Special Update about the 2024 City Budget Process

I’m getting ready to follow along with and participate in the 2024 City budget process with District 3’s interests in mind. I was not appointed to the Finance Committee but I will still follow the budget process and proposals closely and serve as a resource for my constituents. And please keep in mind that I'm still learning how this goes! This will be my first budget season as an Alder.

Background

The City has two budgets: the Capital Budget (think buildings, vehicles, equipment, and infrastructure) and the Operating Budget (think staff salaries, fuel, service provider grants). The Capital Budget goes through the process first, followed by the operating budget about a month later. City agencies submit their requests to the Mayor’s Office, the Mayor proposes her Executive Budget to the Common Council’s Finance Committee, the Finance Committee changes the budget and sends it to the Common Council, and the Common Council changes and approves a final version of the budget. Here’s a more detailed timeline of the budget-season milestones following the introduction of the Mayor’s Executive Budget in early fall.

City agencies have submitted their Capital budget requests to the Mayor’s Office and these have been posted online for Alders and the public to review. City Finance Department staff reviewed the budget process as well as some high-level information from the individual agency requests in the May 8th Finance Committee meeting, which everyone can watch (beginning at minute 30). Agencies will release their Operating Budget proposals soon. The Mayor's Office will then spend the summer putting together the Executive Capital and Operating Budgets.

My analysis of the capital budget proposals  

Agencies proposed a lot of capital projects requiring a lot of money. And I understand why: it’s their job to advance the mission of their agency and they care deeply about what they do. Further, many previously-proposed and previously-discussed projects have become much more expensive since the 2023 capital proposals were written, reflecting the generally higher cost of materials, equipment, and labor. I don’t object to any of the services or infrastructure goals laid out in the agencies’ budget request proposals. My concerns are about the expenditures side, and specifically the use of General Obligation (GO) borrowing to finance a large portion of proposed projects. I recognize that public debt can be a valuable tool to smooth out payments for major expenses over time and to ensure that beneficiaries pay for the up-front cost of capital projects. However, due to the U.S. Federal Reserve's efforts to reign in inflation by raising their Federal Funds rates, interest rates in all credit markets are rising along with the public’s anxiety about the increasing cost of living in Madison. This was a clear message from my constituents when I knocked doors this winter and spring. I’m hoping that the 2024 capital budget will keep the use of GO borrowing low enough to reduce our debt service costs. With interest rates increasing, our debt service payments increasingly pay interest compared to principal and deliver less value to the community compared as a return for our revenue. I would like to show the community that we’re making an effort to reign in a portion of the property tax bill over which we have more City control in recognition of the cost pressure households are facing. If there’s a time when that makes a lot of sense, it’s now while debt is getting more expensive. I believe we have a responsibility to current and future residents and taxpayers to make good choices with today’s budgets.

(Note that I also believe that elected officials need to be very clear and transparent with the public about the work we’re doing to be responsible with our public budgets and the use of public debt. I get physically queasy, more often lately, if I think too long about the fact that some federal-level decision-makers are trying to play games with and hold ransom market confidence in the full faith and credit of our national public debt. If that national showdown over the federal debt ceiling goes the wrong way, I fear that local borrowing may become even more difficult after confidence in public debt is damaged.)

Finally, given that the City’s Operating Budget is under the largest constraints imposed upon us by our heavy-handed state government, I’m looking for ways we can leverage capital projects to reduce future operating costs.

What I’m doing about the budget  

As I mentioned above, I’m paying attention to all of the 2024 Capital and Operating Budget items and discussions in the Finance Committee meetings. I’ve reviewed each of the twenty-six agency capital requests, have sent many weedy questions to some very patient and helpful City staff, and have determined a number of projects that I will support, such as public works and neighborhood connectivity infrastructure improvements. I’ve also determined a number of projects whose spending (and reliance on GO borrowing) I have concerns about and may oppose. Because the agencies’ Capital Budget requests are now with the Mayor’s Office for review and prioritization this summer I’ve shared this feedback with her, including my explanation for my concerns about so much GO borrowing as proposed by agencies. When agencies' Operating Budget requests are available I intend follow this process again. The Operating Budget will be especially complicated and difficult because of the levy limit imposed upon us at the local level by state law (so much for “local control”).

What you can do about the budget  

Most importantly, follow along. Read my posts, watch for Finance Committee and Capital and Operating Budget news, and read local news related to the City budget. Many great local news media will also write extensively about the process this fall. Share your feedback and your concerns with me when there’s an item you want to discuss (district3@cityofmadison.com, my constituents get priority). Finally, consider attending virtually or in-person a Finance Committee or Common Council meeting when there’s a Capital or Operating budget-related item where you feel strongly that the Alders should consider your point of view.

Thank you for reading this post and for being engaged! As always, you can reach me at district3@cityofmadison.com. Have a great rest of your holiday weekend.