Naperville budget officials offer another bright financial forecast

Naperville's financial outlook continues to look strong, according to city budget officials.

Because of the uncertainty hanging over the first two years of the COVID-19 pandemic, officials have relied on conservative forecasts. Now Budget Manager Ray Munch says the city's economy has enjoyed a robust recovery.

"Revenues continue to indicate strength in the local economy," Munch said. "Improving economic conditions statewide are resulting in higher income tax estimates for 2022. And while inflation and supply-chain issues are presenting some challenges, strong revenues are currently offsetting those risks."

The March budget update Munch presented to the city council focused on trends being seen locally and at the state and national levels.

He noted state and home-rule sales tax revenue for the first two months of 2022, representing October and November sales, far exceeded expectations. State sales tax receipts were 8.2% higher than projected at $7.4 million, while home-rule sales tax revenue was 10.5% higher.

Munch said December sales tax revenue, which will be accounted for in next month's numbers, is expected to see an even bigger boost based on national indications of a 14.1% rise in holiday spending in 2021 compared to 2020.

"Strong revenue continues to be the result of good consumer spending, but also the higher costs of goods," Munch said.

As strong as Naperville's finances seem right now, Munch did offer caution for the future due to inflation and continuing supply chain issues. He even said motor fuel tax revenue, which is 10% lower compared to the end of 2019, will continue to wane as driving habits change and drivers shift to electric vehicles.

"We expect rising costs in goods, services and labor to all have an impact on the budget in the coming years," Munch said. "While that raises some concerns, relatively strong revenue performance continues to mitigate some of the risks associated with rising costs."