Title
Year End Appropriation Resolution to amend the 2024 Adopted Operating Budget to increase General Fund appropriations by a total of $8.0 million by appropriating a net amount of $1.5 million from the General Fund Unassigned Balance to meet projected shortfalls in agency budgets and increasing the general fund transfer out to the capital projects fund by $6.5 million related to American Rescue Plan Act (ARPA) reallocations; transferring $7.3 million of American Rescue Plan Act (ARPA) funds from the grant fund to the general fund; reducing general fund balance applied by $849,364, related to ARPA reallocations; making transfers of appropriations within agency budgets; making revenue adjustments to non-general fund agencies based on third quarter projections; clarifying for federal transit financial reporting purposes that a portion of the Metro Transit subsidy from the General Fund is used to pay debt service in the Metro Transit enterprise fund; and amend the 2024 Adopted Capital Budget to appropriate funding from non-borrowing sources to various capital projects; and transferring funds across capital projects to comply with federal arbitrage rules.
Fiscal Note
The proposed resolution amends the 2024 adopted operating budget in order to make technical adjustments within various agency budgets. The amounts proposed in the year-end appropriation are based on actual expenditures through September of 2024. Major changes in the resolution include: 1) appropriating $8,038,911 in the General Fund budget, including $1,538,911 from the General Fund unassigned balance to cover projected deficits in multiple agencies and $6.5 million for a transfer from the General Fund to the Capital Projects Fund that is supported by a reallocation of federal American Rescue Plan Act (ARPA) State and Local Fiscal Relief Funds (SLFRF), 2) reallocating federal ARPA-SLFRF funds to close out projects by the end of 2024 and transferring $7,349,364 to the general fund, 3) transferring $2,583,400 from direct appropriations to multiple agencies for compensated absence escrow costs, 3) authorizing intra-departmental transfers within general fund agencies, 4) amending the budget for multiple non-general fund agencies, and 5) amending the 2024 adopted capital budget to make technical adjustments of funding across projects and comply with arbitrage requirements under federal tax law.
Appropriations from general fund unassigned balance
Under the State of Wisconsin Expenditure Restraint Incentive Program (ERIP), the City must limit the growth in its General Fund budget over the prior year, excluding debt service, to rate of inflation plus 60% of the net new construction factor in order to qualify for a state aid payment of approximately $7 million. The ERIP growth limit for the 2025 budget (2026 ERIP payment) is 4.8%. In order for the City to keep the growth rate in the 2025 budget compared to the 2024 budget below 4.8% and qualify for the ERIP payment, the 2024 budget will need to be increased by at least $6 million through the 2024 Year-End Appropriation Resolution.
The mid-year budget resolution (File 84378) appropriated $545,000 from the General Fund unassigned balance to purchased services in the IT operating budget to cover a projected deficit. The year-end resolution appropriates an additional $1,538,911 from the General Fund unassigned balance to cover projected deficits in the following agencies:
• Clerk: $100,000 in salaries, $70,000 in benefits, $115,000 in supplies, and $8,500 in purchased services for higher than budgeted costs related to the general election (Total: $293,500)
• Direct Appropriations: $25,911 in transfer to capital for the Finance Capital Budget Administration program so that the transfer amount is aligned with the inter-departmental billing in the Finance Department’s operating budget
• Fire: $304,400 in salaries
• Police: $173,800 in salaries and $71,300 in purchased services for software licenses originally budgeted in capital
• Streets: $670,000 in inter-departmental charges for higher than budgeted fleet charges
The appropriation from fund balance in this resolution, in addition to the reallocation from the American Rescue Plan Act (ARPA) funding described in the next section, will assist in ensuring the City qualifies for a payment under ERIP by increasing General Fund appropriations by $8,038,911. This amount, plus the $545,000, appropriated from the General Fund unassigned fund balance in the mid-year appropriation resolution (File 84378, RES-24-00514, adopted August 6, 2024), will increase General Fund appropriations by a total of $8,583,911 compared to the original adopted 2024 budget. Under 2023 Wisconsin Act 12 (Shared Revenue legislation), there is no limit on the amount of increase in the 2024 City budget to qualify for a 2025 ERIP payment. This overall increase in the 2024 adopted budget will help ensure the City’s recently adopted 2025 budget qualifies for an ERIP payment in 2026, as well as helping the City qualify for ERIP payments in subsequent year budgets.
Reallocation of American Rescue Plan Act (ARPA) Funding
The Common Council adopted a resolution in July 2021 (File 65935, RES-21-00487), that allocated the $47.2 million that the City received from the State and Local Fiscal Relief Fund (SLFRF) provisions under ARPA. The original plan has been updated in subsequent budgets and resolutions, but has maintained the same level of funding for community investments. Due to the timing of some of the remaining ARPA-funded projects included in that plan, the December 31, 2024, deadline for expending or obligating ARPA funding, and the need to make changes to the 2024 City operating budget to qualify for a state ERIP payment (described above), the 2024 Year-End Appropriation Resolution will make a number of changes to ARPA-funded projects. These changes continue to implement the projects in the July 2021 ARPA allocation plan, but accomplish it in a way that ensures ARPA funds are expended prior to December 31, 2024.
• Men’s Shelter (Bartillon Drive): This capital project includes $4.0 million of ARPA funding. The project was recently put out to bid and a contract implemented. The ARPA funding is currently appropriated from the City’s Grants Fund. In order to help meet the ERIP budget target and the ARPA spending deadline, the ARPA funding will be transferred to the General Fund and used for eligible General Fund expenditures. The Men’s Shelter project ARPA funding will be replaced by a Direct Appropriation to Capital from the General Fund. The net effect of this change is an increase in the 2024 General Fund budget of $4 million. This is offset by the ARPA funding transferred to the General Fund.
