Naperville OKs using tax revenues to pay down pension obligations

Naperville city council members hope their citizens and visitors are as hungry and thirsty as ever now that a portion of the city’s food and beverage tax will be helping pay down the city’s public safety pension obligations.

Council members Tuesday formally approved a plan to allocate 25 percent of annual revenue generated by the city’s food and beverage tax to the pension funds, create a $2 million cap for the Special Events and Cultural Amenities (SECA) Fund, allocate $500,000 from the tax to the Social Services Grant (SSG) Program, and redirect any excess funds from the tax to pay down long-term obligations.

“The quarter percent off the top would be split between police and fire pensions. Any dollars after that would work out to be $2 million cap for SECA and a $500,000 cap for social services,” said City Manager Doug Krieger. “Any amounts before that, we want to allow the council some flexibility so council could determine whether those dollars went toward retirement of debt, make that available to public safety pensions or even to IMRF pensions.”

City officials said increasing the pension funding will shorten the amortization period to 2027 and will provide a cumulative

savings of $25 million to the city.

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.

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 Krieger said previously that the economy has improved to a point where that approximately $825,000 is no longer necessary to balance the budget.

Officials from the Naperville Area Chamber of Commerce, who initially asked to be involved in any discussions regarding the tax, said they met with city staff and ultimately agreed “it was a good plan.”

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