WAUPUN — While having a road map is a good start for budgeting, minding a few traffic signals is key to avoiding a pileup during the actual journey.
Waupun City Administrator Kathy Schlieve and accountant Michelle Kast presented a “Budget Fundamentals and Fiscal Monitoring 2020 Budget Workshop” to the city council’s Committee of the Whole on Tuesday night at City Hall. In addition to being a reminder of what funds are for what purposes, traffic signals on certain pages showed which areas are potential hazards, and what issues will challenge Waupun’s financial plan for 2020.
As most members of the council are veterans of the process, there were few questions as the following points were defined and explained:
- Purpose of Budget Document;
- Indicators of Growth;
- The Basics of Funds;
- International City/County Management Association Fiscal Trends Monitoring.
“We’ve talked about the importance of understanding budget fundamentals, and a tool developed by the ICMA to look at communities’ fiscal health,” Schlieve said, referring to an association of professional city and county managers. “One thing that we know fundamentally is that a dollar in 2014 was worth more than a dollar in 2018. This analysis tries to look at that.”
Red traffic signals indicated unfavorable trends in intergovernmental (shared state) revenues, shortfalls in user-charge coverage, rising reliance on tax revenue and reduction in revenue per capita. A yellow light indicated caution related to levy limits, which some communities are exceeding to meet rising costs — especially for street projects.
Equalized value is a green light for Waupun, with growth broadening the property tax base.
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Use of the unassigned fund balance to cover costs and reductions in capital outlay are highlighted by yellow lights, indicating a need to address infrastructure needs, but not having a ready source of revenue available to pay for them.
Expenditures are up, causing concerns for overall financial health.
Debt service costs are down, although the need to increase such spending is likely as overdue projects are undertaken.
“Over time, declining revenues are challenging city operations, driven largely by declining shared revenues,” Schlieve said. “This is shifting more of the burden to the local taxpayer. Consideration should be given to the need to diversify revenue sources. Possible alternatives are limited, but include things such as wheel tax, special assessments, user fees and intergovernmental service agreements.
“When adjusted for inflation, expenditures have increased slightly (1 percent). Operationally, we must adopt a lean government mindset and actively pursue projects that identify and eliminate waste and create efficiency. Continued erosion of revenue streams over time may result in cuts to city services and/or challenge needs for capital improvements. The cost of construction (roads and buildings) is outpacing inflation, making it difficult to keep pace with increasing demands for capital outlay without borrowing.
“As we approach our levy limit, growth (measured by net new construction) is essential to increase our limits. This places particular importance on the role of economic development and resources will need to be allocated to support this growth.”
Budget formulation is ongoing, involving all city departments and overseen by the Common Council. A preliminary budget will be presented to the council Sept. 24, with a final document anticipated by Oct. 29. The budget will likely be considered for final approval Nov. 12.