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Giving Residents a Voice


Tax sleight of hand

A home rule sales tax of 0.50% was instituted, with the specification that the proceeds be directed to reduce debt and increase the City’s cash reserves. The City estimated that the tax will generate $6.375 million in 2016, with $8.5 million annually thereafter. Of the $6.375 million estimated to be collected in 2016, the City recommended that $2 million be dedicated to reducing current debt. The remaining amount was dedicated as a funding source for unfunded capital projects totaling $20.1 million. So $4.375 million will reduce the amount of additional borrowing for capital projects in 2016, not reduce the amount of debt outstanding. In calendar year 2016, the City’s debt level will actually increase by $6.4 million.

Only a government is capable of making the following statement: “There are two methods to drive down debt. The first method is to pay off existing debt…The second method to drive down debt is to reduce future borrowing requirements through finding dedicated funding sources for the CIP (Capital Improvement Program)… The remaining unfunded projects, as approved by City Council, would require borrowing to complete”

(Source: CY 2016-2020 City of Naperville Budget, page 184)

So in this instance, debt reduction is not a decrease of debt, but a decrease of the additional borrowings which would have been required had the sales tax not been instituted.

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