Mayor’s message on the capital budget. Capital budget = building things, large one time purchases, TIF, big projects . . . borrowing.
May 4, 2015
To: Department and Division Heads
From: Mayor Paul R. Soglin
Subject: 2016 Capital Budget Instructions and Target
Like many communities across our state and nation, we continue to seek ways to balance the need to replace and upgrade our aging infrastructure at the same time we have increasing demands for services that meet the expected quality of life as our city grows. All of this is done within the backdrop of declining federal and state support for our local and national infrastructure needs. I truly
appreciate the efforts you have made to carefully balance competing priorities within your agency budgets.
I am concerned about the future fiscal effects of the 2015 adopted Capital Improvement Plan (CIP). Many projects in the CIP are slated to occur in the 2015 through 2017 time period. Completing all of these projects in this timeframe is unrealistic from both the perspective of the impact on taxpayers and the resources and time necessary for planning, design, engineering and construction. As the
attached chart shows, growth of debt service from capital projects is expected to affect the operating budget and the property tax levy in future years.
Fulfilling our important priorities will require careful planning. Toward that end, you should adhere to the following policies and targets in developing the proposed 2016 capital budget for your agency:
• Limit the overall general obligation and revenue bonding authority for your agency to the amounts included in the capital improvement plan (CIP) adopted as part of the 2015 capital budget. Seek to remove projects or reduce anticipated costs based on updated information. Agencies should also seek to delay projects currently planned for 2015 through 2017 to later years.
• Provide information on new projects not currently in the CIP as a supplemental request and do not add these projects to the CIP at this time. This approach will allow these projects to be more carefully reviewed.
• Review projects scheduled for 2016 in the current capital improvement program and seek to appropriately allocate funding to the years the costs will realistically be incurred. Projects are often implemented over multiple years due to timing of site acquisition, planning and design considerations, regulatory approvals, and construction timetables. As was mentioned above, agencies should carefully consider deferring projects to later years to the extent practicable.
• Submit project reduction plans that total 10% of 2016 general obligation bonding amounts included in the 2015 adopted CIP. These plans should also include reductions equal to 10% of the 2015 adopted CIP amounts for 2017 through 2020. Projects deferred from one year to another within the six-year period of the CIP should not be included in the reduction plan. This reduction plan requirement also applies to Water Utility and Sewer Utility revenue bond amounts in the CIP. Reduction plans should describe the implications of the proposed reductions and should focus on eliminating entire projects rather than partial reductions in funding to all projects.
I look forward to working with you and the Finance Department in the coming weeks on this important task.
