City of Madison Capital Budget Message for 2012

September 7, 2011 11:58 AM

Despite the economic difficulties the City of Madison faces, the 2012 Executive Capital Budget will move Madison forward.

I have already reduced total authorized spending from the 2011 adopted budget by roughly $52.6 million. This action is allowing the city to reduce our general obligation borrowing by $38.7 million.

It is no secret that Madison is feeling pressure from both the revenue side and the expense side in this year's budget. Our revenues are down dramatically. Madison's portion of shared revenue has declined, as well as state funding for Madison Metro and the city's recycling program. At the same time, the fees others charge us are up – utility bills will rise and the charges from Madison Metropolitan Sewer District are increasing. Even tipping fees at the Dane County landfill are going up.

Revenues and expenses are thought of as operating budget issues, but this year the impact of the capital budget on the operating budget is an issue of great importance.

Borrowing for the city capital budget has increased greatly over the past decade. That is a trend that we cannot sustain. Borrowed money must be repaid, no matter what the interest rate. Most of the borrowing of the past decade occurred in the last three years (budget years 2009-2011). While borrowing increased, debt has not been retired at the same rate, creating an imbalance of debt service in the operating budget. Because of this imbalance, any revenue growth in our operating budget in coming years will be consumed by this increased debt service.

It is imperative that we work to reduce borrowing. It is not enough to keep it at the same level as last year. Too many dollars must now go to pay for past borrowing, and those dollars are not available to plow streets, maintain parks, and provide public health or public safety services.

In spite of this reduction in capital spending, we are still able to use the budget to encourage private development. For example, the redevelopment of the Don Miller properties on East Washington Avenue is proceeding. The city is also creating a Tax Incremental Finance (TIF) District at Whitney Way and University Avenue as well as an additional district at the vacant Bancroft Dairy site at the intersection of Park Street and Fish Hatchery Road. Keep in mind that approval of a TIF district does not mean approval of the funding. In each instance a separate analysis must be conducted to ensure that a fair and proper funding proposal is developed.

This budget includes responsible funding for the Edgewater project as well as further preparation for a new parking ramp and potential new hotel development near the Madison Municipal Building.

An important new commitment in this budget is funding for the City's first comprehensive multi-modal transportation plan. Major goals for the Master Plan for a Livable City will be to make Madison a more walkable and bikeable city and to create more opportunities for bicycling and transit transportation. The planning process will include a review of land use plans and build on existing transportation plans for bicycling, pedestrians, transit and autos. Public outreach and participation will be a major component of the planning process.

Additional money for biking is targeted for the University Avenue Underpass and the Ice Age Junction Trail.

Public safety continues to be a priority, and I have included funding for completion of the new police training center and a new fire department training center. We continue to invest in our green space and city parks with work scheduled to get underway on our long-planned Central Park. Other neighborhood parks will continue to be upgraded and improved. A major project is the long anticipated renovation of the Central Library, which will be partially funded with private donations.

This budget provides over $3 million to maintain energy-efficient buildings. This includes a much needed new roof for Olbrich Garden.

We will continue our program of maintaining and replacing streets, including major projects on County Road M and University Avenue. However, there are a number of street projects that will be delayed. While these delays will help to hold down borrowing in 2012, they are unsustainable in the long run. The majority of our city streets were built in the 1950's, 60's and 70's and their replacement cannot be delayed for very long.

As part of our efforts to reduce borrowing, I am also interrupting our normal schedule of vehicle replacement for the next two years.

This capital budget will provide for immediate needs, but if our overall fiscal situation does not improve in the next two years, there will be serious fiscal consequences. To maintain city services we must continually tend to our infrastructure, including street reconstruction and sewer repairs. To keep our operating costs down, we must purchase new equipment on a regular basis. Too many delays will lead to increased costs in the long run.

If the state modifies its allocation of shared revenue dollars or increases funding for other programs, future budgets will be easier. Another source of increased revenue would be an expansion of the tax base through new construction. We cannot assume that any of this will happen in the near term and so must take a fiscally prudent approach for 2012 and beyond.

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