Naperville cutting capital spending by $2.7 million
Naperville's budget crunch will adversely affect planned spending on some capital improvements as the city aims to rebuild reserves and reduce debt.
Staff members are identifying $2.7 million in cuts from a $64.6 million capital spending plan on upgrades to infrastructure in advance of a vote on the 2016 budget scheduled for Dec. 1.
The cuts come as the city council looks to reduce its borrowing next year as part of a goal to increase reserves to 25 percent of annual operating expenses by 2023 and slice 25 percent off its $120 million of debt.
One major project that got lopped right away is $4.3 million for land acquisition toward future expansion of the central parking facility on Chicago Avenue. Other cuts will be proposed before the council is set to vote on the $436.3 million 2016 budget at 7 p.m. Tuesday, Dec. 1, in the municipal center at 400 S. Eagle St.
Cuts will be made from projects classified as "unfunded," meaning there isn't a tax, fee or identified revenue source to cover their cost.
After removing funding for the parking facility, the capital improvements plan included about $10.7 million in "unfunded" projects that would be paid for by taking on a new loan. Among them are:
• $2.2 million of public works projects including $991,000 for stormwater improvements.
• $550,000 of police projects including $80,000 toward a defensive tactics and fitness facility with space for ammunition storage.
• $200,000 for replacement of the Millennium Carillon elevator in Moser Tower.
Some city council members said borrowing to cover the entire $10.7 million seemed too rich after decisions this year to create a new home-rule sales tax and raise garbage fees and electric rates.
Council member Kevin Gallaher said he expected there would be some "belt-tightening on the city's side." Council member Patty Gustin suggested staff members come back with recommendations for $8 million of improvements that should be pursued - representing a cut of $2.7 million.
"I don't want to fully fund everything," council member Kevin Coyne said. "$8 million is reasonable."
Council members decided revenue from a new home-rule sales tax of 0.5 percent approved in September will help pay for some of the $8 million unfunded total.
The tax, which will be collected beginning Jan. 1, is expected to generate $6.4 million for Naperville next year. That's lower than the $8.5 million a year projection because it will take the state three months to begin forwarding the extra tax payments back to the city, Finance Director Rachel Mayer said.
Pending final budget approval, revenue from the new sales tax will be used in two ways:
• $2 million will pay down debt through a property tax abatement.
• $4.4 million will pay for some of the $8 million in "unfunded" projects in the capital improvement plan for 2016.
Mayer said this strategy helps gradually reduce debt because instead of borrowing the $4.4 million, the sales tax will provide the money to pay for it up front. If some of the sales tax can offset borrowing each year, that will help the city reduce its debt to about $80 million by 2023.
"I think that we're on the right track here as long as we stick with a strategy that meets those goals," Mayor Steve Chirico said.
With $4.4 million of the "unfunded" projects now paid for, that left $3.6 million that would require a loan.
That total contributes to $15.8 in debt the city needs to add next year, Mayer said. The remaining $12.2 million is needed to fund $7.3 million in public improvements for the new downtown hotel, restaurant and shopping district at Water Street and $4.9 million on projects started this year for which the city has not yet borrowed.