to Otten, while climbing to $8.8 million, up significantly from close to $7 million in 2021 when the coronavirus pandemic was wreaking havoc on the capability of people to shop at Fairview Heights stores. Additionally rising was revenue, in an amount close to $76,000, from what is referred to as the city’s “home rule” tax which has been in place since the 1990s when a fractional rise in the sales tax rate was implemented to help fund various public works-related infrastructure improvements.
Local dining establishments collect a food and beverage tax that goes to the city but that total, along with income from a room tax paid for every overnight stay at local lodging establishments were both down a bit, the total for the former being around $11,000 and the latter estimated at $40,000, Otten said. Countering this, however, as he went on, is the fact that the city’s share of income tax went up by around $290,000. Municipal governments like Fairview Heights receive a small share, in the range of six to seven per cent, of the income tax paid by individuals, trusts and corporation to the state of Illinois. That, along with whatever local residents pay in sales tax and food and beverage tax, when shopping or dining out locally, are the only types of taxes the city collects from those who live within its borders.
Due to the state’s removal of some grant programs from its motor fuel tax process, this funding source for the city also saw a drop, decreasing about $132,000. MFT money can only be used toward expenses that provide a better experience for drivers of vehicles on local roads and streets such as when they are resurfaced or upgraded.
Expenditures incurred by the city for its general operations providing various services, including employee salaries and benefits, actually dropped by about three per cent, Otten explained, for the fiscal year audited, a decrease in the area of parks and recreation by two per cent accounting for part of this.
One of the most marked positive outcomes shared by Otten relates to the city’s status regarding its contributions to the Illinois Municipal Retirement Fund which is basically a pension plan for employees who receive monthly payments from it once they work enough years to be vested in the plan and leave their jobs.
Otten said the state directs local government units like the City of Fairview Heights how much its annual contribution to the IMRF should be while over the past five years, these expenses have dropped by about 41 per cent and income from it has risen in a similar amount. This is possible because there is a board of trustees for the IMRF which oversees how its money is invested and therefore generates additional income as part of this program.
Conversely, for decades, the city has been behind as a participant in a police pension fund program administered by a different entity at the state level which is totally independent of the IMRF. Otten pointed out there was some positive movement concerning this part of the city budget as the underfunded total went from $22,900,000 the previous year to $20,500,000 during the most recent one as indicated in the current audit, “still a very large number” as he characterized it.
Otten further shared that an actuary involved in the process said the city is about $200,000 shy in terms of what it should be contributing to the police pension fund on an annual basis.
