Naperville views financial future

Naperville has not yet chosen a way to fill the last $700,000 of its budget gap for the next fiscal year, but councilmen met Tuesday to discuss five-year financial projections and budget woes the city may face in the future.

In the worst case scenario, Naperville’s budget deficit could hit $13.7 million in 2013 and could grow to

$26.4 million by 2016, according to projections made by Finance Director Karen DeAngelis.

That scenario assumes the costs of pensions, debt service and employee health care will continue to increase; inflation will absorb any uptick in revenue; and grant opportunities may not be available, DeAngelis said.

“As you see the gap growing in future years, it’s the absence of knowing about any of these one-time sources that may become available,” she said.

Councilman Dick Furstenau called out another assumption in the budget projections that gives yearly 2 percent raises to all city employees at a cost that reaches $5.1 million by 2016.

“The number should be zero and everyone should participate in that,” he said.

Councilman James Boyajian said the city’s projections may be too pessimistic in assuming top revenue sources will not begin to bring in more money.

“This absolutely is a conservative view,” City Manager Doug Krieger said.

DeAngelis said her projections do include slight growth in equalized assessed values of city properties in 2015 and 2016, as a few new properties may be built.

“The city has not yet hit full build-out,” she said. “We do have some growth left.”

The city also has some budget fixes in mind — both for the next fiscal year and following years — including possibly releasing $3 million from its vehicle replacement reserve fund, DeAngelis said. The release of funds, she said, would only help during one fiscal year and would not decrease the expected deficit in subsequent years.

All the talk about future budget gaps “tells me what we need to do presently,” Furstenau said. “We need to make sure we’re working to drive our costs down as much as we can.”

Councilmen will continue to address the 2012 budget deficit of $700,000 at a March 7 workshop.

“The future is uncertain,” DeAngelis said. “We will solve it as we get there.”