Naperville has a budget deficit and too little in reserves: Now what?
Naperville is at a financial crossroads.
The city's previous plan of using its cash reserves to fill budget gaps without raising taxes or fees has run its course, officials say.
Naperville now has about $18 million less in reserves than it needs to meet required levels. And Finance Director Rachel Mayer says the city is projecting a budget deficit of between $5 million and $7 million for its next spending plan.
That's the scenario council members will face Tuesday when they convene for a special meeting at 7 p.m. in the municipal center at 400 S. Eagle St.
City Manager Doug Krieger said the council will be asked to give direction on three financial principles proposed to guide decision-making about how to fill the budget gap and how to approach finances in a broader sense.
No final decisions are expected Tuesday night, but the city could move toward adopting the following principles:
• The city will "live within its means," Krieger said, meaning the council will commit to passing a budget each year that is balanced without the use of reserves.
• Naperville will maintain a high level of city services and pass the costs on to the people or businesses receiving the services.
• The city will put in place a plan to reduce its debt, aiming to lower overall debt by 25 percent in four years.
Mayor Steve Chirico said forming consensus on these principles is key to addressing the city's need for money because it will guide how officials choose to make cuts and/or bring in more revenue.
Two main ideas to generate more money have been suggested so far: adding a home-rule sales tax of up to 1 percent, and increasing the monthly garbage and recycling collection fee from $2 to $12.35.
"Can we all agree that we need to have a structurally balanced budget? Let's agree that that's got to be done every year. That seems like a no-brainer to me, an easy decision to make, but the fact is, we haven't done it," Chirico said. "I hope that we can all come to an agreement that this is important. This needs to be done. We cannot continue going forward with an unbalanced budget."
Several council members said they're on board with the intent of the financial principles, which could help the city create a better budget situation moving forward.
"I'm all for the three principles," council member John Krummen said. "They're defined correctly."
Council member Becky Anderson said the city even should take the principles one step further and aim to build back a more comfortable level of reserves.
Council member Patty Gustin said she's learned it's time for a change in the way Naperville handles its money. The city has $164 million in debt and is aiming to maintain its AAA bond rating.
"We all know that things need to be a little different and modified because we can't stay the course that we've previously been on," Gustin said. "We need to look for different ways in which to adjust our spending, ways to identify where we can generate additional revenue."
Before discussing the revenue-generating proposals of a new sales tax and a garbage fee increase, the council also will review proposed spending cuts from department heads.
Council members say even after cuts totaling 95 full-time employees and decreases in brush pickup, street maintenance and building inspections since 2008, it's important to scrub the budget again, seeking ways to lower spending before raising costs to residents and visitors.
"I want to be convinced that we've reduced costs the best we can before we start looking at new revenue," council member Kevin Coyne said. "Illinois residents in general are taxed so much that increasing that (sales) tax is a last resort."
Council member Paul Hinterlong agreed.
"Before I raise any taxes or fees," Hinterlong said, "I want to make sure all of our departments are running efficiently."