Mayor Soglin 2016 Executive Operating Budget Message

Tuesday, October 6, 2015 - 12:53pm

Our great city continues to be among the top places to live in the country.  One of the key elements of those rankings is affordability – making sure that Madison has a high quality of life at a reasonable price.  Making Madison an equitable place for all is about prioritizing our investments while keeping costs moderate.  It is about investing in what makes Madison great and matching the growth in the cost of government to what our citizens can afford.
While our regional economy is one of the strongest in the state and nation, we must continue to be prudent in the level of tax payer resources used to support our wide array of services.  We must continue to strive to do more with limited resources; to be nimble and set priorities.  We must continue to identify and implement the combination of strategies that help our businesses, families and children thrive and prosper.
Toward that end, my 2016 budget limits the growth in taxes on the average value home to 2.9 percent, a $66 increase over 2015.  Certain factors in the state-mandated levy limits, most notably the recent tax refund to Attic Angels Prairie Point, would allow taxes on the average value home to increase by almost 4 percent, or nearly $90. With inflation increasing a very modest 1.7 percent in 2015, I am not exercising that option and call upon the Common Council to work with me in holding the line for our businesses and families. 
Carrying this levy authority over to 2017 will help us maintain a more modest tax increase this year while providing additional capacity to address on-going priorities next year, including scheduled employee pay increases and expanded benefit contributions that were recently endorsed by the Common Council.
Through the following initiatives, my 2016 budget makes targeted investments that we can all afford and makes progress toward our goals by focusing more on outcomes:
First, it fully funds investments in equal access for all our citizens that began in 2014 and were continued in the 2015 budget, including expansion of apprenticeship opportunities through the construction employment and training program, and operations of the Theresa Terrace Neighborhood Center and Meadowood Neighborhood Center. 
Second, it better addresses important community services needs by providing funds for a Housing First Street team to help support access to housing and support services. The successful Wanda Fullmore Summer Youth Internship Program is further expanded in this budget and a private sector Jobs for Youth Seeking Employment Internship Program is established.  A solar installation employment training program will be initiated under the auspices of the Engineering Division as part of the City’s effort to increase the energy sustainability of its facilities.  Outreach efforts in support of equity at the Madison Public Library are enhanced through creation of a bilingual community engagement coordinator and the youth support program at the Municipal Court is expanded.  Transit access to underserved neighborhoods in support of equitable access to jobs and education is increased in response to Neighborhood Resource Team efforts.  Voter outreach efforts are increased to help prepare Madison residents for the state’s Voter ID law.  City racial equity and social justice initiatives are given better focus by locating the City’s Equity Coordinator in the Mayor’s Office.  Finally, support for the significant efforts of the City’s partner agencies in community services and equity activities is sustained through a cost-of-living funding adjustment.
Third, it enhances services, safety and security in key neighborhoods through funding 12 new Police commissioned staff that were created in the 2015 budget with one-time revenues or will become effective in 2016 through City matching support for a federal COPS grant.  The budget continues the practice of maintaining sufficient funding for recruit classes to keep the Police Department at its authorized strength of 457 commissioned officers and command staff throughout the entire year.  It also continues to increase budgeted levy support for contractually obligated vacation convert-to-pay costs for Police commissioned staff.  An improvement in overall health outcomes is sought by establishing a Community Paramedic – Mobile Integrated Health Pilot project in the Fire Department as a cooperative effort with the University of Wisconsin.  Funding is also provided for a Fire Department recruit class.  Finally, over $2 million of new levy funding is provided to support a contractually required 3 percent pay increase for Police and Fire commissioned and command staff, effective in December 2015.
Fourth, it responds to the opportunities and demands raised by rapidly expanding technological capabilities by adding an Information Technology security specialist position, improving financial analysis and effectiveness through increased training coordination related to the new enterprise resources planning (ERP) system, and investing in a new asset management system to better track and respond to infrastructure needs.  It builds on Madison’s reputation as a cultural and music destination by expanding support for Dane Dances and Make Music Madison.
Fifth, this budget reinforces key day-to-day services and infrastructure, including full funding for refuse, recycling, snow plowing, and ice control, as well as additional staff resources to better monitor, oversee and manage public works projects and better coordinate and serve private development projects.  It funds a 2 percent pay increase for Teamsters employees and a 2.25 percent pay increase for other non-Police and Fire employees and modifies the City’s health insurance plan design to reduce costs while continuing to maintain access to high quality care and services.  Finally, it implements best practices for confidential services to employees by establishing the Employee Assistance Program as a separate agency.

