Office of the Mayor

Paul R. Soglin, Mayor City-County Building, Room 403 210 Martin Luther King, Jr. Boulevard Madison, Wisconsin 53703-3345 PH 608 266 4611 FAX 608 267 8671 www.cityofmadison.com mayor@cityofmadison.com

October 1, 2013 To: The President and Members of the Common Council From: Mayor Paul R. Soglin Madison is a great city for so many reasons: our lakes and parks; the wide-array of cultural and recreational opportunities; its vibrant, prosperous, and cutting edge economy; our generous and civicminded populace, and our varied and invigorating neighborhoods. So many of us who live, work, and play in this great city can be grateful for, and enjoy these treasures. However, many people in our city do not have as much access to opportunity. Their access is wanting. These are families, teens, single parents, and young kids who work hard each day and who live in neighborhoods without access to quality childcare, good housing, transportation, health care, and the education and job training that is critical for success. Nearly one-half of the children in our schools come from families with incomes that make them eligible for free and reduced price lunch. Many of these children have had to change schools and disrupt their education several times in their young lives as their parents seek housing or become homeless. Madison has always made success for everyone a top priority. We are a giving people, a caring city. My operating budget for 2014 builds on that commitment by listening to the ideas of our citizens, supporting collaborative efforts with public, private and non-profit sector partners, and investing in proposals made by our multi-disciplinary neighborhood resource teams. Despite severe state mandates and misguided state legislative politics, the City budget sets priorities to ensure that all residents of Madison are part of its success story. Success for all depends on prudent investments of our hard-earned resources. First and foremost, I am recommending $150,000 in one-time funding for comprehensive studies, in-depth evaluations, and development of measurement tools to ensure that our existing community services programs are fostering success for all in an equitable manner. Second, through a commitment of over $200,000, we are partnering with Madison public schools and the Madison Public Library to fully fund a youth outreach worker and invest in more youth library outreach services as part of a broad effort to provide greater outof-school time opportunities for our children. Third, we are connecting young people to meaningful employment by allocating $125,000 to leverage apprenticeship opportunities modeled on Milwaukees Big Step program. Fourth, we are providing permanent funding for an Emerging Opportunities Program in support of critical and immediate social services needs in our community. Fifth, we are building on our community participation efforts by investing in a civic engagement platform to harness new social media technologies toward enhancing city services, making programs more cost-effective, and soliciting citizen feedback.

October 1, 2013 Page 2 The 2014 budget maintains and enhances essential public services. The Police Department will be closer to its authorized strength through an expanded recruit class that will provide 15 additional officers prior to the expected retirement of existing commissioned staff. The soon-to-be completed Fire Station 13 will open with new management. New transit routes, including service to the isolated and at-risk Owl Creek neighborhood, that were added this year are fully funded in 2014. Operations of the new splash parks on the southwest side are fully funded in this budget. Permanent citywide funding is provided for the Law Enforcement Advocate Partnership with Domestic Abuse Intervention Services. One-time funding of $120,000 is provided to help the YWCA continue its critical transit for jobs program while it seeks monies to replace federal budget cuts. Critical operations needs are also addressed in this budget, including fuel costs for the City fleet, tipping fee increases necessary to fund expansion of the Dane County-operated landfill, and staffing costs of the biennial election cycle. Additional Police overtime funding is provided in support of safety efforts in downtown Madison and monies are allocated to purchase equipment for new squad cars. Approximately $1.7 million is provided to meet increases in the cost of employee health insurance. Investing in our priorities and addressing critical costs-to-continue were made difficult due to modest growth in revenues. The property tax levy is limited to a 1 percent growth factor associated with new construction in 2012 plus the change in debt service costs. State shared revenue remains unchanged. Strength in building permit and room tax revenue due to the recovering economy was offset somewhat by less than expected revenue growth from the recent increase in ambulance fee rates. Given this very modest growth in revenues, balancing the budget presented challenges. The toughest decision was providing funding sufficient for a 2.1% employee pay increase for represented employees rather than the scheduled 3% increase; the scheduled increase for non-represented employees will be reduced from 2% to 1.1%. Our employees are the Citys most valuable resource they get the job done in a professional and innovative manner and with the highest level of service to our citizens. I have made it clear to our represented employees that the ability to fund future pay increases would be dependent in large part on state mandates and state aid levels. The City is engaged in bargaining with its police, fire and transit units to reach agreement on compensation levels for 2014. Under agreements with the remaining unions that were settled a year ago, the City has the authority to limit the rate of growth in pay. It is my hope that conditions will improve sufficiently in 2015 to reverse the deferred portion of the scheduled wage increase. Reductions were also necessary to balance the budget: First, general fund appropriations for Madison Metro have increased by nearly two-thirds since 2010 due primarily to rising fuel costs and state aid reductions the largest increase of any City agency or program and nearly five times the rate of growth in the property tax levy over that period. For the 2014 budget, there was not enough revenue available to fully fund both the cost of new route expansions and rising fuel costs for Metro transit. Metro benefited from an extremely favorable fixed fuel price contract during 2012 and 2013. Fuel prices have increased approximately 20% over that period of time. The City Transit and Parking Commission has responsibility for Metro fare levels and will be reviewing revenue and service level options over the next few weeks. Second, several positions of lower service priority are being eliminated in City agencies. Most of these positions are currently vacant; any layoffs will hopefully be avoided through attrition over the next several months.

October 1, 2013 Page 3 Third, several fees are proposed for increase, including brush processing, wood mulch delivery and transfer station services. The online transaction fee for certain payments is being increased from 25 cents to 50 cents to help offset bank charges and related costs. Fourth, the City subsidy to the Overture Center is being reduced from $1.75 million to $1.45 million. My proposed 2014 operating budget also begins a multi-year phase-out of the one-time funding from the Citys general fund balance used to support the subsidy in the 2013 budget. The Overture Center is a wonderful regional resource. However, city property owners alone cannot be the sole source of public support for this facility. My proposed budget continues to focus on fiscal responsibility. In order to avoid a structural deficit in the 2015 budget, the entire levy capacity generated by the $4 million premium received with the Citys recent debt issuance is committed to one-time capital projects. The executive budget proposes financial and budget management policies that reflect our goal of maintaining a fund balance equal to 15% of general fund expenditures and striving to focus appropriation decisions within the budget process, with certain exceptions. With the fund balance currently near 17 percent of general fund expenditures, I am proposing that approximately $1.8 million of the balance be allocated for one-time or limited periodic (the extra elections costs in 2014) expenditures, or as part of a phase-out of one-time funds committed to ongoing costs in the 2013 budget. General fund expenditures in the 2014 executive operating budget are expected to increase 3%. Based on that expenditure growth along with a 4.0% increase in Library Fund expenditures, current projections of state aid levels and projected growth in local revenues, the property tax levy is expected to increase by 2.45%. With the latest estimates of overall value of taxable property, the tax rate is expected to increase by 2.0% and taxes on the average value home by 1.47%. We are very fortunate to live in this great city. Lets work together to ensure that all Madison residents can participate in its prosperity.