Finance Director Haggerty presented an overview of Rockford’s accounting structure to the City Council on Sept. 29, explaining the constraints that govern how different revenue sources may be used and answering questions about casino and cannabis receipts, pension funding and the city’s capital‑sales‑tax commitments.

Haggerty said the city tracks three broad types of funds: governmental funds (general fund, special revenue, capital projects and debt service), proprietary funds (enterprise and internal service funds) and fiduciary funds (pension trust funds).

Why it matters: Council members will use the fund rules and revenue constraints as the 2026 budget process begins; some revenue sources are legally or policy‑restricted to particular uses and cannot be repurposed without council action or, in some cases, a public referendum.

Major points from the presentation

- General fund: core city services (police, fire, streets, permitting, economic development) are paid from the general fund. Haggerty said revenue sources include property, sales and income taxes, permits and fees.
- Special revenue rules: the director emphasized that certain taxes are legally restricted. The 5% portion of the hotel‑motel tax is set by state law for tourism promotion; Rockford uses that tax to fund Go Rockford operations and tourism promotion. A separate 1% hotel‑motel redevelopment tax and food‑and‑beverage/packaged‑liquor taxes support redevelopment and tourism programs.
- CAP (1% capital sales tax): staff noted the city has historically used the 1% CAP sales tax for public infrastructure and that a public referendum has reaffirmed that commitment; state law currently allows wider uses, but the city’s referendum language and council commitments limit CAP proceeds to infrastructure projects unless council seeks a new public vote.
- Cannabis revenue: Haggerty said the city currently records cannabis receipts in the general fund rather than a separate special‑revenue fund because Department of Revenue guidance restricts disclosure while the city has fewer than five licensed dispensaries; once five or more dispensaries operate, the city could separate cannabis revenue into its own fund.
- Casino revenue and guarantee: Hard Rock’s permanent casino includes an annual $7,000,000 revenue guarantee for the host community. Council approved targeted allocations of part of that revenue, including $1,000,000 annually dedicated to police pension and $1,000,000 annually dedicated to fire pension (allocations tied to council policy and the negotiation terms). Staff said any casino revenue above guarantee would remain in the casino fund for council direction after annual reconciliation.

Pensions, risk and reserves

Haggerty reviewed the city’s practice of making the minimum state‑required pension contribution and noted that actuarial assumptions have been made more conservative in recent years; the funded ratio has declined partly because of that actuarial change. Staff said actuarial valuations are performed annually and that pension funding is a recurring council and budget issue.

On reserves and downturn planning, Haggerty said the city maintains a general‑fund balance policy intended to cover short‑term revenue fluctuations and to allow time for council decisions; the policy target is approximately 20% of annual operating costs. For capital, CAP and MFT funds are programmed for specific infrastructure work; staff said a major downturn would prompt CAP staff to reprioritize projects and return proposals to council.

Enterprise and internal service highlights

- Parking fund: Haggerty said the parking fund does not fully cover operating costs and that redevelopment funds subsidize the difference; the current contract with the parking operator (ABM) operates as a cost‑plus fee and the city collects revenue then pays ABM’s costs plus management fee. Council members expressed concern about parking fines and monthly permit pricing for downtown residents.
- Water fund: capital improvements, including recent well projects and lead service‑line work, are financed with a mix of user fees, low‑interest state loans and bond proceeds.

Next steps and questions

Council members asked for and received commitments to: provide a breakdown of general fund spending by department, share TIF and CAP analyses already prepared for aldermen, and provide monthly casino‑revenue updates and an annual reconciliation. Finance staff said they would supply requested fine‑revenue details and earlier TIF materials to aldermen.

Ending

Haggerty told council that accounting rules, state statutes and prior referendum language limit how certain local taxes can be used and that staff will return with the detailed budget presentations and requested statistics as the 2026 budget process begins.