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2017 Budget: It's an election year, let's kick the can down the road. 'Just this year.'

We were happy to see that the Naperville City Council reversed course on the previously proposed increase in property taxes which we wrote about, instead voting to decrease next year’s levy by approximately $120,000 (all levies including Special Service Areas) from the levy this year. Good news. They must have really taken a cold hard look at expenses in that $441 million budget ($122 million in the General Fund) and reduced the increase in expenses, right? Just to be clear, not cut expenses, but reduce the proposed $34 million increase. You know, to get to that structurally balanced budget, one of the City’s financial principles?


Well, no. Unfortunately it wasn’t done by addressing expenses at all, other than “savings” of $130,000 in operating expenses and cancelling a $60,000 capital project. It was done by deferring some capital expenditures ($1.2 million) from 2017 into 2018, shifting previously allocated revenues from the capital budget to the operating budget ($1 million), reducing library reserves ($500k) and utilizing a one-time source of revenue ($770k) from the sale of property. Other than the allocation of the revenue from capital to operating, all are one-time items.


Rachel Mayer, Finance Director:








In addition, they shifted $980,000 of excess Food and Beverage Tax revenue (formerly called SECA funds) previously allocated to reducing the outstanding pension liability to the 2017 budget for pensions. The unfunded pension liability is the single biggest financial issue facing the City today, and they’re shifting funds from addressing it in order to avoid a tax increase in an election year.


Councilman Hinterlong addressed the shift of the $980,000 from reducing the unfunded pension liability to funding part of the required 2017 budget contribution:





He also had more to say on the topic:





He’s right. We’re glad to see someone up there willing to say it.


Worth mentioning is that total expenses are approved to increase from an estimated $406.9 million in 2016 to a budgeted $441.5 million in 2017, an increase of $34.6 million, or 8.5%. What it would have taken to avoid the games would not have been cutting costs, but less of an increase in spending, to a mere $30 million, or an increase of 7.4%. This Council doesn't work that way though. The departments come in and explain why they need the increases, and they generally get them. Very few hard questions asked, and seemingly never the idea of holding the increases to something close to the rate of inflation, let alone constant or, god forbid, an actual decrease. Councilman Hinterlong mentioned spending discipline. It's good to see one person up there at least broach the topic.


So Council eliminates the proposed property tax increase by moving revenues around, using one-time revenue sources, deferring capital expenses, and changing the previous commitment to partially reducing the outstanding pension liability. Why address issues when you can kick the can down the road until after the next election, right?


Care to guess how the four Council members up for reelection in April feel about this budget?


Well Councilman Coyne understood Councilman Hinterlong’s concern.





He understood it, but he’s not willing to do anything to address it. Not this year. It’s ok just this one time.


Councilman Krummen?






He doesn’t like it either, but will go along with it for this year only. (Classic responses there by Finance Director Mayer and City Manager Krieger).


Councilman Gallaher?





"We may be straying from one of our principles", but he'll support it for just this year.

How about Councilwoman Brodhead?





Well, she'll "be happy to support" it.


So there you have it. While we are glad to see the retreat from the property tax increase previously proposed, we’re disappointed that the approved budget did nothing to address the structural budget issues facing the City. This is the budget which we previously noted moved expenses from operating to capital, in effect using a portion of the recently passed Home Rule Sales Tax for operating expenses instead of debt reduction. This is a budget which used a one-time revenue item, and moved capital expenditures from 2017 to 2018 by saying in essence ‘it happens all the time.’ This is the budget which made the pension liability issue worse by shifting $980,000 from paying down some of the liability to being part of the current year budget. (The unfunded pension liability which increased from $116 million at December 31, 2014 to $157 million at December 31, 2015, an increase of over $41 million. That’s right, an increase in the unfunded pension liability of $41 million, and they're shifting funds away from that for 'just this year'. Source: City of Naperville CAFR, 8 months ended December 31, 2015). While increasing expenses over $34 million, or 8.5%.


All four of the incumbents (Coyne, Gallaher, Krummen, Brodhead) running for re-election voted in favor of this budget. Rather than even looking to reduce the increase in (not cut) costs in a budget going from about $407 million in 2016 to over $441 million in 2017, they voted to kick the can down the road until after the election.


With stewardship like that, have they earned the right to be there after the election?




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