Naperville taxpayers, this will be a short article. You are paying millions of dollars a year into a Food and Beverage Fund that allocates many hundreds of thousands of dollars a year toward dozens of local not-for-profit events and causes. In virtually all cases, the recipient organizations are well connected politically. Each having enumerable relationships on the council dais. Is it time to scrap this SECA “fund”? In almost all cases the recipient organizations survived for many years without these funds. Should the City just rid itself of this fund which is rife with potential conflicts? Is it not likely that using these funds to pay down the Naperville real estate tax levy would be of far greater value to Naperville taxpayers?
Totally agree Bob.
Here is the history of SECA.
Back when the economy crashed during the Bush administration most cities found themselves fiscally challenged. In the case of Naperville this lead to city council asking various city department to make budget cut recommendation to the council.
The Chief of Police at this time, instead of submitting recommendation, when to council and during the meeting gave a long speech about how the police department having to provide officers to protect special and community events was a major cost for his department and wanted to start charging the organizations behind these events of the cost of the overtime pay for these officers.
Sounds reasonable but as the sponsors of these events pointed out they had not requested the presents of these officers, the city was mandating there presents. There were also many other city services the city was mandating be used as well. These organizations complained that if they were going to be charged for these services they should have a choice whether or not to use them or just how much of these services they used instead of the much less expensive free market service providers.
The compromise reached was that a new food and beverage tax would be implemented that would fund a new city organization the “Special Events and Community Amenities” (SECA) organization. This fund was to provide organizations that held events or provided amenities with grants to cover the cost of city mandated services. This tax was suppose to only be used to fund SECA.
As the economy recovered and the SECA tax revenue amount kept increasing each year people start to become concerned that this amount was becoming to large and would encourage more grants for events that would overwhelm the community. The result should have been to reduce this tax rate, but that is not what happened.
Instead a cap of $2 million was established (with COLA) to be use for SECA (later changed to $1.9 million without COLA and over $1 million going to per-qualified Amenities like the River Walk, City Band, DuPage Children’s Museum, etc) .
The rest became a kind of city council slush funded, part of which is suppose to be used to help our Police and Fire Pension funds become fully funded (close to 15 years later and they still are not fully funded), as well as the more recently established Service Grants.
If you actually look at the financial report posted online for review by council at the next city council meeting Tuesday. You will see that this Food and Beverage Tax revenue currently exceeds $6 million. Of this $4 million is going to SECA, Service Grants, Police & Fire Pensions, and salaries. The remaining $2 million is listed as an Inter Fund transfer. Don’t ask me what this is. Its as transparent as mud.
So the real problem here is not how a few hundred thousand of these dollars in SECA grants given to event sponsors to pay to the city for services is being spent but what is this $2 million Inter Fund transfer funding?
The interfund transfer is made up of $1m to the Naper Settlement Fund and the rest going to Debt Service fund. Seems pretty clear to me when looking at the F&B section in the 2024 Annual Operating Budget document
One further comment. Studies and Data have shown that the majority of people paying things like sales tax and the Food & Beverage tax are not Naperville residents.
They are residents from surrounding communities that come to Naperville to shop and dine.
James Haselhorst’s comments are mostly accurate (not sure why the reference to Bush and the economy). The food and beverage tax was started to allow the City to provide in-kind services to special events (Ribfest and The Last Fling, primarily) and to fund cultural amenities. Prior to that, the City of Naperville provided funding and in-kind services to nonprofits, but there was no formal process. The food and beverage tax was viewed as less burdensome on residents than raising people’s property taxes. It is a use tax and many people who dine in our downtown are not from Naperville.
The amount of food and beverage tax that is collected has gone up substantially. With the “SECA” fund being capped, as James note, much of the F&B tax revenue is now used to fund other City obligations, including a portion of the City’s contribution to Fire and Police pension funds. So, in a sense, some of the F&B tax revenue is already being used to pay down the City’s real estate tax levy.
I personally think that SECA is a good thing, in general, but reasonable minds can disagree on whether the City should be giving grants to nonprofits. There are a lot more nonprofits and events now than there were when the F&B tax was first implemented, with more groups coming forward each year. If local restaurants were to complain that the F&B tax is hurting their business, maybe Council should look at repealing it. I’m not sure if that’s the case.
I only used the Bush reference because that is what most people use to anchor memories these days and not years. If I said 2007 most people would not remember much about the economic collapse, but if you give the Bush reference suddenly they have a better memory. That is the only reason for it.
Sadly we have become society that anchors memories more by political events then actual dates. It is no doubt do to self serving agendas by political factions that someone has to be responsible for everything, even things that had more to do with years of economic or social pressures building up and less to do with political policies. Yes, these policies play a role but they are rarely the sole contributing factor.
James, we are getting off topic, but the food and beverage tax was put in place in 2004. The U.S. economy was good and the F&B tax didn’t have anything to do with the Bush economy. The F&B tax was put in place as a creative way to come up with funding for city services for large events like Ribfest, which was still growing into a very large event at that time.
According to the Budget Report to be presented to city council at the meeting this evening, the Naper Settlement fund does not show a Interfund TF (rev) of any kind, let alone for $1million. It does show an Interfund TF(exp) of around $177K.
So again, not very clear at all!!! Sorry but still many questiona about transparency regarding the use of revenues for this and several other funds. Over $30million in revenue is moved around in this budget report using the Iterfund TF (rev/exp) line item, some of it from funds who’s revenues is suppose to be kept segregated.
