CITY COUNCIL AGENDA ITEM
ACTION REQUESTED:
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Annual Budget Workshop #2: 2026 Annual Operating Budget
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DEPARTMENT: Finance Department
SUBMITTED BY: Raymond Munch, 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 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 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 2026 proposed budget is being presented to the City Council and the community through a series of three workshops. The first took place on Sept. 29; the remaining two will occur on Oct. 28 and 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 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:
Preparation of the 2026 budget included consideration of both short- and long-term financial trends to help guide departments in compiling their budgets. Short-term items, such as the pending sunset of the State of Illinois’ 1% grocery tax, were addressed in 2025; in this case, a replacement revenue source (1% local grocery tax) was identified that will replace the estimated revenue loss.
However, several longer-term trends required Finance staff to request that departments “hold the line” on budget submissions, as they could very well have continued implications beyond the 2026 budget. These include moderating revenue growth trends, declining legacy revenue streams, property tax stability, known asset maintenance and replacement needs, historical spending by departments, employee compensation and insurance costs, and the overall economic environment.
In light of the above, the 2026 proposed budget, which is balanced, includes no new personnel and limited additional requests. The second budget workshop will review the one-time and ongoing actions taken by staff to balance the budget and preview the additional requests. The discussion will also include Naper Settlement, the Naperville Public Library, and ancillary City services provided by outside organizations (the Downtown Naperville Alliance, Naperville Development Partnership, and NCTV17).
The presentation slides, along with the 2026 budget message and proposed revenue and expenses summary, are attached to the agenda for review before the workshop.
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:
www.naperville.il.us/globalassets/media/finance-documents/budget-audit-reports/2026-proposed-budget.pdf <http://www.naperville.il.us/globalassets/media/finance-documents/budget-audit-reports/2026-proposed-budget.pdf>.
FISCAL IMPACT:
N/A