TRANSMITTAL LETTER FOR BOARD MEETING OF MARCH 16, 2023
COMMITTEE ON BUDGET AND EMPLOYMENT
Mr. Brian A. Perkovich, Executive Director
Title
Report on Budgetary Revenues and Expenditures for the year ended December 31, 2022
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Dear Sir:
Attached is a report on revenues and expenditures for the year ended December 31, 2022. This report is prepared on an unaudited budgetary basis of accounting.
The 2022 Corporate Fund revenues ended at $429.1 million, or 18.1 percent above budget, driven primarily by a $73.1 million increase in Personal Property Replacement Tax (PPRT) receipts, which was almost double what the State of Illinois projected to be disbursed to the District during its fiscal year ending June 30, 2022. The increase in PPRT receipts helped to offset a $46.4 million decrease in Cook County property tax receipts resulting from the delay of second installment property tax bills. The increase in PPRT also helped to offset a $4.0 million decrease in user charge receipts, which was anticipated due to refunds/credits that were applied to customers based upon 2021 usage rates. Corporate Fund non-tax revenue ended 2022 at $91.2 million, or $6.6 million over budget. Major components of non-tax revenue include user charge income of $37.2 million, rental and easement income of $27.4 million, and TIF surplus distributions of $15.5 million.
The 2022 actual year-end expenditures of $379.5 million were 86.6 percent of the $438.5 million Corporate Fund budget and were $23.6 million over 2021 expenditures. Healthcare costs were 4.8 percent higher than in 2021. This increase was expected as health plan claims return to more normal levels post-pandemic. Energy expenditures (electricity and natural gas) in 2022 were 9.3 percent higher than in 2021. This increase was due to expected increases in electricity contract rates. The Corporate Fund ended the year with an operating surplus on a cash basis.
The two primary economic factors driving District revenues are the real estate market and the Consumer Price Index. Through December 2022, the Illinois Association of Realtors reported that Chicago metropolitan area home sales were down 19.0 percent, while the median sales price has increased 3.8 percent compared to the same period in 2021. Home sales have decreased during this time period due to the Federal Reserve’s continued increase in its benchmark interest rate.
According to the Bureau of Labor Statistics, for the 12 months ending December 31, 2022, the Consumer Price Index increased 6.5 percent before seasonal adjustment. This was the smallest 12-month increase since the period ending October 2021. The all items less food and energy index rose 5.7 percent over the last 12 months. The energy index increased 7.3 percent for the 12 months ending December 2022, while the food index increased 10.4 percent. All of these increases were smaller than for the 12-month period ending November 2022.
According to Bloomberg News, the Federal Reserve is expected to raise interest rates further before pausing to assess how the most aggressive tightening cycle in decades is impacting the economy. According to Forbes, the Federal Reserve expects interest rate hikes to end 2023 in a 4.75 to 5.75 percent range. The next Federal Reserve meeting will take place in March 2023.
The Budget Office continues to analyze monthly expenditures and will closely monitor economic conditions, revenues, and expenditures throughout the remainder of 2023 and in preparation of the 2024 budget.
Respectfully Submitted, Shellie A. Riedle, Administrative Services Officer
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