Naperville solves nice problem: too much tax money
Can a city tax really bring in too much revenue?
Naperville City Council members wrestled with that question Monday night as they attempted to fulfill three obligations with a tax originally established to fulfill one.
The city's 1 percent food and beverage tax brought in $3.3 million this fiscal year, exactly $2 million more than was projected when the tax was introduced in 2004. That led city officials to believe they can fund the Special Events and Cultural Amenities, or SECA, fund while also pumping up social services and cutting six years and $65 million from the city's unfunded public pension obligation.
Since 2004, Naperville offered the SECA money to assist eligible organizations pay for new and continued cultural experiences. The money has been used in a variety of ways, from assistance to the DuPage Children's Museum to funding for the Century Walk public art project to offering assistance for community festivals.
Since 2011, a quarter of the total 1 percent food and beverage tax has been diverted to the city's General Fund. But City Manager Doug Krieger said the economy has improved to a point where that approximately $825,000 is no longer necessary to balance the budget.
That money, he said, could instead now be used to cut six years and approximately $65 million from the city's approximately $97 million unfunded pension liabilities.
“I like the concept,” said Councilman Steve Chirico. “That's a big number.”
Councilman Grant Wehrli agreed.
“A quarter point to pay down the pension, .75 percent to SECA with a cap and any delta in between goes to social services,” Wehrli said. “I kinda like that plan.”
The council also agreed, in concept, to cap the annual SECA fund allocations at $2 million and double the amount kept in reserves to $400,000.
“I recommend we put a cap on SECA so we can stop what has happened where we have projects chasing the money,” Councilman Kenn Miller said. “If you do that I would also suggest putting an inflation increase of 3 to 5 percent so it continues to grow with inflation and the actual growth of the money.”
Several council members praised the plan that is expected to meet three needs without any new taxes being imposed.
“It's a tax that's already in place. It's purpose is being served even if we cap it,” said Councilman Bob Fieseler. “We're taking the excess and funding an obligation with the help of outsiders who are using the services that are being provided by the city.”
Wehrli, however, said he believes the city will have to continuously monitor the tax's revenues.
“This to me is a win-win-win across the board as long as we set it up correctly,” he said. ”This is something that I can see in 10 years that we have a $2 million cap, the tax is collecting $6 million and we simply have too much money coming in. If anything we may have to throttle this thing back again in the future.”
The council Monday also awarded $1.9 million to 79 different local organizations and scheduled a $600,000 payment toward retiring the Millennium Carillon debt.