Decatur is focused on the wrong recession
In the narrative to the City of Decatur, Illinois 2023 Recommended Budget, the document describes how predictions of a severe recession next year should guide revenue and expense decisions. Few would argue that a municipality should prepare for economic downturns. The more important question is at one point is a municipality prepared for an economic downtown such that additional net revenues can be returned to taxpayers, used to pay down debt, and/or invested in projects that tackle long-term challenges that a city faces. This is the decision that the city of Decatur faces as its cash reserves have increased from $16 million at the end of 2021 (a 60-day cash reserve is $13 million) to $22 million in projected reserves by the end of 2022.
DECATUR IS EXPERIENCING A SUBSTANTIAL POPULATION AND LABOR FORCE RECESSION
Decatur’s population has declined every year since at least 2010 and has shrunk from the 419th most populous city in 2010 to the 540th most populous city in 2021. The population of Decatur has fallen from 76,122 in 2010 to 69,646 in 2021, decreasing 9.3% in eleven years. The city’s labor force is decreasing at a faster rate. In September 2010, Decatur’s labor force was 36,587 compared to September 2022, when the labor force stood at 30,522, a decrease of 16.6%.
IS INCREASING CASH RESERVES THE BEST WAY TO REVERSE A POPULATION RECESSION?
In 2022, Moody’s provided an update to Decatur’s credit analysis. Among the city’s listed strengths were the city’s “stable operating performance and healthy reserves” (cash reserve was $17.5 million in March 2022) and “revenue raising flexibility” (i.e., the city can raise taxes). Challenges that were noted included “Elevated pension liabilities” and “Below-average wealth and income”. As it pertains to lower wealth, median household income is lower in Decatur ($45,404) compared to IL ($68,428) and the U.S. ($64,994). The 19.4% poverty rate in Decatur is greater than the national and state averages.
A BUDGET SHOULD BE REFLECTIVE OF THE CITY’S VALUES
If a municipal budget is reflective of its values, the city should focus on increasing the well-being and quality of life for its current residents and attracting new residents that can join our city’s workforce. These efforts are primarily the responsibility of the city’s Economic and Community Development (ECD) Department. However, the ECD Department’s proposed general fund spending in 2023 is $4.3 million of a projected $88.2 million in general fund making it the fourth largest department behind the police department ($32.1 million), fire department ($22.6 million), and public works ($10.6 million). Even when other proposed funds from community grants ($138,000), HOME programs ($1,436,000), Community Development Block Grants ($2,679,188), and community revitalization programs primarily funded by American Rescue Plan funds ($9,550,000 spent across multiple years), the total amount of money proposed to be spent on community and economic development is $18,090,718.