CITY COUNCIL AGENDA ITEM
ACTION REQUESTED:
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Conduct the public hearing for the 2024 Annual Budget (Item 1 of 2)
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DEPARTMENT: Finance Department
SUBMITTED BY: Rachel Mayer, Finance Director
BOARD/COMMISSION REVIEW:
The Financial Advisory Board reviewed the proposed 2024 Annual Budget at its October 30, 2023 meeting.
BACKGROUND:
The annual budget is the City’s financial and operational plan that serves as a guide for the upcoming year and sets the stage for future investments in programs and services. The budget development process brings together input from elected officials, department directors, staff, and the public to shape the City’s goals and objectives for the coming year and beyond.
The City is required to adopt an annual budget before the start of the fiscal year to which the budget applies. The City has adopted the Illinois Municipal Code, 65 ILCS 5/8-2-9.1 through 9.10 (State Budget Law) and incorporated this code into Chapter 9 of Title 1 of the Naperville Municipal Code, which provides the overarching requirements for the City’s budget process.
Accordingly, a tentative annual budget for 2024 was published for review by the City Council and the public on October 13, 2023. Per state statute, a public hearing on the tentative 2024 Annual Budget will be held at the November 21, 2023, City Council meeting prior to adoption of the budget ordinance. Once the hearing concludes, the budget may be revised and passed without further public inspection, notice, or hearing.
DISCUSSION:
Budget Process & Initial Recommendation
Development of the Annual Operating Budget and Capital Improvement Program (CIP) is a critical task 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. While formal budget preparation begins in August, regular discussions with the City Council throughout the year guide the budget development process from a policy and priorities perspective.
Each City department developed its operating budget and CIP recommendations based on historical needs, emerging priorities, and closing service gaps identified in key operational areas. Those recommendations went through two rounds of review, first with the Finance Department and then the City Manager’s Office. These assessments reviewed operational changes, discussed objectives, and analyzed recommendations. All changes made during the review processes were integrated into the tentative budget. In consultation with the Finance Department, the City Manager makes the tentative budget recommendation to the City Council.
The tentative 2024 budget was recommended at $618.65 million, an overall increase of 2.4% from the amended 2023 budget of $604.14 million. That recommendation was supported by $598.20 million in estimated revenues, an increase of 2.0% from 2023, and leveraged existing revenue streams and fiscal policies. Notably, no new taxes or fees were recommended to support the budget.
Increased capital and service level investments were the primary drivers of changes in the 2024 budget. The initial 2024 CIP totaled $150.44 million, representing an increase of 7.2% over 2023 and accounting for 25% of the total 2024 budget.
The proposed budget was evaluated by the Council through a series of three workshops that took place on August 29, September 26, and October 24. This year, the process began with two foundational workshops evaluating information about the Capital Improvement Program and service delivery and resources. During these two workshops, staff presented highlights of the recommended budget, including proposed enhancements to existing service levels and major capital projects. Following these presentations, staff provided an overview of the tentative 2024 budget at the third workshop and summarized how the proposed budget achieves service level and capital investment goals while maintaining a strong financial position.
Final Budget Recommendation
Staff revised the final budget recommendation based on the direction provided by the City Council at the third budget workshop. Those revisions resulted in a decrease of $4.9 million from the tentative budget proposed in October. The 2024 budget is now recommended at $613.74 million. This new total is a 1.6% increase from the amended 2023 budget of $604.14 million. The final recommendation continues to leverage existing revenue streams and fiscal policies, and no new taxes or fees are recommended to support the budget. The revisions are summarized below.
Electric Utility - Capital Project Reduction
Staff revised the Electric Utility budget upon learning that $4.62 million in anticipated federal grant funding was not awarded. Subsequently, both the project expenses and the anticipated grant revenues were removed from the budget. Staff will continue to evaluate funding for this work in future budget cycles. The work can be delayed with no adverse effect on service to customers.
Naper Settlement - Operating Expense Reductions
Per City Council direction, staff reduced Naper Settlement’s budget by $92,000 related to dollars requested for research & development of new cultural events and associated initiatives. Staff also removed $200,000 associated with personnel costs for a grant specialist and preservation specialist. Staff reduced the amount of the Naper Settlement property tax levy in line with these budget reductions.
|
Budget Modification |
Fund Impact |
Account Type |
Increase / (Decrease) |
|
Remove Storm Hardening & System Resiliency CIP (EU087) |
Electric Utility |
Expense |
($2,745,000) |
|
Remove Distribution Automation CIP (EU088) |
Electric Utility |
Expense |
($1,872,000) |
|
Reduced Federal Grant Revenue |
Electric Utility |
Revenue |
($4,617,000) |
|
Reduce Other Professional Services |
Naper Settlement |
Expense |
($92,000) |
|
Remove Grant Specialist |
Naper Settlement |
Expense |
($100,000) |
|
Remove Preservation Specialist |
Naper Settlement |
Expense |
($100,000) |
|
Reduce Property Tax Levy |
Naper Settlement |
Revenue |
($292,000) |
With service delivery at the core of each City department’s daily efforts, those services are reflected in the final budget recommendation, which staff believes lays out the resources necessary to accomplish the City’s goals and maintain the high-quality service levels Naperville residents and the business community have come to expect.
Following the adoption of the budget, the City Council will be asked to approve property tax levies that support the 2024 budget at its December 5, 2023 meeting.
FISCAL IMPACT:
Staff recommends City Council adopt the 2024 Annual Budget totaling $613,742,548.