FINANCIAL ADVISORY BOARD AGENDA ITEM
ACTION REQUESTED:
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Review the proposed 2026 Annual Budget and Capital Improvement Program
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DEPARTMENT: Finance Department
SUBMITTED BY: Raymond Munch, Director of Finance
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 July 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 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 2026 proposed budget is being presented to the City Council and the community through a series of workshops on September 29, October 28, and November 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 December 2. Adoption of the annual budget is followed by a public hearing and the adoption of the annual property tax levy on December 16. To comply with state statutes, the budget and tax levy must be adopted before January 1, 2026.
DISCUSSION:
The 2026 City of Naperville budget is recommended at $685.13 million, an overall increase of 6.8% from the amended 2025 budget of $641.65 million. Investments in our utility infrastructure and transportation improvements mainly drive this growth, alongside rising health insurance costs that have impacted personnel expenses across most funds. The 2026 budget is supported by $656.07 million in revenues and other financing sources. While the General Fund leverages existing revenue streams and tax rates, a one-time increase of $1.8 million has been included here due to an Electric Use Tax rate correction. Additionally, $6.5 million in grocery tax revenue will continue to be collected on a municipal level. The Electric and Water Utilities recommend rate increases to match charges with service costs and support the expansion of capital investment, as defined by the 2024 rate studies. The budget also includes $58 million in new utility debt to be issued for capital improvements. The proposed property tax levy is expected to result in a lower property tax rate.
The proposed 2026 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/globalassets/media/finance-documents/budget-audit-reports/2026-proposed-budget.pdf>
The Budget Message and Highlights and Revenue and Expenditure Summary are attached to this agenda item as summaries of the 2026 budget.