City departments may be allowed to relax their budget cuts after the City of Madison projected a smaller gap to make up in its 2014 operating budget. 

The city’s operating budget for the next year cannot exceed the 2013 budget limitation, Mayor Paul Soglin said in a statement. However, city departments are not being required to make any cuts when preparing their budget requests for the upcoming year.

Soglin asked department heads to prepare flat operating budgets as well as create an alternative budget that reduces the 2013 budget limitations by three percent.

The decision of whether cuts will be needed from any departments will happen later in the budget process, David Schmiedicke, the city’s finance director, said in an email to The Badger Herald. He said the preparation of an alternative budget with three percent reductions is just to create options when balancing the budget.

“This exercise provides options to the Mayor and council in order to ensure a balanced budget and to possibly fund items of higher priority,” Schmiedicke said.

Schmiedicke said the biggest costs in the budget are the salaries and fringe benefits set under pre-existing labor agreements. He added increases in insurance premiums and pension contributions will likely also have an effect on the budget. 

The Finance Department found these factors, among others, will cost the city $12 million in 2013, according to the statement said. 

In the statement, Soglin attributed the inability to increase the operating budget to aspects of the state budget. State aid for local projects will not be restored from previous cuts, despite the $1 billion surplus in the state budget for 2013-15, the statement said. 

Schmiedicke said state aid was reduced by approximately $5 million between 2011 and 2012, which was a 10 percent reduction in state aid provided to the city.

This will cause a gap between revenue and expenditures for the city, although it will be smaller than that of 2012 and 2013, according to the statement. The statement said Soglin hopes this gap will not hinder the funds for certain projects.

“Taking these and other factors into account, the Finance Department projects a difficult gap between revenues and expenditures, particularly if we wish to address neighborhood development issues, poverty, the digital divide and food policy,” Soglin said.

Katie Crawley, Soglin’s spokesperson, said he will continue to be committed to his projects on poverty and neighborhood development as he promised during his mayoral campaign.

Soglin hopes the city will be able to maintain all its essential services as well as work on issues of poverty and neighborhood development, which he believes are key in strengthening the city, the statement said.

“The mayor considers those essential services,” Crawley said. “Poverty and strengthening neighborhoods have really been at the top of his initiatives for his elected terms.”

Crawley said Soglin’s overall message reflects good news because he is not calling for any cuts, which have been necessary in recent years. 

City Council will hear the budget in October before it is finalized in November.