Gov. Scott Walker’s proposed budget for 2013-2015 could create challenges for the city over the next few years, city officials said Thursday.
According to city Finance Director David Schmiedicke, some of the major provisions of the proposed state budget that could affect the city are the property tax levy limits and shared revenue.
Ald. Scott Resnick, District 8, explained shared revenue is the money the state sends back to municipalities and counties from the taxes residents pay, such as property taxes.
Resnick added over the last few years, the state made drastic cuts to shared revenue.
Schiedicke said with the proposed budget, various amounts of state funding for the city would be frozen at the levels from the previous budget cycle. He explained this is an issue for the city because the city made drastic cuts to shared revenue over the last few years.
The shared revenue from property taxes represent about three fourths of the city budget, Schiedicke said. About 15 percent of the budget comes from other state aid, he added. The allocated funding for the city shown in the budget will place significant limits on city revenue growth, he said.
Schiedicke said current law property taxes can only go up when changes through new construction increase the value of buildings in the city. The city has a relatively large property base, he said, but new construction accounts for only about three fourths of a percent of that base, and there will most likely be no dramatic increase in that amount, he said.
A large overwhelming share of the city’s revenues will be growing at a very slow pace, Schiedicke said. However, the costs of providing essential services in the city are going up at a faster pace than that, he added.
“I am disappointed shared revenue will not be increasing,” Resnick said.
Resnick said from shared revenue with the state, the city will most likely receive between $5 and $8 million, while Milwaukee will most likely receive between $180 and $220 million. If Madison received the same level of shared revenue as Milwaukee, the city would receive millions more in state funding, he said.
Mayor Paul Soglin and the City Council will have to look closely at programs the city provides and prioritize within the limits of state funding, according to Schmiedicke. The city will have to account for lack of revenue and limited revenue growth, he said.
The city cannot raise taxes to increase revenue because they are already close to the levy limits, Resnick said. The city will have to make changes to a number of services in the next budget cycle, he said.
Resnick cited the Overture Center and Madison Metro as services where funding would have to be reduced to account for the lack of additional revenue. He added City Council will be fighting for making cuts without layoffs.
There will be challenges for the city over the next few years in terms of balancing the budget, Schmiedicke said. The city will be starting the budget process for 2013-2015 later in the spring, he said.
“We have to do a lot more with less money,” Resnick said. “We are going to have to find the money from somewhere.”