While most public attention with COVID-19 has focused on big cities and countries, numerous suburbs will deal with the effects of the pandemic as well. Here is how Naperville, a large and well-off suburb, is planning to tackle a budget gap:
The city of Naperville is shaving nearly $25 million off its 2020 budget in the wake of the economic downturn caused by the coronavirus pandemic…
City Manager Doug Krieger said some of the projects were selected to be postponed because they’re considered “nice-to-haves” and aren’t expected to cost significantly more to be completed in future years. One major project, a $2.6 million plan to improve downtown streetscapes, was included on the list for deferment because “the downtown merchants did not want to proceed” with it in light of the pandemic, he said.
The moves will help the city offset anticipated declines in revenue sources — such as sales tax, food and beverage tax and motor fuel tax — as residents and businesses continue to follow the stay-at-home order…
Other work that will not take place this year includes $9 million in water meter-reading technology upgrades, a $7 million road widening project on North Aurora Road and $1.1 million of work toward a park at 430 S. Washington St. to be built in conjunction with North Central College, as well as smaller projects such as LED lighting conversion, tree planting, electric vehicle charging stations, flooring replacements and conference room IT and electric upgrades.
Suburbs and other municipalities can generate tax revenue through several sources (as noted above). Property taxes are affected by property values, which appear at this point appear to be holding firm during COVID-19. Sales taxes are generated by local businesses; this will certainly be down in communities (though the decline of retailers was already an issue). Food and beverage taxes will be down. And the number of people buying gasoline – feeding into the motor fuel tax – is down (and projections for the state’s funding through this suggest a big dip). In Illinois, we are near a third month of reduced business and social activity and this will make a big dent in municipal finances.
At the same time, based on the descriptions here, it sounds like an average resident of Naperville would not even notice that these improvements are not addressed this year. Of course, it could create a backlog for future years – pushing projects down the road means other planned projects might be delayed later – but the focus is on helping to address the current issues.
Naperville may be an unusual case compared to many other suburbs. It is a big community with a lot of successful businesses. The local government prides itself on being well-run and stable. It is not clear how long Naperville could continue to work through budget shortfalls but it is likely better prepared for this than many places.
This means that many municipalities could be facing tough questions in the months ahead about local projects and local funding. If the federal government and states are struggling with missed revenues, this will certainly affect municipalities who have to address local budget issues.