‘This is all great news’ Downers Grove financial picture better than expected

When the COVID-19 pandemic hit last year, Downers Grove officials rightfully were concerned about the future of the village’s financial picture.

Sales tax revenue was bound to decline as many local businesses and restaurants were forced to close their doors. The village also braced for a significant decline in revenue generated from the hotel tax because that industry was dealt a crucial blow by the pandemic.

Village officials responded to the crisis by instituting a financial response plan that included a series of steps resulting in a $2 million reduction in expenses.

The village reduced general fund expenses and deferred equipment replacement. A hiring freeze was put in place, and staff travel and training was eliminated. Additionally, $6.5 million worth of projects in the capital and major buildings funds were put on hold.

Downers Grove received about $2.5 million in federal funds through the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Now, there appears to be light at the end of the tunnel as officials have indicated the village weathered the storm brought about by the pandemic.

“This is all great news, relatively, [given] what we started off the year and the pandemic thinking. In summary, our COVID-19 financial response plan worked,” Village Manager Dave Fieldman said during a presentation at the Feb. 16 Village Council meeting.

Almost all of the village’s major revenue sources performed better than the year-end estimate presented to the council in August, Fieldman said.

“So, really, that second half of the year performed much better than we would have expected when we gave the estimate in August,” he said.

Sales tax receipts are down about 5% through November, and home-rule sales taxes are down 11%, Fieldman said. The food and beverage tax declined almost 17% in 2020, and the hotel tax revenue dropped a significant 64%, according to the presentation.

Taken together, the four major village revenue sources were down 10.7% in 2020.

A closer examination of sales tax revenue shows it outperformed 2019 in July, August and September before declining in October and November, Fieldman said.

The village’s home-rule sales tax also did well in July, August and September, he said.

The food and beverage tax experienced an initial decline before posting a strong recovery in May and June, followed by improvements in July through September, Fieldman said.

The hotel tax bottomed out in April with little recovery, Fieldman said.

The village estimates 2020 revenue will be down $1.7 million once December sales tax and home-rule sales tax receipts are reported.

The encouraging financial news has led village staff to recommend moving $2.9 million to the major buildings fund – money that would be available if needed in the fiscal 2021 general fund, Fieldman said.

If revenue performance remains strong, he said the village should consider filling vacant positions.

The Village Council is expected to decide on the proposal by mid-April.

“The news is good. I’m glad to hear it, and I hope it continues to improve,” Commissioner Greg Hose said after the presentation.

“I don’t think anyone was expecting positive news, I feel like, [so] quickly,” Commissioner Nicole Walus said.