Homewood officials say the budget for the fiscal year that begins May 1 should end with a surplus, but that depends on what happens in Springfield with a proposal by Gov. J.B. Pritzker to eliminate the state tax on grocery sales.
In mapping the spending plan, Homewood officials are also budgeting for a modest bump in revenue due to the planned opening later this year of the Wind Creek Chicago Southland casino.
For now, the village anticipates ending the fiscal year April 30, 2025 with a surplus of about $409,000, thanks to anticipated increases in sales and income tax revenue and gambling revenue from the casino, according to village documents.
Sales taxes account for nearly a third of revenue for the village’s general fund, the fund that supports many village services including fire and police. Property tax revenue accounts for about 17% of general fund revenue, according to the village.
Homewood last year saw the sudden loss of a major retailer when Walmart closed at 17550 S. Halsted St. in March.
In planning for the current budget year, which began May 1, 2024, Homewood anticipated taking a hit on sales tax revenue, estimating $5.3 million for the fiscal year. The hit wasn’t as bad as expected, and for the new budget the village anticipates sales taxes of $5.7 million.
The village also expects revenue from its local tax on restaurants to increase by $100,000, to $1.9 million, as new restaurants open.
With the Wind Creek casino expected to open later this fall, Homewood is anticipating gambling revenues of $250,000 during the first three months of calendar year 2025.
The village anticipates quarterly revenue from the casino — gaming taxes are being shared with East Hazel Crest, where the casino is located — to increase to $500,000 per quarter over the next four or five years.
General fund revenue for the coming year is budgeted at $27.2 million and expenses at $26.8 million, according to the draft budget. That would translate to a surplus of a bit more than $400,000 when the budget year ends next April.
The unknown, however, is whether elimination of the state grocery tax will gain traction.
The village says grocery sales account for about $650,000 in annual sales tax revenue, or 14% of total sales tax revenue.
The tax for a $150 grocery bill is $1.50, but suburban mayors have urged Pritzker to rethink doing away with the tax, the revenues from which flow directly to municipalities.
Municipalities have also urged the state to restore funding through the Local Government Distributive Fund, which earmarks a portion of state income tax revenue to counties and municipalities based on population.
The portion had been 10% until 2011, and is now at 6.5%, so restoring the full funding would make up for any revenue loss from cutting the grocery tax, mayors have said.
The proposed village budget calls for spending for police to increase by 4%, and Homewood said some of the increase is to help in recruiting and hiring more officers.
The budget also would allocates money to hire three firefighter/paramedics, but that may have to be delayed if the state eliminates the grocery sales tax.
Absent any spending changes and factoring in the loss of revenue from the grocery tax, the village would end the budget year with a deficit of $240,000 rather than a surplus, according to the budget draft.
One course of action would be to move ahead with the proposed budget, as the village has about $1 million in “unassigned” money — not earmarked for a particular expense — that could be used to absorb a deficit.
Village staff will lay out a five-year capital spending plan May 9 that will assist in preparing the new budget.
According to the village, it has several capital spending projects planned for the water and sewer fund, including replacing the village’s central water tower at an estimated cost of $4.5 million, and replacing lead water service lines. That cost, anticipated at about $30 million, will be spread out over 17 years.
Village officials also are expected to consider a study of water and sewer rates to determine if they are sufficient to sustain revenue for the water and sewer fund and expected capital costs, according to the preliminary budget.
