Kadner: Dolton avoids shutdown, for now
By Phil Kadner email@example.com May 28, 2013 10:14PM
Updated: June 30, 2013 6:32AM
Facing the possibility that Dolton might not be able to meet its payroll Friday and have to shut down operations, the village board approved a $1 million loan during an emergency meeting Tuesday morning.
Dolton is “swimming in red ink and on the verge of bankruptcy,” transitional village administrator Clem Balanoff warned the trustees.
Balanoff told me that last week the village had as little as $25,000 in its bank account to meet a $340,000 payroll this week. Money has since poured in from several sources, bringing the account to more than $200,000.
But in addition to the payroll coming due, the village also had an employee insurance premium payment of more than $200,000 due this week.
Balanoff told the village board that the loan from the fund of a special taxing district in the village was needed because Standard & Poor’s had downgraded the village’s bond rating to “near junk bond status” — making the alternative of a tax-anticipation bond an unattractive alternative.
Mayor Riley Rogers, elected April 9, said he discovered after taking office early this month that Dolton has $3 million in outstanding bills from vendors, which include the city of Chicago for supplying Lake Michigan water to village residents.
Rogers said a 15 percent increase in the price of lake water from Chicago was not passed on to residents in January, and Dolton has been picking up the tab. He implied that water rates would likely increase soon.
Balanoff noted that Dolton’s sales tax rate is about 1 percent less than nearby communities. A half-percentage-point increase in that tax rate would raise $500,000 in new revenue per year, he said.
The Dolton fire chief said that by charging for some services, the fire department might be able to raise another $500,000.
The village board will look at those and other revenue alternatives at its next meeting.
Rogers said members of the previous administration, led by Mayor Ronnie Lewis, left with $250,000 in cash benefits from unpaid sick days and other perks, and he questioned whether they were entitled to all the money.
Rogers and Balanoff said calls were made to a bank to stop one of the benefit checks (to the former police chief) from being cashed, but the money was paid. Balanoff said the benefits packages include pay for days without an accident on the job.
Balanoff, who said he is working for the village without pay, and Rogers said Dolton has run deficit budgets since at least 2009 and perhaps much longer.
Balanoff told the board that in 2010 the village spent $4.43 million more than it received in revenue; in 2011 it overspent by $1.18 million; in 2012 it did so by $2.1 million and in fiscal year 2013 the deficit hit $3 million.
Rogers and Balanoff claimed that mismanagement, incompetence and perhaps corruption were all responsible for Dolton’s dire financial condition.
Rogers said the village purchased “two luxury cars” last year for about $57,000 that were used by Lewis and the former police chief.
“The purchase was not authorized by the village board, but they used money from a police confiscation fund so they didn’t need the village board’s approval,” the mayor said.
The two vehicles, Chrysler 300 sedans, are now parked behind the village hall in a police lot.
Rogers said a van to transport prisoners was also purchased for about $65,000. He contends that the van was not needed and little used. He said he hopes to sell it to the Cook County Sheriff’s Department.
Rogers wants to sell the two Chryslers as well and some other vehicles confiscated by the Dolton Police Department. A police officer had a confiscated vehicle in his driveway and was using it as his personal car, the mayor said.
Pointing to a truck trailer parked in the village lot, Rogers said, “It’s full of stolen bicycles, and I don’t think they ever tried to find the owners,”
A village gas pump was not monitored, and Rogers implied that people were using it for their personal use.
“Recreational vehicles, I am told, could be seen pulling up in the middle of the night and filing up at our pumps,” he said.
Rogers, on leave as an investigator for the Cook County state’s attorney’s office, said he has reported a number of “things” to various law enforcement agencies for investigation and “will pursue any hint of corruption aggressively.”
Mike Willis, who has been Dolton village treasurer since 2009, said the village has about $38 million in outstanding bonds it is paying off. He said Dolton’s revenue stream has remained “pretty constant” since 2009.
When I asked if he had warned village officials about going over budget in recent years, Willis said, “I repeatedly told them and suggested budget cuts and other things, but they just kept spending and ignored my suggestions,”
The $1 million loan is coming from a tax increment financing district (TIF), which is typically created and initially financed by a bond sale to spur economic growth in blighted areas. Higher tax revenue from the new development pays off the bonds, with extra income placed in a fund that is supposed to be used to spur further business investment.
The TIF district providing the loan to Dolton is known as the I-94/Sibley Boulevard TIF district and includes a Menards and a White Castle. Balanoff said the money borrowed would have to be repaid and suggested it be done by the end of the year.
However, the new village attorney, John Murphy, said the loan might not have to be repaid until the TIF district expired, although no one seemed to know when that would be. TIF districts usually exist for 23 years but can be extended.
Dolton joins a growing list of south suburbs in deep financial trouble.
There is no law against government negligence and mismanagement.
But it is outrageous that some of the poorest people in the Southland are paying higher tax bills than most and getting little to show for it in return.