The mayor of Madison, Wisconsin is acknowledging that her city’s current budget is far out of balance and that coronavirus costs are just a small part of it.
In a memo sent yesterday to city managers, Mayor Satya Rhodes-Conway acknowledged that about $5 million to $10 million of the city’s projected budget deficit of $20 million to $25 million was caused by the coronavirus shutdowns, reports Madison.com. The city’s operating budget for the year is $341 million.
The rest of the shortfall, Rhodes-Conway told the bureau heads, is the result of overspending on regular budget items.
The mayor urged the agencies to determine what spending is essential.
“Times like these call us to double down on our priorities,” Rhodes-Conway said, according to Madison.com. “We need to ask ourselves serious questions about whether or not we should be in the business of providing certain services.”
The mayor pointed out that the city’s revenues can rise and fall rapidly with changing economic conditions, whereas spending tends to rise steadily.
“In these times there is little we can influence when it comes to volatility of our revenues; meaning we will have to focus on the areas that we can control, which is our expenditures,” Rhodes-Conway said in the memo.
The revenue losses result from “huge drops in fines, fees, investment performance, hotel room taxes, Metro Transit fares, parking revenues and more,” the Wisconsin State Journal reported.
In early May, Rhodes-Conway had told city managers the budget deficit for 2020 could be as high as $30 million.
Finance Director David Schmiedicke said the mayor’s team was considering “service reductions, furloughs and use of the city’s $52 million ‘rainy day’ fund and emergency federal funding for transit,” the Wisconsin State Journal reported.
“This is the first action; others will follow over the summer,” the newspaper reported Schmiedicke as saying. “We hope to avoid layoffs, but permanent reductions are unavoidable given the severity of the economic impacts.”
In her memo yesterday, “the mayor advised agencies to think about other ways the city could save money beyond the jurisdiction of their departments,” Madison.com reports. “She encouraged agencies to brainstorm ideas for one time savings and creative ways to combine services.”
Cameron Sholty, director of government relations for The Heartland Institute, says a habit of overspending by the city government is likely the problem.
“Prior to Governor Evers’ Safer-at-Home order, the national and state economy were continuing their growth apace,” said Sholty. “Therefore, if the budget challenges facing the city of Madison aren’t coronavirus-related, then it seems there were structural spending issues, not revenue challenges.
“The state of Wisconsin was enjoying a budget surplus, so why in the state’s most rapidly growing region, does Madison face such challenges?” said Sholty.
Sholty says Rhodes-Conway is showing good leadership in the budget matter and should stick to her plan.
“The mayor should be lauded and should make sure to avoid one-time budget fixes and instead seek to make structural changes to their budget,” said Sholty.
Update: comments from Sholty added on June 3.