Let's Talk Budget: Underspending Rules & Finance Meeting
postedHow Unused Budget Authority Works
Each year, the Common Council adopts the City's budget for the following fiscal year; we are currently working on the 2027 budget. The budget provides agencies with authority to spend up to specified amounts for approved purposes during that fiscal year.
That budget authority does not automatically carry forward from one year to the next. Any unused budget authority generally lapses on December 31, at the end of the fiscal year.
Agencies may spend less than the amount authorized in their budget for many legitimate reasons. For example:
- A position may remain vacant while the City completes the hiring process.
- A contract may take longer than anticipated to negotiate or execute.
- The cost of supplies, equipment, or services may be lower than originally estimated.
- A project or purchase may be delayed.
- Other operational circumstances may result in expenditures being lower than budgeted.
After the fiscal year ends, the Finance Department conducts the year-end close process. This includes comparing the City's actual revenues and expenditures with the amounts that were budgeted.
If the City receives more revenue than it spends, the resulting difference contributes to the City's General Fund balance. No City agency is entitled to prior-year unspent budget authority. An agency's failure to spend its full budget in one year does not create a claim to that amount in the following year, nor does it automatically increase the agency's future budget.
In other words, budget authority is authorization to spend and not a guaranteed allocation of cash that an agency gets to keep if it is not spent.
Contingent Reserve
Each year, the adopted operating budget includes a small Contingent Reserve to address emergency or unanticipated needs that arise during the fiscal year. The resolutions before us would use this reserve to support businesses on Willy Street and adjust personnel costs.
The senseless loss of a life is always tragic. Mr. Ruiz's death has brought both unity and division to our community. The messaging across social media has been all over the place. As agendas are advanced and emotions run high, we cannot lose sight of the very real consequences that remain.
Mr. Ruiz's family will forever grieve the loss of their loved one. Businesses in the area are struggling. Unsheltered people remain unsheltered. We have an external investigation underway and a pending announcement from the District Attorney.
There are a lot of feelings right now, such as sadness, anger, frustration, and a very real desire to find purpose and action in the aftermath of this tragedy. But we are dealing with a complex situation, and all of these issues will take time to process and address.
I also have a lot of anger and frustration about our City budget. I wish we had the resources to do everything our community needs. I want to support the businesses on Willy Street. I want to finance housing and food security for everyone who needs it, expand violence prevention efforts, and expand CARES. I want to meet every community need with the resources it deserves.
But we cannot.
Our budget is constrained by state-imposed restrictions like ERIP and the Fire and Police Maintenance of Effort; this is our financial reality. We have already discussed the restrictions created by ERIP and the risk of losing up to $9 million in funding. At the same time, we are already struggling to increase services that affect people in our community every single day.
Given those realities, I cannot support putting additional funding at risk or treating our limited reserves as an unlimited source of money.
We have four months remaining in 2026. The Contingent Reserve exists precisely because we cannot predict everything that will happen during the year. Reducing that reserve now, without fully considering what needs may arise over the next four months, would be irresponsible.
And we know there are significant uncertainties ahead.
Whatever the Dane County District Attorney's announcement ultimately be, it could create additional public unrest and require substantial City resources. City staff may need to respond to demonstrations, community needs, public safety concerns, communications, and other consequences that we cannot fully anticipate today.
That is exactly why we have a Contingent Reserve.
This does not mean that the needs of Willy Street businesses are not real. They are. It does not mean that the community's grief and anger are not real. They are. And it certainly does not mean we should not look for ways to support people and businesses affected by this tragedy.
It means that we have to be responsible with the limited resources we have.
We cannot make a decision based solely on what we know today while ignoring what may happen tomorrow. The Contingent Reserve gives the City the ability to respond when circumstances change, and I believe we need to preserve that capacity.
A second resolution asks to bring an existing position to full-time status, ignoring the reality that the reserve is one-time funding.
We can acknowledge the need, share the frustration, and still recognize our responsibility to protect the City's ability to respond to whatever comes next.
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Alder Yannette Figueroa Cole
District 10
Contact Alder Figueroa Cole