Naperville predicts revenue shortfall will worsen

Naperville will need to fill at least a million dollar hole in its budget this fiscal year despite having a built-in contingency.

That figure is expected to climb to more than $5 million next year and could eventually mean more layoffs.

The current shortfall is based on low first quarter revenues that are not expected to rebound significantly.

"It's same kind of dreadful three you looked at and were challenged with last year," Karen DeAngelis, director of finance, told the council Tuesday. "It's retail sales taxes, income taxes and real estate transfer stamps."

The city's real estate transfer stamps came in 30 percent below budget for the first quarter while income tax is 16 percent below budget and retail sales tax revenue is 8 percent below budget.

There is one upside - ambulance fees are above what they were projected, largely because of conservative budgeting.

When creating the current budget the city had been up against an $11 million shortfall it filled by cutting services, departmental spending and 43 jobs - 20 that had been filled and 23 that were already vacant.

The city gave itself a million dollar buffer at that time in case of further revenue declines. It plans to spend that money and still be another million short for the current fiscal year that ends April 30, 2010.

City Manager Doug Krieger has asked each department to aim for spending 99 percent of what it had budgeted for the next seven months.

Some councilmen said they should be spending even less in order to build the contingency back up to protect it against further declines.

"Shouldn't we be self building another contingency as we go along," Councilman James Boyajian asked. "Because 99 percent is driving 60 miles an hour right at the wall hoping your brakes hold."

The city will be aiming to find additional savings - as much as $1 million more - just to be safe.

The next fiscal year that starts in May 2010, will be even tougher. The city's early predictions put the revenue shortfall at $5 million. Councilmen again requested a $1 million contingency on top of that.

The projected shortfall assumes there won't be any salary increases for nonunion or non-negotiated contracts.

However, the city expects to spend $3 million more for pension and benefit payments next year. Councilmen expressed their displeasure Tuesday at having a defined benefit system in which they guarantee employees a set amount of retirement income. If the markets are down as they have been, the city has to contribute more to reach that promised amount. They plan to lobby Springfield to work on changing or at least improving that system.

In the meantime, the city is exploring a number of options to deal with the next year's shortfall including looking for organizational and departmental efficiencies.

"I feel the cuts made last year were for the most part transparent to the residents," Krieger said. "What that tells me is we can dig a little deeper. You dig until you get to a pain point and you strike a balance."

Krieger said he cannot promise there won't be more layoffs before the end of the current fiscal year.

"The organizational efficiency study, I think that will yield savings for both next year as well as this year," he said.