Mayor Satya Rhodes-Conway is asking agencies to be creative in addressing a projected $9.5 million shortfall in the city’s operating budget for 2020.
The city, which has a $332.1 million operating budget for 2019, is expecting to see $9.5 million in new revenue but a $19 million increase in spending, leaving the $9.5 million gap next year, the city Finance Department said. The shortfall is almost double the $4.7 million gap the city faced as it began the budget process for the current year.
On Monday, Rhodes-Conway provided budget instructions and policy goals for city department and division heads, requiring they provide a base scenario to continue current services and scenarios with budgets that would increase and decrease by 2.5%.
“As with previous budgets in this era of declining federal support, stagnant state aid and limited local control, projected expenditures for current services exceed allowable revenue growth,” the mayor said in her first operating budget message to managers.
“The reality of our budgetary outlook is that we may have to prioritize and rethink the way we are approaching areas of our service delivery to bring our budget into balance,” she said.
The projected 2.9% increase in revenue is fueled by a $9.5 million rise in tax collections, the maximum allowed under state levy caps, plus a $750,000 increase in state aid that’s nearly offset by a $705,000 decrease in other local revenues.
Spending is projected to rise 5.9%, including $9.8 million more for personnel costs; $3.5 million for grants and local matches that phase down over time, such as for federal community policing grants; $3.8 million in increased debt payments, which would rise to $58.8 million and 16.3% of all general fund spending; and $1.6 million for inflationary costs, including funds to administer the 2020 elections.
“It definitely will present some challenges,” city finance director David Schmiedicke said of the gap. “It’s larger than last year, but it’s not totally out of context to what we’ve seen in recent budgets, particularly in the era of strict state levy limits.”
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The mayor encouraged collaboration between agencies to deliver more efficiencies and asked for suggestions for raising revenue to help close the shortfall.
If eventually enacted, the maximum tax increase allowed under state levy limits would raise city taxes by $83, or 3.2%, to $2,670 on the average home now valued at $300,967.
In her first capital spending message in late April, Rhodes-Conway instructed department heads to focus their capital requests on items that promote affordable housing, public transportation, responding to climate change and advancing racial equity. She again emphasized those priorities in Monday’s operating budget message.
In both messages, she asked that funding requests be tied to the city’s new comprehensive plan, called “Imagine Madison,” which lays out long-term approaches to land use, transportation, neighborhoods, housing and more.
Rhodes-Conway, however, also strongly echoed former Mayor Paul Soglin’s long-running concern over increased borrowing and rising debt payments, which account for 17.5% of the city’s operating budget for 2019, far above the unofficial target of 12.5% of spending.
The mayor is expected to introduce her capital budget to the City Council on Sept. 3, and an operating budget on Oct. 1. The council is scheduled to make final decisions the week of Nov. 11.