How the document fits into the city’s expenditure strategy
By Steve Barg
For those of you who follow city government, the portion of our finances that you probably keep a close eye on would most likely be the annual budget. It is in that document that the city sets forth its detailed plan for the upcoming year’s revenues and expenditures and the city’s property tax rate is established, based upon the total amount levied.
Although not chiseled in stone, the annual budget must be strictly followed unless the city council approves a budget amendment allowing monies to be transferred from one account to another for very specific purposes. Budget amendments are intended to be a somewhat uncommon event, as evidenced by the super majority — seven votes — required for their approval.
We usually refer to the budget as our most significant document, but the Capital Improvement Program (CIP) is an extremely important financial planning tool as well. Where the budget is detailed and specific, the CIP, a five-year plan updated annually, serves as a blueprint for future capital spending.
Think of it this way: You and your spouse create a budget, chart out your expected income, and figure out how to best use these monies to cover anticipated expenses like mortgage/rent, utilities, food, clothing, gas, insurance, etc. You have a long-range list, too, including items like home improvements, vehicle replacement, new furniture, and vacations with some ideas on how to pay for these things when the time arrives. This list changes over time, based upon your most pressing needs, but it gives a framework to your future plans. This is your version of the CIP.
What items are found on a typical CIP? Looking at the proposed CIP, a large percentage of projects, comprising the majority of total cost, are for major street work such as reconstructions, overlays, etc. Despite how much the city spends on roads every year, we are not able to keep up with our actual needs. Other CIP projects include maintenance of our city buildings and facilities, along with improvement projects related to parks and recreation, community development, public safety, stormwater management, and our airport.
To give you a sense of how challenging it is to reduce the list of projects to make things work, the initial CIP requests exceeded funding expected to be available over the five-year period by roughly $7 million. Revenues to pay for these capital projects come from a variety of sources, including tax levy funds, borrowing, room taxes, user fees, and applying current fund balances.
So far the CIP Committee — made up of four council members, one plan commission member, a citizen representative, and the mayor — has met twice and will likely have two or three more meetings before it reaches consensus on a recommended CIP.
As we move into the second half of April, the CIP will be reviewed at Board of Public Works and City Plan Commission meetings, after which the council will consider final approval in May. Once approved, the CIP will be a blueprint for the next five years of planned spending, including the 2017 budget. But remember that in January 2017, the entire process starts over, as it will once again be time to update the CIP.
If you have questions or suggestions about our long-range Capital Improvement Program, please call me at 715-486-2003, or email me at Steve.Barg@ci.marshfield.wi.us. Thank you very much, and I wish all of you a wonderful spring season.