The Board of Estimates approved the use of the city’s reserve fund to help offset this year’s budget shortfall of nearly $3.6 million on Monday.

The board also approved the use of Tax Incremental Financing toward the Capitol Square Revitalization and expansion of Metro Transit contracts in the area.

Of the approved money to be taken from the city’s reserve fund, $125,000 is to be appropriated to the Madison Police Department, $9,000 to the City Channel, $994,000 to the Streets Division, $25,000 to Community Services and $1,625,000 to the Workers’ Compensation Fund.

After withdrawing the appropriated $2,778,000, the remaining balance of the reserve fund will be 12 percent of the budgeted expenditures — short of the established goal of 15 percent.

“We’re very fortunate in that we have maintained an AAA bond rating for so long,” Ald. Mike Verveer, District 4, said. “Even though we currently have an AA bond rating, we’ve fared as well as we have thanks to this cushion in the form of (the reserve fund).”

The necessity for the appropriations has been attributed to the $3.6 million shortfall in this year’s budget. Officials said the shortfall is not due to overspending but rather revenues not meeting projected figures.

Approval of TIF funds toward the Capitol Square Revitalization project was one of the main points of contention at the meeting.

“When we approve TIF projects, we are told that the project needs to generate some type of property tax revenue,” said Ald. Jed Sanborn, District 1. “But this does none of that.”

He added the use of TIF funds for the Capitol Square project does not directly result in an increase in property tax revenue.

The Capitol Square project is focused primarily on renovating many of the dated, aesthetic features in the Square, including new planters, improved benches, tree replacement and new curbing.

Verveer, sponsor of the Capitol Square Revitalization project, said although the renovation plans do not in and of themselves generate an increase in revenue, a revitalization of the area would most likely result in increased commerce and a better image for businesses and establishments in the surrounding area.

The board also approved authorizing the Metro Transit to develop contracts with area businesses and organizations interested in creating a pass program for employees, volunteers and staff. The program is intended to provide service for both the fixed-route transit and ADA paratransit service.

The proposal cited the success and popularity of larger programs of this type, most prominently that in coordination with the University of Wisconsin and St. Mary’s Hospital. The new proposal is different in that it applies to businesses and organizations with fewer than 1,000 affiliated individuals.

The board also authorized the mayor, city clerk and chief of police to accept a $14,500 award for the Innovative Law Enforcement Program from the state Office of Justice Assistance.