MONROE - The city's Finance and Taxation Committee moves toward its final consideration of 2012 budget cuts this week with two meetings Monday and Wednesday.
The committee left off last week with $63,000 yet to shave from the operating budget and reconciled to using about $646,000 of undesignated funds to cover increases in debt service and capital expenses. City officials have been working to hold the 2012 tax levy at the same level as 2011, when expenses were budgeted at $13 million.
About $200,000 of the debt service increase comes from an unanticipated fall in Tax Increment District No. 7 value and its inability to cover its own principal and interest payment. With the city's payment of that debt, the committee is asking for an agreement with TID 7 to reimburse the city with interest, when the funds become available. That agreement must be approved by the TID 7 Joint Review Board.
Capital accounts requests for 2012 totaled $520,000 more than the 2011 levied amount of $360,000. The committee has brought the requested funding down by $125,000.
Committee members cut $60,000 from street construction, leaving the capital account with $440,000 more than last year's amount of $100,000. Members noted savings for street construction had been drastically cut in the past two years.
The fire department request was reduced from $135,000 to $100,000, and the parks department was cut $30,000.
The Parks Department capital account also took a hit earlier in the budget process, letting go of $20,000 earmarked for a replacement truck.
Committee members did not favor using excess fund balance money to cover debt and savings.
The city has more than a $1 million as yet undesignated, after setting aside $3.2 million in an almost untouchable emergency account, and after paying for a trail bridge over 8th Street and setting up a loan for the city water utility this summer.
Putting the money in capital accounts means the funds cannot be used for operating expenses. They can, however, be slid between capital accounts.
And using the money for TID 7 debt service means the money is gone, with little hope that it can be repaid anytime soon.
Committee members discussed what could have been done to avoid the short falls for the coming year, but the general understanding was nothing can be done to quickly correct the problem for the 2012 budget.
"Next year, there has to be some real thought given to getting out of this mess," Alderman Chris Beer said.
TID 7 needs some new added value, meaning some major new construction, to pump it up. An alternative is to increase construction in one of the city's other five tax increment districts, which could become a donor for No. 7.
Some aldermen balked at using undesignated funds for capital accounts, where department heads save money for anticipated large purchases. Their fear is what the city would use in times of unexpected expenses - especially state and federal mandated project, such as the city saw this fall with upgrading public safety radio equipment.
City Administrator Phil Rath said the city needs to build up a 5-year capital fund, and pointed out the city's two choices when it comes time to replace equipment.
"It's either pay as you go, or pay as you use," he said. "If you don't save ahead, you end up borrowing."
Committee member Reid Stangel brought back the idea to raise the levy by $53,000, the amount of net new construction, as allowed by law, but the rest of the committee members resisted.
Using the fund balance money is a short-term decision, he said. "In two or three years, it's going to catch up with us. Little bumps along the way are better than one big one," he added.
Cathy Maurer, city treasurer, said this year is the first time she has seen net new construction in the city, and the city's large fund reserve was built up over time, when past interest rates were high. Ehlers, the city's financial advisory company, would see paying off the debts as "not the best use of fund balances," she said.
"The option of cutting operating expenses was not looked at favorably either," Rath said. Cutting personnel leads to reduced services, and cutting programs leads to cutting workers, he pointed out.
"Laying off people doesn't help the economy," Stangel added. "Unemployment is the worse of two evils."
But some aldermen not on the committee are ready to make those cuts.
Thurston Hanson said having a zero increase in the 2012 budget is just the start to making cuts in the budget.
"It's not the amount; it's the principal," he added.
Alderman Michael Boyce found disjunction in the logic of hanging on to the undesignated funds while raising the tax levy.
"Having a high fund balance that is so healthy compared to any community in the state speaks volumes," he said. "Raising the levy just avoids making the hard decisions."
The Finance and Taxation Committee meets Monday at 5:30 p.m. and Wednesday at 6 p.m. at the city hall.
The committee left off last week with $63,000 yet to shave from the operating budget and reconciled to using about $646,000 of undesignated funds to cover increases in debt service and capital expenses. City officials have been working to hold the 2012 tax levy at the same level as 2011, when expenses were budgeted at $13 million.
About $200,000 of the debt service increase comes from an unanticipated fall in Tax Increment District No. 7 value and its inability to cover its own principal and interest payment. With the city's payment of that debt, the committee is asking for an agreement with TID 7 to reimburse the city with interest, when the funds become available. That agreement must be approved by the TID 7 Joint Review Board.
Capital accounts requests for 2012 totaled $520,000 more than the 2011 levied amount of $360,000. The committee has brought the requested funding down by $125,000.
Committee members cut $60,000 from street construction, leaving the capital account with $440,000 more than last year's amount of $100,000. Members noted savings for street construction had been drastically cut in the past two years.
The fire department request was reduced from $135,000 to $100,000, and the parks department was cut $30,000.
The Parks Department capital account also took a hit earlier in the budget process, letting go of $20,000 earmarked for a replacement truck.
Committee members did not favor using excess fund balance money to cover debt and savings.
The city has more than a $1 million as yet undesignated, after setting aside $3.2 million in an almost untouchable emergency account, and after paying for a trail bridge over 8th Street and setting up a loan for the city water utility this summer.
Putting the money in capital accounts means the funds cannot be used for operating expenses. They can, however, be slid between capital accounts.
And using the money for TID 7 debt service means the money is gone, with little hope that it can be repaid anytime soon.
Committee members discussed what could have been done to avoid the short falls for the coming year, but the general understanding was nothing can be done to quickly correct the problem for the 2012 budget.
"Next year, there has to be some real thought given to getting out of this mess," Alderman Chris Beer said.
TID 7 needs some new added value, meaning some major new construction, to pump it up. An alternative is to increase construction in one of the city's other five tax increment districts, which could become a donor for No. 7.
Some aldermen balked at using undesignated funds for capital accounts, where department heads save money for anticipated large purchases. Their fear is what the city would use in times of unexpected expenses - especially state and federal mandated project, such as the city saw this fall with upgrading public safety radio equipment.
City Administrator Phil Rath said the city needs to build up a 5-year capital fund, and pointed out the city's two choices when it comes time to replace equipment.
"It's either pay as you go, or pay as you use," he said. "If you don't save ahead, you end up borrowing."
Committee member Reid Stangel brought back the idea to raise the levy by $53,000, the amount of net new construction, as allowed by law, but the rest of the committee members resisted.
Using the fund balance money is a short-term decision, he said. "In two or three years, it's going to catch up with us. Little bumps along the way are better than one big one," he added.
Cathy Maurer, city treasurer, said this year is the first time she has seen net new construction in the city, and the city's large fund reserve was built up over time, when past interest rates were high. Ehlers, the city's financial advisory company, would see paying off the debts as "not the best use of fund balances," she said.
"The option of cutting operating expenses was not looked at favorably either," Rath said. Cutting personnel leads to reduced services, and cutting programs leads to cutting workers, he pointed out.
"Laying off people doesn't help the economy," Stangel added. "Unemployment is the worse of two evils."
But some aldermen not on the committee are ready to make those cuts.
Thurston Hanson said having a zero increase in the 2012 budget is just the start to making cuts in the budget.
"It's not the amount; it's the principal," he added.
Alderman Michael Boyce found disjunction in the logic of hanging on to the undesignated funds while raising the tax levy.
"Having a high fund balance that is so healthy compared to any community in the state speaks volumes," he said. "Raising the levy just avoids making the hard decisions."
The Finance and Taxation Committee meets Monday at 5:30 p.m. and Wednesday at 6 p.m. at the city hall.