The Council asked for more evidence that this additional tax would solve the budget or whether they would have the same conversation in 10 months. Councilwoman Boyd-Obarski in particular highlighted that, “This is the third year in the row we voted to raise things, and each time we were told, this is the path.”
However, as we’ve shown here the Home Rule Sales Tax is a tax that’s paid by residents and shoppers in Naperville from all communities. Increasing the rate makes our community less competitive and less likely that shoppers will continue to visit our stores and puts our businesses at risk of losing crucial sales.
The City is asking for these tax increases because of the increased pension pressures and other cost increases. As I’ve written about here, the Council did scrub the budget and cut significant capital and non-capital expenditures to lessen the tax burden, and I continue to applaud them for it.
However, it should not be forgotten that known and planned surpluses are included in the budget so that Naperville may pay down debt and increase cash reserves. In the December 5 Budget for CY2018 the Total Revenues were approximately $452.6 million while the Total Expenses came to approximately $443.6 million. In layman’s terms, the City is expecting to pull in approximately $9 million dollars more than they will spend in 2018.
Most of those additional planned dollars will shore up the electric utility fund which is rebuilding their 30 day cash reserves.
In total, the City is planning on reducing their debt by 25% and increasing their cash reserves by 25% within an 8 year timeframe. So, how are they doing on that front? Pretty darn good actually.
On the question of cash reserves, the City states here that they have 21% reserves at the end of 2016, with only an additional $4.4 million left to build versus 2014 levels. You’ll recall their goal was 25%.
I applaud Mayor Chirico and the entire City Council for reaching for these aggressive goals. What’s more, I agree with the idea that the City should pay down this debt and build up these cash reserves.
However, I question whether we need to continue to raise the Home Rule Sales Tax to accomplish this specific eight year timeframe. We know that the increase in the Home Rule Sale Tax will make our businesses less competitive, especially in comparison to an online rate that could be 6.25% or 0%.
What’s the harm in extending the time horizon and accomplishing the same goals over 10 years if necessary? This year alone, we are planning to shore up the electric fund with over $9 million dollars. The Home Rule Sales Tax increase would only bring in $1.1 million approximately for 2018, more in 2019.
With an increase in the Hotel/Motel Tax as well as the Telecom Tax approved in early February, I argue that we can afford to hold the line here and keep Naperville an affordable and attractive shopping destination while we still meet our City’s financial targets. Even if that means we hit the target on a slightly longer time horizon.
Join us as we ask City Council to not increase the Home Rule Sales Tax. Click the link and make your voice heard.