Balancing this budget presented significant challenges. 
First, state-mandated property tax limits would allow a maximum increase of $8.6 million, or 4.25% over the 2015 levy.  My budget proposes to use $6.6 million of the allowable levy growth (a 3.2% increase), leaving a balance of approximately $2.0 million that will be carried over to 2017.
Second, general fund revenues are a nearly $400,000 lower in 2016 compared with 2015 in several areas.  Revenues from fines and forfeitures are down over $350,000 due to fewer traffic violations and more efficient parking revenue equipment that is reducing parking ticket collections.  Building permit revenues are down $500,000 compared with 2015 as the rate of growth in construction slows from the rapid increases experienced earlier in the decade.  Weakness in these areas is offset by stronger ambulance fee revenues as emergency medical and fire services are expanded to surrounding communities, as well as improved collections.  Room tax revenue growth continues to be very strong (estimated to grow 12% in 2015 and 11% in 2016), with commensurate benefit to the City’s General Fund and the marketing efforts of the Greater Madison Convention and Visitors Bureau.  State aid is dropping over $400,000 due to utility aid reestimates and recycling aid cuts in 2016.
Third, contractually required pay increases of 3% for Police and Fire commissioned staff and 2% for Metro Transit Teamsters employees, along with a 2.25% pay increase for all other employees will cost an additional $4.9 million.
Fourth, general fund debt service is anticipated to increase approximately $3 million, or approximately 8%, based on the $82 million of debt issued in 2015.
Fifth, shortfalls of nearly $5 million in the Insurance, Workers Compensation and Fleet Service funds need to be addressed.
Sixth, cost-to-continue of $3.4 million for initiatives and one-time revenues from 2015 need to be addressed.  With a Presidential election year in 2016, $600,000 is needed to meet election support costs.  Further, agencies requested $6.7 million in funding for new initiatives and other priority needs through the supplemental budget request process.
These budget pressures were met through a number of measures:
First, $1.325 million in additional room tax support is made available for other programs by transferring all of the City support for the Overture Center subsidy from the General Fund to the Room Tax Fund.  Total support for the Overture Center remains unchanged at $1.75 million in 2016.  The share of room taxes for tourism-related purposes will be an estimated 63 percent in 2016.  Recent changes to state law require that the tourism share be 70 percent in 2017.  This mandate also requires that the City form a Tourism Commission to allocate those resources starting in 2017.
Second, the annualized effect of the new Urban Forestry Special Charge will reduce levy support for the Urban Forestry program by $1.5 million in 2016.
Third, ambulance conveyance fees will be standardized by setting one fee level of $1,000.  This will increase the resident fee from $900.  Most of the cost of the fee is met through insurance reimbursements.  The program continues to have a hardship waiver component.  This fee increase will increase program efficiencies and potentially reduce third-party administrator contract costs.  Estimated revenue from this change is $275,000.
Fourth, towing fees are increased from $50 to $65.  This is the first increase since 1997.  These fees will continue to be lower than Milwaukee and other major Wisconsin cities.  Revenues are expected to increase $150,000 from this change.
Fifth, health insurance costs down almost $1 million compared to 2015 as the City moves to a deductible plan design.  Costs were anticipated to increase 7.5% or $2.4 million without this change.
Sixth, $1.5 million is allocated to the Worker’s Compensation, Insurance and Fleet Service funds as part of a multi-year effort to address shortfalls in these programs.  In addition, nearly $3 million of the agency supplemental requests are being funded in the executive budget.  Metro Transit reserves of $500,000 are utilized to fund 2016 costs in anticipation of a review of certain fares for 2017.
The budget increases General Fund appropriations by 2.0 percent and increases the levy 3.2 percent.  Based on the latest estimates of overall value of taxable property, the city tax rate is expected to decrease by 0.5 percent to 9.45 per $1,000 of assessed value.  With the average home value up 3.5 percent, taxes on the average value home are expected to increase $66, or 2.9 percent.
Madison is a great place – to live and visit and grow a business.  We must make sure to keep it great – through prudent and affordable investments that help everyone reach their full potential.