CITY COUNCIL AGENDA ITEM
ACTION REQUESTED:
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Annual Budget Workshop #3: 2027 Annual Operating Budget and Capital Program Overview
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DEPARTMENT: Finance Department
SUBMITTED BY: Traci Marrocco, Interim Finance Director
BOARD/COMMISSION REVIEW:
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BACKGROUND:
Development of the Annual Operating Budget and Capital Improvement Program (CIP) is critical in establishing the annual financial framework that supports the City’s mission to provide services that ensure a high quality of life and maintain a dynamic business environment while creating an inclusive community that values diversity. The budget development process begins in June and is guided by the policies and priorities established by the City Council. Click here to enter text.
Each City department develops its operating budget and CIP recommendations based on historical needs and emerging priorities. Those recommendations undergo two rounds of review: the first with the Finance Department and the second with the City Manager’s Office. These assessments review operational changes, discuss objectives, and analyze recommendations. In consultation with the Finance Department, the City Manager makes the final recommendation to the City Council through the proposed budget published in mid-October.
The 2027 proposed budget is being presented to the City Council and the community through a series of three workshops. The first and second took place on Sept. 21 and Oct. 27, respectively, with the final workshop being held on Nov. 10. Budget workshops establish the groundwork for the formal budget adoption process.
Following the workshops, the City Council will hold a public hearing and be asked to approve the annual budget on Dec. 1. Adoption of the annual budget is followed by a public hearing and the adoption of the annual property tax levy on Dec. 15. To comply with state statutes, the budget and tax levy must be adopted before January 1, 2027.
DISCUSSION:
The third budget workshop will provide a fund-by-fund overview of the entire budget as well as the opportunity for Council to provide further direction to staff on various issues that have been brought up throughout the budget development process. The 2027 City of Naperville budget is recommended at $723.83 million, an overall increase of 5.6% from the 2026 budget of $685.34 million.
The total budget comprises $703.56 million in expenditures, an overall increase of 6.0%, and an additional $20.27 million in transfers between budget funds. Factors driving the 5.6% increase include significant investment in personnel, service delivery, and infrastructure improvements.
The 2027 budget is supported by $677.04 million in revenues, a 3.1% increase from the 2026 budget. The increase in revenues is primarily driven by recommended rate increases for Water and Electric, along with projected growth in the City’s three largest non-utility revenue sources: sales tax, state-shared income tax, and property taxes. The budget reflects an average 5.0% electric rate increase across rate classes, along with 12% and 10% increases in water and wastewater rates, respectively, based on consultant-led rate studies.
The 2027 budget continues the City’s focus on “Money on a Mission,” ensuring that every dollar has a purpose, while also addressing service gaps identified in key operational departments. The proposed 2027 budget reflects 9.375 new FTE requests based on demonstrated need and the objective of improving current service levels. At the same time, departments were asked to review their budgets closely and align funding with actual spending patterns, trimming amounts where historical expenditures did not support the existing budget. This approach allows the City to address priority
service needs while maintaining discipline over ongoing expenditures and ensuring resources are directed where they provide the greatest value.
Ultimately, this philosophy allows the City to focus on projects that align with our mission and priorities, many of which take several years to complete. It also helps the City prioritize the long-term financial needs of existing services to maintain service delivery stability and ensure that new services or programs have a long-term funding source in place before implementation.
In addition to an expansive capital improvement program, the budget supports several key measures that address emerging trends that either are currently or may lead to service gaps. With people being the primary resource in any service-based organization, this is a two-pronged approach: retaining existing staff in a challenging workforce environment and adding staff to ensure effective service delivery.
The presentation slides, along with the 2027 budget message and proposed revenue and expenses summary, are attached to the agenda for review before the workshop.
The proposed 2027 Annual Operating Budget and Capital Improvement Program, which includes the full budget and summaries, can be found on the City’s Annual Budget and Audit Report webpage and through the following link:
https://www.naperville.il.us/289/Budget-Financial-Reports#docaccess-1aa9f07197b98012ec4fd019cabde88d <https://www.naperville.il.us/289/Budget-Financial-Reports>
FISCAL IMPACT:
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