Against the backdrop of what has been described as “generally favorable economic conditions,” the city of Naperville closed out the 2025 fiscal year in a strong position, according to a recent presentation.
Director of Finance Raymond Munch provided a report on Naperville’s preliminary year-end financials at a city council meeting Wednesday, March 18.
2025 marked by ‘good performance,’ according to director
Tentative numbers from this past fiscal year indicate Naperville’s maintenance and operating budget brought in $498.98 million in revenue and $486.80 million in expenses.
The city’s capital and debt service budget is a preliminary $75.31 million in revenue and $60.43 million in expenses. The special funds budget is an estimated $41.14 million in revenue and $40.02 million in expenses.
“The numbers that we’re presenting here this evening are preliminary and unaudited,” Munch said as he offered up a caveat. “The finance department continues to pay final invoices and work on year-end closeout procedures, in preparation for our annual audit that begins later this month.”
As final details shake out, Munch said the city’s estimated ending cash balance is expected to increase to the tune of $28 million across all funds within the full scope of the budget.
“We continue to see good performance in some of our more economically sensitive revenues, like sales, income, and real estate transfer taxes,” Munch said. “We also saw strong revenue performance across building permits and related fees, as well as much stronger than expected interest and investment income.”
Naperville’s preliminary year-end expenses of $587.2 million are balanced against projected revenues of $615.4 million, Munch said. Total year-end expenses, he added, are an anticipated 8.5% below budget.
At a granular level, Munch said there are some areas on both sides of the financial ledger that resulted in some sizable swings in year-over-year comparisons.
The city’s projected receipt of $55.4 million in state shared sales tax represents a 14.4% increase from the revenue source in 2024.
“That’s unusual. The reason for that — and we talked about this a little bit during the budget process — is the state took another swing at leveling the playing field for e-commerce, and out-of-state retailers, and how those sales taxes are applied,” Munch said in explaining the reason.
But the city’s $7.4 million in local food and beverage tax revenue came in less than the $8 million placed into the 2025 budget as it was being assembled. The end, unaudited dollar amount, however, is still 1.2% higher than the amount collected in 2024.
“That was largely due to some of the rotation of businesses downtown,” Munch said in explaining the lower collection amount. “We anticipate that will smooth out over time.”
Looking to the rest of 2026, impact of external forces
In addition to combing through the preliminary details of the city of Naperville’s 2025 financials, Munch looked to the current year and touched on municipal government’s approach to weighing expenditures against revenues.
“Some of the budget challenges that we worked through last fall may persist in the next year,” Munch said. “As such, we’re analyzing revenue streams to ensure they’re supporting rising costs in areas such as health insurance and rising wages. We also remain mindful that significant investments are required in our infrastructure.”
Noting Naperville “does not exist in a vacuum,” Munch said he and others within city hall are monitoring what is taking place within Springfield and Washington, D.C., to evaluate the impact “external forces” might have on the city’s bottom line at the end of 2026 — and beyond.
“Notably, at the federal level, the conflict in Iran has spiked oil prices, which raises new concerns over price inflation,” Munch said. “Closer to home, the state of Illinois has proposed a budget that includes a 3% reduction to the municipal share of the local government distributive fund, or LGDF, which would limit future city revenue growth.”
OT numbers scrutinized, fund balance questioned
During deliberations, Mayor Scott Wehrli posed questions about the city’s preliminary year-end overtime pay line item, which clocked in at a tentative $12.1 million and was higher than the budgeted amount of $11.7 million. It also represents a 13.7% increase from 2024 overtime figures.
Munch said there are times when overtime staffing is covered through SECA funds, independent of the main operating budget.
“Much of our police, fire, public works overtime is driven by special events, so there are SECA reimbursements that occur there,” Munch said. “In other instances, we charge entities directly for overtime services so the police can provide a special service at a private event or a school function, and we get reimbursement through those, under certain agreements.”
In the future, Wehrli asked for more specificity in how much revenue the city is bringing in, compared to the overtime expenses, to provide a clearer depiction of the factors in play.
“Theoretically, if we have an organization or a business that’s going out, and they’re wanting extra police in their facility … it makes our overtime look a lot higher than it really is,” Wehrli said. “(The budget report) doesn’t show the revenue that we’re collecting for those police officers from that private business, so I think that’s something that is helpful for us to see.”
Councilman Benny White inquired about the current state of Naperville’s cash reserves, which Munch indicated are in the low to mid 30% range.
“Going into your reserves isn’t necessarily deficit spending,” Munch said, responding to an inquiry White posed. “It’s only deficit spending if you’re doing it to support an ongoing cost.”
As for application of fund balance dollars, Munch added, “I think there would be opportunities to start to utilize reserves. The one thing I would point to is looking at our capital program, and is it appropriate to be issuing GO (general obligation) bonds for government capital, when you have reserves that could support some portion of that? I think that’s probably the first consideration that we would have.”
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