WAUKESHA – On Monday evening, the Waukesha Finance Committee received a presentation about the City Financial Management Plan, a planning tool for the current operating budget and a roadmap for the future, the document explains.
Divided into a general fund forecast and impacts as well as planned financial sustainability initiatives, the FMP states it was created to “proactively start to address future budgetary challenges before they become more challenging.”
Often referred to as the “operating fund” and primarily funded through property tax levy, the general fund records revenue and expenditures for most city department activities. City staff prepare a general fund budget annually and present it to both the Finance Committee and Common Council. By state statute, the budget is balanced to ensure expenditures don’t surpass available funds and anticipated revenues, the FMP says. Rising operational costs, like higher prices for products and services and increased employee compensation, have made that a challenge.
During the meeting, City Administrator Tony Brown said Waukesha’s general fund is roughly $80 million and about “75% of all of our costs in the general fund are compensation.” From 2023 to 2024, general fund expenditures jumped 4.8%, the FMP outlines.
Among the city’s many obstacles are state-imposed levy limits, which set a maximum amount a municipality can impose as a property tax levy on parcels within their boundaries, the FMP notes. Currently, the levy can only be increased annually based on the property value added through net new construction. Waukesha “primarily relies on property taxes to fund operations,” the plan says.
Brown explained that the city has two main revenue sources. There are “property taxes at 65%” as well as “intergovernmental revenue …that makes up 80% of all of the revenue we have in the general fund.” The city administrator said that’s important to note because it means 80% of the general fund “is not in the city’s control.” Intergovernmental revenue, he added, are funds made available to Waukesha by “funding levels the state sets for different programs like general transportation aid, shared revenue, etc.”
Since 2009, the city has only been able to increase the operating fund tax levy by an average of 1.14% annually. “To put that into perspective, on an $80 million budget, that generates about an additional $525,000 of revenue,” Brown told the committee.
Despite last year’s 2.21% increase, the city expects net new construction to hover around only 1% in the next few years, according to the FMP. Brown said that when assessing municipalities across the state, it’s clear Waukesha is not the only community facing challenges. He said of “roughly 1,905 municipalities in the state of Wisconsin, 52% of them last year had 1% or less of net new construction.” This will become even more difficult as “a city like Waukesha, who is largely built out, gets to a point where five to 10 years down the line we’re fully built out,” since redevelopment poses a new challenge, the city administrator explained.
Finance Director Joe Ciurro told the committee that the general fund forecast illustrates what the fund would come to should the city continue operating as it is. Though the Finance Committee and Common Council could pass the 2024 budget since “it nets to zero,” Ciurro said after considering trends like “inflation, in personnel, and in other operating” and “comparing those to the trends we were seeing on the revenue side, we knew that there was trouble lurking.”
Without new solutions, Waukesha will have an operating budget deficit of $800,000 in 2025 and nearly $8.5 million in 2028. By the end of 2029, Ciurro said all of the budget stabilization fund (which has just over $4 million) would be spent as expenses outpace revenue.
“That’s not fiscally responsible. We wouldn’t even be able to issue debt. Our rating would be ridiculously low,” he explained. “Obviously, not a feasible plan.”
Waukesha’s current financial position has been a concern for years, the FMP acknowledges, and in addition to levy limits, factors like inflation, increasing health insurance rates, and short-term rather than long-term budget strategies contributed to the situation.
After the planning and review process – which included input from every city department – some initiatives were identified as providing the most cost savings or revenue generation with the least amount of impact. The FMP divides them into the categories of new revenue, cost recovery, and service adjustments.
Two of those new revenue initiatives include additional reinspection fees on failed trade inspections and a garbage/recycling collection special service charge to cover the costs of the service. Brown said the garbage fee would help the city move it off the levy. In turn, it would manage contract costs and “alleviate crowding out other city services that are within the general fund.” Following inquiry from District 4 Alderman Joe Pieper, the city administrator noted the estimated household fee would be $12 to $13 per month or around $155 annually.
Among the proposed cost recovery initiatives were establishing funding for a short-term equipment replacement fund and increasing fees for services like the drop-off center as well as Parks, Recreation & Forestry Department programs. Service adjustments could involve bus route changes, reducing seasonal positions, and restructuring and reviewing personnel.
By implementing those initiatives, Waukesha would be in the black in 2025 and 2026. However, there would still be shortfalls in 2027 and 2028, though less than they would be should the city continue its current path. Ciurro acknowledged the FMP is “just the beginning of the work,” and the document says the city will revisit it annually to continue identifying “initiatives as part of the budget process.”
Initiatives that didn’t make the cut in the FMP include a vehicle registration fee, fire protection fee, creating a Transportation Utility, and eliminating public safety positions.
The City Financial Management Plan will be presented to the Common Council at an upcoming meeting.
link