Should Naperville cut services or raise taxes?

 
 
Updated 7/28/2015 7:08 PM

Naperville City Council members might have to raise taxes or fees to bring in needed revenue, but first they want to make sure expenses are as low as possible.

Council members asked for alternatives to a new 1 percent home-rule sales tax and a $10.35 monthly increase in garbage and recycling fees -- the two measures employees are proposing to fill what's projected as a budget gap between $5 million and $7 million.

 

A new financial strategy -- which could bring new taxes and higher fees -- is needed as the city no longer has excess reserves. The city is required by policy to have $92.5 million in reserves, but with $74.2 million in the bank, it's falling $18.3 million short.

When reserves were plenty, the city used them to fill budget holes like the gap expected next year. But officials said that won't work anymore.

Mayor Steve Chirico said it's unlikely the city can cut its way completely out of the hole, especially given cuts since 2008 that have removed the equivalent of 95 full-time positions and decreased brush pickup, streetlight maintenance and building inspection services.

"But if we find a few million, it might be a different conversation," Chirico said.

Maybe, with a gap more like $2 million, adding a sales tax or increasing garbage fees could be avoided, he said.

City Manager Doug Krieger said his department heads are prepared to brainstorm cuts and list potential properties to sell for a one-time budget boost. But he said those measures alone won't be enough.

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"At a minimum, it'll bring up some great discussion and great thoughts and some new ideas," Krieger said. "I believe the impact of those service-level cuts would be of a magnitude that people wouldn't find acceptable, but there probably is some savings out there."

City staff members will present their potential budget cuts along with lists of assets to sell and the number of positions that have remained unfilled the past five years during a special council meeting at 7 p.m. Tuesday, Aug. 11, in the municipal center at 400 S. Eagle St.

Council members also asked the staff to consider increasing the tax on real estate transfers and raising the hotel tax rate, especially as an Embassy Suites opened this month and a Hotel Indigo is under construction downtown.

Some expressed hesitance to rely too heavily on sales tax, which already is Naperville's largest revenue source at $33.8 million of the $113 million in general fund revenue it has budgeted this year.

                                                                                                                                                                                                                       
 

"I just want to make sure we're nimble enough that we don't have to take extreme measures and cut," council member Kevin Gallaher said. "We've been through some things before and we weathered them well because we weren't overly reliant on sales taxes."

The city's sales tax revenue comes from charging a 7.25 percent total rate -- roughly 3 percentage points below the increased rate recently approved for Chicago and Cook County suburbs.

"We are still lower than all surrounding communities by far," council member Becky Anderson said. "It is something to consider."

Before department heads report proposed cuts, Chirico said, it's "premature" to have a true stance on whether the city should create its first home-rule sales tax or add another $10.35 to the current $2 monthly garbage and recycling fee. Whether those measures or others are chosen to fill the budget hole, Chirico said the upside is there are solutions.

"The good news," he said, "is we do have options."

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