Additional City Budget Information

This comes from the city Finance Director. Explaining more details of the budget.

From: Schmiedicke, David
Sent: Wednesday, October 03, 2012 4:19 PM
To: ALL ALDERS
Cc: Soglin, Paul; Miley, Sally; Monks, Anne; Crawley, Katie; Iheukumere, Astra; Zavos, Nicholas; May, Michael; Simon, Debra; Bohrod, Daniel; Fruit, Tim; York, Elizabeth
Subject: Summary of 2013 Executive Operating Budget

Alders:

I thought it would be helpful to provide a summary of some of the key revenue and expenditure information in the 2013 Executive Capital Budget, as well as respond to questions regarding the maximum allowable levy increase under state law and apprise you of the approval and calculation processes related to applying prior year unused levy authority in the 2013 budget.

Short summary of key information related to the 2013 Executive Operating Budget (see attached document). This summary also includes three tables:

· Summary of revenues and expenditures for 2011 through 2013. This table also shows operating expenditures net of debt service, premium applied to debt service, and direct appropriation to capital projects over these years.

· Summary of the gross change in expenditures and revenues from 2012 to 2013. Expenditures are increasing by $13.6 million, with about $5.7 million of that increase related to operating expenditures (i.e., excluding debt service and direct appropriation to capital).

· Tax rate computation table for the 2013 executive operating budget. This table shows the assessed value estimates for 2013 through August 31, 2012, the mill rate calculations, and the property tax levy estimate. An estimate of the maximum allowable increase under the state levy limit is shown at the bottom of the table.

Maximum Allowable Levy Increase (and remaining amount compared with the 2013 executive operating budget). The 2013 Executive Operating Budget is an estimated $383,670 under the maximum allowable levy increase under state law. A property tax levy of this amount compared to 2012 would increase the mill rate by 5.6%, the levy by 3.6% and taxes on the average value home by 2.43% ($51.39). The levy limit is subject to change as factors involved in the calculation are finalized.

Approval and Calculation Processes related to Prior Year Unused Levy Authority. The 2012 levy limit calculation under state law allows municipalities to apply unused levy authority from the prior year. The amount of the carryover that can be applied cannot exceed 0.5% of the prior year levy. In the 2012 adopted budget, the city did not use $1,757,284 of levy authority. Under the 0.5% of prior year levy maximum, the city can use $933,687 of the carryover from 2012 in 2013. Use of this carryover requires a 3/4ths vote of the Common Council (a separate resolution and vote will be required as part of passage of the 2013 budget). The 2013 Executive Budget proposes using $550,017 of the allowable carryover.

Please let me know if you have any questions.

Thanks.

Here’s the Key Budget Information:

Assessed Value (as of 8/31/2012; awaiting final Board of Review decisions)
• Residential – down 2.76%
• Commercial – up 0.33%
• Total – down 1.89%
• Average Value Home = $232,024 (down 3% from 2011)

General Fund Expenditures
• Total spending = $252.9 million
• Up $12.2 million from 2011 (5.1%)

Library Fund Expenditures
• Total spending = $13.5 million
• Up $1.4 million from 2011 (11.3%)

Total Expenditures (General and Library Funds)
• Total spending = $266.4 million
• Up $13.6 million from 2011 (5.4%)

Revenues
• Total revenues = $70.1 million
• Up $6.0 million from 2011 (9.4%)

Property Taxes
• Total levy = $193.1 million
• Up $6.4 million from 2011 (3.41%)
• Mill rate = 9.30 (up 5.41% from 2011)
• Taxes on Average Value Home = $2,157.31
• Up $47.01 from 2011 (2.23%)

Key Revenue Changes
Room tax
• Projected room taxes for 2012 are $1 million above estimates included in 2012 adopted budget and 8.4% above 2011 actual collections. The 2013 executive budget assumes that room taxes will increase by 4.6% in 2013.
• Transfer of surplus room tax revenues to general fund is up $1.1 million from 2012 adopted budget (2013 executive budget proposes to return to 100% of surplus room tax revenues to general fund compared to 2012 provision that split surplus between general fund, GMCVB and Monona Terrace)
• Ambulance Conveyance Fee is increased by $300 to $900 for residents and $1,000 for non-residents and an increase of $3.50 per mile (to $16.00 per mile). The fee was last increased in the 2009 budget. Revenues from the fee increase are estimated at $2.2 million (a 42% increase above projected revenues under current fee levels).
• State aid is expected to be $1.3 million (3.9%) higher than amounts in the 2012 adopted budget.
• All other revenues expected to increase $448,000 (1.8%) compared with 2012.
• Bus fares increasing from $2.00 to $2.25. This increase will generate an additional $686,600 in revenues for Metro Transit. Of this amount, $218,000 will support expanded service on Routes 2 (West Transfer Point to Capitol Square) and 18 (Owl Creek).

Fund Balance Applied
• The 2012 adopted budget transferred $2 million of surplus revenues in the city’s salary continuation insurance fund to the general fund. The 2013 executive budget continues that transfer and proposes applying $1.16 million from the general fund balance for capital projects.

Debt Service
• General fund debt service is up $8.16 million (30%). This includes a $6.9 million reduction in the amount of premium applied to debt service.
• Library fund debt service is up $1.2 million (83%) due to $15.2 million of borrowing for Central Library renovation costs.

There’s more numbers at the end of the document here if you want to take a look.

WHAT DOES IT MEAN?
This is what I see.

This blog post is clearly for geeks, but I can point out that there seems to be a bigger transfer from the “rainy day fund” than usual, I believe.

Also, I question how the home prices went down again, but commercial assessments are up. I wonder if we need to look at our assessment practices. The average home value has gone from $241K in 2011 to $232K in 2013. I’m curious where we are seeing the changes in value? On the higher end homes? Or the modestly priced homes? Its only a loss of 400K, but it could be an increase.

The room tax news is good. Check it out
Projected room taxes for 2012 are $1 million above estimates included in 2012 adopted budget and 8.4% above 2011 actual collections. The 2013 executive budget assumes that room taxes will increase by 4.6% in 2013.
However, expect the business community to up in arms over the room tax issue since the Greater Madison Convention and Visitor’s Bureau and Monona Terrace are not getting money they think they have rights to.

Remember on the ambulance fee, there is a waiver for low income people who can’t afford it, we need to make sure that information is aggressively out there – but after that, most of the rest of us will have our insurance pay for it and won’t notice. It would be awful if someone didn’t call the ambulance because they were afraid it would cost too much tho, we again, aggressive education is important.

State aids are UP.

Bus fares should not be increased . . . or, I think we should just give homeless people free bus rides. And increase the number of low income bus passes available, since they are usually gone in the first week of the month. They should also increase where people can get those passes.

We should all thank the unions for the $2M transfer from the the salary continuation fund.

And, um, all that capital borrowing is killing us, its costing us an extra $8M this year.