Rockford banked millions in surplus cash. Here’s how it might spend the unexpected revenue

By Kevin Haas
Rock River Current
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ROCKFORD — The city is preparing a plan to spend nearly $32 million from its rainy day fund after better-than-expected tax revenue flowed into its coffers over the last year.

The fund, which is where the city saves tax revenue for emergency needs, was bolstered by economic recovery that surpassed the city’s expectations when it set its budget more than a year ago, according to Carrie Hagerty, Rockford’s finance director. The revenue was largely generated from income taxes and taxes on corporate profits. The city had budgeted that revenue conservatively, Hagerty said, expecting that economic recovery after the pandemic would continue to be slow.

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The city also spent less than it budgeted because, like many employers, it struggled to fill open jobs quickly.

We first told you about the budget surplus in July. This week the city laid out six recommendations for spending the money. Aldermen got their first look at City Hall’s recommendations on Monday and are now weighing their options.

The possible spending includes water main and street improvements along Auburn Street, a new fire station, money for repairs to existing homes, improvements to Davis Park, communications equipment for firefighters and money to settle legal claims.

The city’s policy requires it to keep 20% of its annual operating budget in its emergency fund. That would equate to about $36.8 million. However, the fund now has more than $77.2 million, meaning it’s holding nearly $40.4 million more than its policy requires.

“We don’t believe it’s a best practice not to deploy those dollars to the benefit of the community,” said Todd Cagnoni, the city administrator. “We’ll continue to work with our council and talk about how they want to prioritize these recommendations.”

Hagerty is recommending that some of the surplus funds be set aside above the city’s 20% policy to prepare for future budget constraints, namely the growing cost of pensions.

Here’s a quick look at the six recommendations:

$13.4M | Infrastructure for Auburn Street and neighborhoods

The funding would pay for the reconstruction of Auburn Street from the Veterans Memorial Circle roundabout to Springfield Avenue.

The city said half of the cost would be for water main replacement that water utilities would reimburse at $1 million per year for six years. That $6 million would then be programmed for arterial streets and neighborhoods.

The Auburn Street project would be bid in 2024 with construction starting in 2025.

“It’s important that citizens know and residents know that this isn’t just about funding Auburn and not opening up dollars to other areas,” Alderman Bill Rose said during Monday’s City Council meeting. “It frees up capital dollars for our (Capital Improvement Plan) to address many other projects that are on the list.”

$10M | New fire station at Magna site

The city may build a new fire station at the vacant lot on East State Street that once was home to Magna grocery store next to Don Carter Lanes.

The new station would replace Station 10, 3407 Rural St., which the city says has a significant backlog of repairs and sits in a residential area that slows response times.

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The vacant lot also needs improvements for controlling flooding of Keith Creek, which is channelized under the parking lot.

“We know there’s already some failure taking place. That’s why if you go out there you’ll see portions of it are barricaded off,” Cagnoni said. “We need to fix that. We can’t leave it in that condition.”

The city would also use federal American Rescue Plan funds and tax-increment finance district funds for other improvements to the site outside of the fire station.

$1M | Homeowner rehab program

The city previously spent $250,000 to run a critical home repair program in partnership with Rockford Area Habitat for Humanity. Rockford Housing Development Corp. added another $250,000 for that program.

However, the city said demand for repairs to homes and neighborhoods far exceeded what that program could tackle.

The city has recently been awarded a $1.4 million state grant to invest in home repairs for households that earn up to 150% of the average median income. It will use that grant in conjunction with $1 million in surplus funds and $1 million in federal Community Development Block Grants for a total repair program budget of $3.4 million.

$2M | legal claims

The city has $7 million in pending legal claims it must pay out. It is self-insured for the first $750,000 of each claim, but it has pending claims that predate its commercial insurance, Hagerty told the council on Monday.

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The city needs to take on debt to settle significant claims if doesn’t have cash on hand to make those payments.

$3M | Davis Park improvements

The city plans to overhaul Davis Park, a city-owned riverfront park in downtown.

New floating boat docks were installed at the park this summer, which was the first step to a multimillion plan to generate more activity at the park. Future improvements include an urban beach, splash pads, a playground, a multiuse trail, a skate park, an open-canopy stage and a pedestrian plaza with space for food trucks.

The city’s funds would be used in conjunction with a multitude of state grants. Hagerty also said Monday that the city has had preliminary conversations with state Sen. Steve Stadelman about an additional $1.5 million in state funding that would help pay for the renovations.

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$2.5M | Fire department communications system

The city said components of the Rockford Fire Department’s communications system are more than 30 years old and have diminished parts availability and prolonged repair times.

It also said the department experiences interruptions to the system that increase the risk to firefighters.

The city previously committed $480,000 in federal coronavirus stimulus funds to radio transmitter replacement. That money, combined with this surplus funding, would pay for the replacement of VHF digital radio systems and 140 portable radios.

This article is by Kevin Haas. Email him at khaas@rockrivercurrent.com or follow him on X at @KevinMHaas or Instagram @thekevinhaas and Threads @thekevinhaas