As Madison faces a projected budget gap of up to $25 million, Mayor Satya Rhodes-Conway asked city agencies to “focus on the essentials” when developing operating budget proposals for 2021.
Rhodes-Conway said in a memo sent Monday to department and division heads that the gap ranges between $20 million and $25 million. Of that, between approximately $5 million and $10 million of the gap is due to the effect of the coronavirus pandemic on economic activity.
The remaining $15 million is attributed to a gap between current service levels and ongoing revenues.
“In these times there is little we can influence when it comes to volatility of our revenues; meaning we will have to focus on the areas that we can control, which is our expenditures,” Rhodes-Conway said in the memo.
The city’s Finance Department estimates that general and library fund expenditures will increase by $23 million to maintain service levels in 2021. To balance the budget, Rhodes-Conway said the projected increase will “need to be drastically slowed.”
Rhodes-Conway said the city can use one-time options in areas that are expected to rebound, but some structural gaps will need permanent reductions.
“Times like these call us to double down on our priorities,” Rhodes-Conway said. “We need to ask ourselves serious questions about whether or not we should be in the business of providing certain services.”
The mayor issued the following guidance to city agencies:
- Base proposals should be consistent with the cost to continue. Agencies can reallocate funding across services as long as the overall agency amount is in line with the target budget.
- Enterprise funds, like Monona Terrace, Metro Transit and the Water Utility, should submit operating budget plans that are consistent with current revenue projects for 2021. If agencies are projecting revenue shortfalls next year they will need to identify expenditure reductions.
- All general and library fund agencies should propose 5% reductions in their budgets. Proposed reductions will need to be ongoing and not one-time cuts. Public Health Madison & Dane County is exempt from submitting a budget reduction proposal.
Also, the mayor advised agencies to think about other ways the city could save money beyond the jurisdiction of their departments. She encouraged agencies to brainstorm ideas for one time savings and creative ways to combine services.
“Rising to this challenge is not something any one of us can do on our own. We all need to approach this year’s budget from the perspective of #TeamCity,” Rhodes-Conway said. “I am calling on all of you to engage your teams and colleagues in finding ways we can drive more innovation in our service delivery with an eye on driving down costs.”
While the operating budget funds ongoing expenses like personnel costs, the capital budget long-term projects like constructing new buildings. Rhodes-Conway sent capital budget guidance to department heads in early May.
Madison’s Finance Committee will receive a more complete 2021 budget briefing at its meeting June 9.
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