No sales tax increase in Naperville, but property tax hike looms
Naperville's sales will remain at 0.5 percent for another two years, but that decision could affect city spending and increase property taxes.
The city council voted 5-4 not to increase the tax to 1 percent as suggested by city staff members, despite a $5 million gap between revenue and expenditures forecast for next year by City Manager Doug Krieger.
Many called the vote an issue of timing.
The state needs to be notified by Oct. 1 of any changes to the home-rule sales tax in order for the rate to go into effect Jan. 1.
But Naperville is in the early stages of its budget process for 2018, with the first workshop before the council set for Oct. 30. That means city staff and council members haven't fully scrutinized spending to find savings, Krieger said.
Speakers from the Naperville Area Chamber of Commerce, plus a business owner and a resident who opposed a tax increase, said the city needs to consider trimming spending before raising taxes.
"You have to do the tough thing, and that's to look at your expenses," said Nicki Anderson, the chamber's president and CEO.
But Mayor Steve Chirico said it's not practical to take out millions from a budget that provides appropriate levels of service. He and council members Becky Anderson, Judith Brodhead and Rebecca Boyd-Obarski voted against keeping the tax flat until the end of 2019.
"It's not realistic to think we'll make those type of cuts in our budget," Chirico said.
Brodhead said the tax should be raised to 0.75 percent, a move that would have brought the total rate in Naperville to 7.75 percent from 7.5. If imposed for all of 2018, a 0.75 percent tax could bring in an additional $3 million, Krieger said.
The "$5 million mismatch" between projected spending and income comes because of three factors, Krieger said.
• The city is facing a $2 million increase in public safety pension costs.
• It needs to put $2 million more a year into maintaining its roads.
• State legislators decreased the amount of income taxes distributed to municipalities and imposed an administrative fee on the collection of home-rule sales tax. Those changes are projected to cost Naperville nearly $1 million next year.
"I think this will have to be addressed from a number of angles," Brodhead said about the budget gap.
Chirico said property taxes now are "the only relief valve."
"I don't think that's the best place to get additional revenues," he said. "Because that falls directly on all of our residents instead of our guests."
Krieger said he plans to ask department heads to make cuts "across the board," including at the Naperville Public Library and Naper Settlement, as employees prepare for the Oct. 30 budget workshop. He also said the city will consider raising property taxes to meet a financial principle that requires a balanced budget to be approved each December.