CITY COUNCIL AGENDA ITEM
ACTION REQUESTED:
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Annual Budget Workshop #3: 2025 Annual Operating Budget & Capital Improvement Program Overview
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DEPARTMENT: Finance Department
SUBMITTED BY: Raymond Munch, Finance Director
BOARD/COMMISSION REVIEW:
N/A
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 August and is guided by the policies and priorities established by the City Council.
Each City department develops its operating budget and CIP recommendations based on historical needs and emerging priorities. Those recommendations go through two rounds of review, the first with the Finance Department and the other 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 2025 proposed budget is being presented to the City Council and the community through a series of workshops on September 24, October 22, and November 12. 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 December 3. Adoption of the annual budget is followed by a public hearing and the adoption of the annual property tax levy on December 17. To comply with state statutes, the budget and tax levy must be adopted before January 1, 2025.
DISCUSSION:
The preliminary 2025 Annual Operating Budget and CIP document was published on the City’s website on Friday, Oct. 11. It is available to view here: 2025 Proposed Budget <https://www.naperville.il.us/globalassets/media/finance-documents/budget-audit-reports/2025-proposed-budget.pdf>.
The third budget workshop will provide a fund-by-fund overview of the entire budget. The 2025 City of Naperville budget is recommended at $641.88 million, an overall increase of 3.3% from the amended 2024 budget of $621.24 million.
The total budget is comprised of $622.91 million in expenditures, an overall increase of 7.2%, and an additional $18.97 million in transfers between budget funds. Increased investment in capital and service level improvements are the primary drivers behind the increase. Interfund transfers are significantly lower due to the Water Capital Fund and Water Utilities Fund consolidation in 2025.
The 2025 budget is supported by $619.48 million in revenues and other financing sources. While the General Fund leverages existing revenue streams and tax rates, the Electric and Water Utilities recommend rate increases to support expansion of capital investment. The proposed property tax levy is expected to result in a lower property tax rate.
The City of Naperville faces a series of well-defined and somewhat more ambiguous financial considerations with budgetary implications in 2025 and 2026. It is important to note that these considerations are manageable challenges; however, they require a more strategic and multi-year approach to budget development.
Considerations include post-pandemic revenue moderation, known significant asset maintenance and replacement needs, the State of Illinois’ grocery tax elimination effective in January 2026, an ongoing internal review of employee compensation and classification, and the overall global economic environment.
The result of these efforts is reflected in an operating budget that looks first to support ongoing services, positions the City to best address the above-mentioned financial considerations, and identifies fiscally responsible solutions to those areas where service enhancement or new positions (nine across four departments) are recommended.
The following are attached to this agenda item:
• 2025 budget message and budget highlights
• Revenue and expenditure summary
• Workshop #3 presentation slides
FISCAL IMPACT:
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