Officials will continue to shine a spotlight on the financial status of Naperville’s Electric Department at a workshop Monday afternoon.
The city-run utility will be among topics under the microscope at the City Council session, part of a series of meetings addressing aspects of the fiscal 2015-16 budget, set for 5 p.m. in the council chambers of the Naperville Municipal Center, 400 S. Eagle St.
When the department a year ago was showing an expected $14 million shortfall, council members increased electric rates 6 percent, effective May 1, 2014, and they’ll go up another 7 percent on May 1. It appears there’s more work to be done, however.
Despite showing higher income than the previous year every month since September — and without payments that will come in from the heat used last month, one of the coldest Februarys on record — the electric utility is expected to end the year with a $5 million shortfall, more than twice than expected. Staff attribute the unforeseen red ink to assorted variables, including a cool summer that kept air conditioners off for more time than usual, resulting in 4.5 percent less energy usage and bringing in $3 million less revenue than anticipated. The city’s bills for purchased energy also ran $600,000 more than expected, and projected revenue growth of 1 percent that did not materialize translated to $1.4 million less income for the department, according to staff reports.
A staff memo issued Thursday indicates that with six weeks remaining in the fiscal year, the utility’s negative cash and investment balance is $6.8 million, which is 55 percent above what the staff had predicted.
Also on Tuesday’s workshop agenda are next year’s budgets for the Water Department, the libraries and Naper Settlement, as well as a variety of special funds.
The city faces a lean spending year for the budget that takes effect May 1. Finance Director Rachel Mayer said in a memo this week that Gov. Bruce Rauner’s proposed 50 percent reduction in municipalities’ share of Local Government Distributive Fund revenue could cost the city $6.9 million in lost income next year.
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“Combined with the $6.8 million imbalance between revenues and expenditures (the funding cut) would create a $13.7 million budget gap,” Mayer said.
If the shortfall is addressed through a property tax hike, it will mean an an estimated increase in the tax rate from about 81 cents per $100 of equalized assessed valuation to about $1.04. The gap also could be made smaller, Mayer said, through increases in other fees, such as those placed on utilities. In fiscal 2014, utility taxes brought in nearly $17 million, Mayer said.
“The garbage fee is another option that could contribute to closing a portion of the gap; primarily because the fee paid for the service does not match the cost to provide the service,” Mayer said. “The city’s current fee is $2 a month, which generates nearly $1 million in revenue annually; while the cost to provide the service is approximately $5.5 million.”
This year’s final budget workshop, set for 5 p.m. March 31, will look at the Special Events and Cultural Amenities Fund. The budget is set for adoption, following the required public hearing, during the April 8 City Council meeting, a day after the municipal elections.
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