Also how are up posting anonymously? This is not suppose to be allowed on this site. It also raise questions about why you feel the need to post anonymously on a discussion about transparency.
Agree, look how much money was thrown at Century walk with little
oversight.
Joan, you don’t have a very good grasp on the facts if you believe that money was thrown at Century Walk with little oversight.
You are the one with no grasp. Head of century walk was a local gop donor. They refused to do an audit too. Plus, their artwork is mostly subpar at best.
Joan, sorry, you’re incorrect. CW did have its financials audited and has provided the audit to the City. CW has never received funding from the City for which it has not had to provide receipts and show what the funds were used for. What do the Chair of CW’s personal political donations have to do with anything? It sounds like you are a very partisan person who’s just looking to disparage a great organization.
You’re the partisan one here and all over social media, Ron. Political donations have everything to do with who’s donating to who and who’s approving funding. The century walk wanted Speical treatment. Don’t play dumb. It’s well documented about century walk
City Council over ruling SECA is special treatment and the Century Walk did receive this special treatment. This was undeniable a special interests case.
As such political donations and who made them does come into play as with any case involving special interest.
Aren’t SECA funds granted to Kim White’s “non-profit.”
The SECA fund provides grants to local non profits to cover the cost of city provided services for special event (i.e. ALL special event grant money ends up back in the city budget as revenue). It also provides grant funds for creation of community amenities, like the murals downtown, art sculptures around the city, the fireman’s memorial, etc. These amenities belong to the residents of Naperville not the organization behind their creation.
The Grant application request for SECA funds requires the applicant to provide a detail line item description for how every penny of this grant money will be spent (would be nice if the city practice this same degree of transparency it is own budget reports). And none of these funds can be used to pay compensation to any person associated with the organization making the grant request.
Sorry but the degree of transparency required by the SECA organization and its commissioners, as well as city council and city staff, insures no one can misuse or misappropriate any of the SECA funds. And since its creation almost 20 years ago no one every has!!
You never answered the question. Didn’t Kim White’s “non-profit” receive a SECA grant(s)? Your grasp of basic economics is baffling. Sure they can’t use SECA grants for payroll, never asserted that, however if you can offset expenses with grants that allows you spend your funds on other things, like payroll. Not hard to get.
You don’t get it. Exactly what Special Event or Community Amenity did Kim White’s non-profit provide? The only non-profit I know her to be involved in does not provide either of these things to our community, which mean it would not qualify for a SECA grant. If you actually have any information that would support your question you should provide it. Otherwise, this just looks like a sad attempt at character assassination.
As to using funds to indirectly cover compensation, this has been tried in the past. In fact this is the very reason the Century Walk Foundation requests kept getting denied. But City Council ignored this reason by the SECA commission and gave Century Walk a multi year grant anyway.
The SECA commission evaluates and investigates all grant requests thoroughly and will not approve any grant that is not clearly in compliance with all the SECA requirements. There are a large enough number of applicants SECA does not have to give any serious consideration to any application that is questionable in anyway.
Jim Haselhorst was so certain he nailed the City Council on their budget issues last night then he was roundly made to look like he was clueless. Rather funny.
The comment by the staff member did not address the issue it simply dismissed it and raised more questions in the process. Unfortunately I was not given a chance to rebuttal what his person said in this meeting. I was simply told my time was up an to take my seat.
The example given by this person about the $17.6 million transfer from the Water Enterprise Fund to the Water Capital Fund begs the question, if that is what is going on with this money then why not call this line item “Water Captial Fund TF(exp)” instead of “Interfund TF(exp)”. Doing this makes it clear (transparent) this is were this revenue is being expensed and it does not increase the size of this report by even one line item (and certainly not anywhere close to the 5 fold increase in size this person said using clearer line item names rather then the ambiguous “Interfund TF” name would result in)
When this staff member made his “100 page” comment I did a quick calculation in my head and estimate that at most replacing the ambiguous “Interfund TF” line item with more accurate labels would only increase the size of this report by about 5%. I can only thing of two reason he made this statement. One he was being dismissing as well as insulting the intelligence of anyone that read this report. Or Two he can’t do simple mathematics in his head, which begs the question “what is this person doing in a senior management position in Naperville’s finance department?”
Finally, yes I know that using the “Interfund TF” is an acceptable practice, but just become you can do something doesn’t mean you should do it and certainly not to the extent is was do in this report. In this report every Special Service Area (SSA) fund had 100% of its revenue transferred using the cryptic “Interfund TF” label except one, 80% of its revenue was expensed this way. This is close to a dozen funds. If that does not seem excessive to you as well as totally lacking in transparency then I would like to know what would qualify for this description according to you?
Actually it did answer your question. You just didn’t get it. You thought you could score some political points and it backfired. All you have to do is make an appointment with the city’s financial manager and discuss it with them and get your answers but instead you chose to make a public, grandstanding statement and it made you look like a fool.
So you know exactly were the over $2 million dollars from the Food & Beverage Tax went? Because the city staff member did not answer my question on these funds. Nor did he answer my question on were the over $3 million from the Electrical Enterprise Fund went.
Did you actually look at the “Interfund TF(rev)” entry in the Water Capital Fund? Was it actually for the over $14 million transferred out of the Water Enterprise Fund?
You claim these questions were answered, but as the video of the council meeting clearly shows, they were not.
James, You did a good job with your public comment. You exposed how complex it is for the average citizen to know where tax payers money is being spent. Seems like a shell game and intentionally left complex. I asked josh mcbroom last time I saw him and he couldn’t even explain it.