4 & 0
October 21, 2009 5:32 PM
My operating budget proposal came in with an increase in taxes on the average $245,000 house of 3.85%. I understand that's a tough increase this year even though it's well below the 15 year average of 4.3%. I've asked the City Council to keep the increase below 4%.
The budget is now in the hands of the Council. For now it's my budget, but when it passes the week of November 10th, it'll be our budget. So, I understand and respect the fact that the Council will want to put its own stamp on it. There will be changes to the document I gave them, and we'll see the first of those proposals shortly in amendments that come before the Board of Estimates.
Changes are an inevitable part of the process. But in making those changes I hope the Council will join me in two basic goals.
First, given the current state of the economy with so many of our residents facing wage cuts and layoffs and other units of government increasing taxes more than our percentage, I hope the Council will work to keep the overall tax increase on the average house below 4%. Even that's a higher number then I would like, but with it we can maintain all the basic services that people value.
Second, I've asked the Council not to do what I was tempted to do but resisted: dip into our long-term cash reserve or "fund balance." We're unique among Wisconsin governments in that we've budgeted for a reserve. The City of Madison's unrestricted cash reserve stands at about $30 million. It's one of the key reasons that Madison retained its Aaa bond rating this year while Dane County lost its Aaa rating. Dane County's small reserve was wiped out by the recession while ours was robust enough to withstand the blow. We'll finish the year needing to dip into the fund balance by a few million dollars, but we have enough put away to weather that hit. Still, there's little reason to think that we'll be able to add anything to our savings account at the end of 2010. So, if we budgeted to take even more out of our reserve next year, it's likely that our fund balance would dip even further and our Aaa bond rating might be threatened.
It's tempting to go to our reserve to restore spending or drive down taxes, but that would be good short-run politics at the expense of sound long-term fiscal policy.
This has been an exceptionally collegial budget process, and I'm not the kind of mayor who likes to draw lines in the sand. But it seems to me that, whatever changes the Council might make in what will be among the tightest budgets in city history, ending up with a tax increase below 4% while leaving our reserve intact would be a good day's work.