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EFFECTS OF RECESSION ON
Macomb, IL — Capital improvements to streets and water and sewer facilities may be deferred in Illinois while local government officials try to address a variety of public service needs with stagnant revenue levels, according to Illinois Institute for Rural Affairs (IIRA) researchers. "Ideally, cities have a capital improvements plan and budget so that appropriate spending occurs annually to replace deteriorated structures," said Dr. Norman Walzer, director of the IIRA at Western Illinois University. "More often though, public officials are concerned first with providing basic services such as police and fire protection and then spending for capital projects depending on availability of funds. Deferring improvements, however, can mean continued deterioration and more costly improvements in the future when the finances might not be any better." According to Walzer, the loss of federal funding for capital projects coupled with the recession have compounded the problem for many communities. "Federal aid to Illinois cities between 1977 and 1987 declined 34.3 percent in 1977 dollars," said Walzer. "This means that local public officials must change spending policies when revenue sources shift." Walzer and researcher Poh P'ng conducted a statewide survey of Illinois mayors regarding financing infrastructure improvements and replacements with the framework of the current economic picture. In particular, mayors were asked about the conditions of streets and water/sewer facilities, but they also reported the budgetary outlook for the next fiscal year. Statewide, 67.9 percent of the mayors responded. The researchers found that, on average, mayors reported that $2.09 million per city will be required per year for the next five years for streets. This amount varies from $1.30 million in cities of population between 10,000 and 25,000 to $3.18 million in cities of 25,000 and larger. These needs do not match up with available revenue. Mayors reported that they expected to be able to spend an average of $1.21 million per year in each city, which leaves an expected unfunded gap of about $880,000 per year. Mayors also reported the expected annual cost for the next five years for water mains and sewers to be $1.29 million compared with an expected spending availability of $976,000 per year. "If financing gaps exist in both streets and water/sewer spending, the lack of significant growth may worsen current conditions," said Walzer. "Certainly, not all cities are affected to the same extent by economic conditions and since large amounts of federal aid are not likely, spending will depend on local economic performance. "Municipal officials are caught in a catch-22," said Walzer. "To enhance economic growth and development, the infrastructure in a town must be in good condition, and the town must be able to offer adequate public services. Without economic growth and development, the town cannot collect the resources to improve these vital elements." • Page 22 / Illinois Municipal Review / May 1992 |
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