TRANSMITTAL LETTER FOR BOARD MEETING OF NOVEMBER 3, 2022
COMMITTEE ON BUDGET AND EMPLOYMENT
Mr. Brian A. Perkovich, Executive Director
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Report on Budgetary Revenues and Expenditures for the third quarter of 2022, ended September 30, 2022
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Dear Sir:
Attached is a report of revenues and expenditures for the third quarter of 2022, ended September 30, 2022. This report is prepared on an unaudited budgetary basis of accounting.
The 2022 year-to-date Corporate Fund actual net tax revenue of $236.3 million is 84.8 percent of the budgeted tax receivable and is $18.2 million over the collections for the same period in 2021. The second installment of Cook County property taxes is normally due on August 1st but has yet to be billed in 2022. Bills are expected to be mailed out in November and due in December. Cash on hand and reserve balances will be available to fund the District’s reimbursements required until the taxes are collected. Year-to-date allocations to the Personal Property Replacement Tax (PPRT) totaled $88.6 million, with year-end allocations estimated to be $106.2 million. Corporate Fund actual non-tax revenue of $65.9 million is $11.9 million under the collections for the same period in 2021. This negative variance is primarily driven by a $7.3 million decrease in Tax Increment Financing (TIF) receipts, which was anticipated based upon the City’s estimates, and $5.3 million less in user charge collections compared to the same period in 2021. Major components of non-tax revenue include the following: user charge income of $28.0 million, rental and easement income of $19.9 million, and TIF surplus distributions of $10.6 million.
The 2022 year-to-date expenditures of $269.5 million are 61.5 percent of the $438.5 million Corporate Fund budget and are $20.2 million over the expenditures for the same period in 2021. Energy and healthcare costs, two of the primary expenditure drivers, are monitored closely throughout the year. Energy expenditures (electricity and natural gas) in 2022 are 17.8 percent higher than the same period in 2021. A larger increase was expected by the end of the third quarter due to increased contract rates. The increase was partially offset by adjustment credits received in accordance with the provisions of the Climate and Equitable Jobs Act which is expected to affect payments through 2023. Healthcare costs are 10.4 percent higher than the same period in 2021. These increases were expected as health plan claims return to more normal levels post-pandemic.
The two primary economic factors driving District revenues are the real estate market and the Consumer Price Index. Through September 2022, the Illinois Association of Realtors reports that Chicago metropolitan area home sales are down 14.3 percent, while the median sales price has increased 5.0 percent compared to the same period in 2021. Home sales have decreased 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 in September, the Consumer Price Index increased 8.2 percent before seasonal adjustment. The energy index increased 19.8 percent for the 12 months ending September, a smaller increase than the 23.8 percent increase for the period ending August. The food index increased 11.2 percent over the last year.
According to Bloomberg News and Reuters, U.S. consumer prices rose by more than forecast to a 40-year high in September, pressuring the Federal Reserve to raise interest rates even more aggressively to stamp out persistent inflation. Both the rent of shelter and owners’ equivalent rent were up 6.7% on an annual basis, the most on record. Despite a strong employment report, which showed a drop in the unemployment rate to a pre-pandemic low of 3.5%, the inflation data will likely cement an additional 75-basis point interest rate hike at the November policy meeting.
The Budget Office continues to analyze monthly expenditures, particularly in the commodity classes, and will closely monitor economic conditions, revenues, and expenditures throughout the remainder of 2022 and in preparation of the 2023 budget.
Respectfully Submitted, Shellie A. Riedle, Administrative Services Officer
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