The average taxpayer in Naperville could see a $31 decrease in the city portion of their 2025 tax bills as the city eyes another year-over-year drop in its property tax rate.
City staff presented plans for the possible tax cut at a Naperville City Council budget workshop meeting Tuesday, the last of three in which elected officials review the tentative spending plan in advance of a final vote in December.
While previous workshops previewed what the city’s capital investments and operating expenses will look like in 2025, Tuesday’s meeting offered an overview of Naperville’s budget as a whole.
Staff anticipate setting a tax rate of 0.6279, down from this year’s rate of 0.6454. It would be the lowest the city has seen since 1968, officials said.
Based on the U.S. Census Bureau’s current median Naperville home value of $558,100, the portion of property tax bills paid to the city next year would be about $1,118. That’s $31 less than paid this year for the same property value, city Finance Director Raymond Munch said.
However, Munch emphasized that taxpayers should know individual bills will vary.
“It’s virtually impossible to predict what each homeowner will experience on their property tax bill,” he said, “as (home) valuation is the primary factor in determining individual bills.”
The city’s property tax rate is decided by weighing the revenue it wants to receive out of the total value of taxable property within its boundaries. For next year, staff have proposed a $58.88 million property tax levy, a 3.3% increase from taxes levied this year. Funds levied from property taxes go to the city’s general fund, police and fire pensions and debt service. It also helps fund Naper Settlement and Naperville Public Library.
Relative to other taxing districts, the city’s portion of the tax bill is small, Munch said. Most of what is paid goes to school districts, with remaining dollars going to not only the city, but to parks, counties and other taxing districts.
Taxes aside, Naperville is looking at a $641.88 million budget for next year. That includes a $166.43 million general fund and a $179.38 million capital improvement plan.
A future without the grocery tax
Amid budget discussions this fall, the pending loss of the state’s 1% sales tax on groceries has repeatedly come up in conversation.
Eliminated through a provision in the state’s 2025 spending plan, the tax is to sunsety Jan. 1, 2026. For Naperville, that could translate into a loss of more than $6 million loss to its annual revenue stream, staff estimate.
If a new funding source cannot be found to replace the grocery tax, the city may not be able to fund new services or hires in years ahead, officials have said.
It may even result in staff layoffs, City Manager Doug Krieger said at Tuesday’s meeting.
“A $6 million hit would be significant, where I believe that adverse personnel changes, which means termination, would be required,” he said.
Naperville City Councilman Josh McBroom called it “a major problem.”
“I think there’s been a lack of appreciation for what this loss of grocery store tax (revenue) is going to mean for the city of Naperville,” he said.
With the tax cut looming, McBroom again questioned the city’s spending on diversity, equity and inclusion.
“I belabor it for the reason, (that) we’ve got this grocery store sales tax (cut) coming up,” he said. “I’ve been talking about it. We’re going to have hard decisions.”
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Naperville over the past few years has been heightening its focus on DEI and in 2021, the city hired its first DEI manager.
“If we can’t even have a decision about a department that has no measurable return on investment to the taxpayers, that’s controversial and political, where are the other inefficiencies?” McBroom said.
Councilman Benny White in response said he was disappointed with McBroom’s remarks.
“For us to not recognize the importance of inclusion and for people to feel valued in the community … is being somewhat dismissive,” he said.
He encouraged DEI initiatives to continue.
A final council vote on the city’s 2025 budget is scheduled for Dec. 3. The city’s tax levy request is to be approved Dec. 17.