Our new interim Finance Director, John Jacobs, found a $1,223,358 mistake in the 2024 and 2025 Village budget presentations and in the resulting 2024 and 2025 Village tax levy.
It is important to note that a) there is no indication of fraud or missing funds and b) the mistake in the budget presentation was not the fault or responsibility of any current Village employee.
When the 2024 budget was prepared (in the fall of 2023) an additional $539,416 of revenue was incorrectly included as a transfer from our TID districts to pay debt service. However, our TID districts pay their own part of the debt and thus this $539,416 entry was added to the overall budget twice.
When the 2025 budget was prepared (in the fall of 2024), the mistake was repeated, but in the amount of $683,942.
As a result, the Village did not levy enough property tax to cover the Village’s non-TID debt service leading to a cash fund shortage. Fortunately, in 2024, there were sufficient reserve funds in the Village’s debt service fund to pay the Village’s debt. However, this drew down the debt service fund reserves to about $40,000 after making the 2024 debt payments, so paying the debt from debt service reserve funds will not be an option in 2025.
John presented several options for paying the debt in 2025, none of which are very attractive, in his presentation to the Village’s Administrative Policy Committee (APC) on April 09, 2025. It should be noted that John prepared these options under time constraints and will be updating the options based on subsequent discussions with our financial consultants. John only joined the Village a few months ago (January 2025) and has done an amazing job working towards getting our finances straightened out.
If there is a silver lining to this mess, it is that the benefit of the mistake went to the Village taxpayers in the form of lower property taxes. In essence our tax rate was too low for the amount of budgeted expenditures in the 2024 and 2025 budgets or our budgeted expenditures were too high for the tax rate (or some combination).
The previous Village Board plans to discuss this issue at their last meeting on Monday April 14th. Once the new Board takes office on Tuesday April 15th, I plan to call a special Village Board meeting for April 17th so that the new Village Board has a chance to discuss the problem and potential options before John meets with our auditors the following week. (The meetings with the auditors are the normal annual audit meetings and were not scheduled as a result of John’s discovery of the mistakes.)
The new Village Board and Village staff will be working diligently to find a solution to this problem which causes the least pain to the Village residents both in terms of potential increased property taxes and in potential impacts on Village services.
I will take the time to discuss this issue with any Kronenwetter resident that has questions, suggestions, or just wants to vent. My Village email and phone number should be available on the Village website in the very near future. I expect that there may be a few, so please be patient with me if it takes a bit of time to get back to you.
This post is the opinion of David Baker.
REFERENCE:
Packet for April 9th, 2025 Village of Kronenwetter APC Meeting