Since Gov. Scott Walker and the state legislature established revenue limits on municipalities, Wauwatosa Finance Director John Ruggini said every year the city has faced a budget deficit, where expected expenditures exceed expected revenue.
This year is no different, although the closing of the city's third tax-incremental finance district will make it somewhat easier by bringing in more property taxes. During the run of the TIF district, taxes on the increased property values of development on State Street had been going toward paying off project costs.
Still, for the 2014-15 budget, Ruggini forecasts a $1.1 million shortfall in revenue to continue current levels of service. Over the next five years, without action from city officials, Ruggini warns that there would be a 2.4 percent structural deficit annually, as expenditures grow 4 percent each year and revenues grow just 1.6 percent.
Wauwatosa's unassigned fund balance — essentially its savings account — has $8.9 million. If the city did nothing to address the forecasted gap in revenues and expenditures, paying for the difference with its savings, it would run out of money by 2019, Ruggini said. But he doesn't expect the city to do nothing.
"The only way to fix the gap is to change the trend lines themselves — increase revenue growth, limit expenditure increases, or preferably, a combination of both," Ruggini wrote in his forecast report for the budget and finance committee.
Ruggini said the main cost drivers for the city are debt service and compensation for city employees, with health care costs going up about 9 percent every year. The city's contracts with fire and police employees expired at the end of 2013. Currently under negotiation, those contracts have potential to bring down costs.
In the next month, Ruggini said he will ask departments to each make reductions by a certain amount to be determined. Budget requests from departments will be due in July, budget presentations will be in August and the budget and finance committee will present a budget in September.
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