• Darbo Drive Property Acquisition: The ARPA allocation plan includes $2.5 million to purchase property on Darbo Drive. A resolution (File 85784) was introduced at the October 29th Council meeting to approve a purchase and sale agreement. This resolution was recommended to be placed on file without prejudice at the November 18 Finance Committee meeting due to the Salvation Army requesting additional time to finalize the agreement. This resolution transfers ARPA funding to the General Fund to be used for eligible General Fund expenditures. The Darbo Drive project ARPA funding will be replaced by a Direct Appropriation to Capital from the General Fund. The net effect of this change is an increase in the 2024 General Fund budget of $2.5 million. This is offset by the ARPA funding transferred to the General Fund.
• Unsheltered Homeless Support: This project includes $779,400 of ARPA funding that was planned to be used in 2025 for homeless shelter operations, including Dairy Drive and the new Men’s Shelter. In order to ensure these funds are expended prior to the ARPA deadline, the ARPA funding will be transferred to the General Fund and used for eligible General Fund expenditures. The Homeless Shelter Operations ARPA funding was replaced by a General Fund appropriation in the 2025 budget through a Common Council amendment to the 2025 operating budget. The net effect of this change is an increase in the 2025 General Fund budget of $779,400 (already included in the 2025 adopted operating budget). This is offset by the ARPA funding transferred to the General Fund in 2024 through the 2024 Year-End Appropriation Resolution.
• Other Projects: There are unused balances in 4 CDD projects and 2 EDD projects that have completed their work. The total balances for these projects is $69,967. The resolution proposes to close the projects and transfer unspent grant funds to the General Fund and used for ARPA-eligible General Fund expenditures. The net effect of this change is an increase in the 2024 General Fund budgeted revenues of $69,967.
The transfer in from the grant fund to the general fund from the ARPA projects described above totals $7,349,364. Of this amount, $6,500,000 will be used to increase the transfer out to the capital fund to support costs for the Bartillon Drive Men’s Shelter and Darbo Drive Property Acquisition. The remaining $849,364 will be used to reduce the amount of fund balance applied in the 2024 adopted operating budget.
Compensated Absence Escrow
The resolution seeks approval to authorize $2,583,400 in transfers from Direct Appropriations to agency budgets to cover projected deficits related to the cost of compensated absence escrow. The 2024 Adopted Operating Budget includes $4,300,000 for sick leave escrow payments made from the General Fund. Through the 3rd Quarter, $2,701,388 has been paid out by General Fund agencies. This resolution recommends transferring funds to Fire, Parks, Police, and Streets, where the compensated absence escrow amount is contributing to a deficit in the agency’s salary budget.
Intra-Agency Transfers (General Fund)
The resolution seeks approval to authorize $398,000 in transfers across major expenditure categories within general fund agency budgets to address areas where expenditures exceed budgeted amounts in those categories. These transfers are net neutral within agency budgets.
Fleet Services Appropriation and Inter-Departmental Billings and Charges
Fleet Services is projecting a deficit of $800,000 in salaries ($300,000), supplies ($230,000) and purchased services ($270,000) due to increased costs for equipment and repairs, largely driven by inflation and ongoing supply chain issues. In addition, the agency has a $33,442 carryforward encumbrance from the prior year. Fleet has made multiple internal transfers through the mid-year appropriation resolution and through administrative approvals to address deficits in supplies and services. As of November 26, 2024, the agency anticipates a net deficit of $833,442 that cannot be managed with internal transfers. The resolution proposed covering these costs by increasing inter-departmental billings.
This resolution increases Fleet’s expenditures by $833,422. Inter-departmental billings to general fund agencies will increase by $670,000 and user agency budgets for inter-departmental charges will increase by a corresponding amount. In addition, this resolution increases Fleet Service inter-departmental billings to non-general fund agencies by $163,442. Non-general fund agencies will offset these charges within their agency budget.
Other Funds (Grant - Non- ARPA, Enterprise, Public Health)
The resolution amends multiple non-general fund budgets by making $1.7 million in intra-agency transfers in Landfill, Sewer, Stormwater, and Parking. These intra-agency transfers are across major expenditure categories where expenditures exceed the budgeted amount in those agencies. These transfers are net neutral within agency budgets.
The resolution amends the Public Health budget by making $2.0 million in intra-agency transfers across programs where expenditures exceed the budgeted amount. All of the transfers are within the Salaries or Benefits major expenditure categories. A resolution is needed to amend the budget across program areas per the intergovernmental agreement for Public Health. These transfers are net neutral within the Public Health budgets.
The resolution increases the budget authority in multiple non-general fund budgets by $4.9 million in revenues and expenses for CDA Housing, Golf, Monona Terrace, and Police (Grant Fund). The proposed increases are funded through agency revenues, grants, or federal sources. All proposed transfers and adjustments are net neutral within each fund.
The resolution establishes that $3,790,806 of the General Fund Subsidy transferred to Metro Transit is allocated within the Metro Transit enterprise fund to paying debt service costs for the agency. Metro is required to demonstrate that a portion of this allocation is used to pay debt service for their federal financial reporting. There is no change to the total subsidy amount or appropriation.
Capital Projects
The resolution amends the following projects. The changes reflect increases to non-borrowing funding sources and related expenditures. None of the funding changes proposed increase borrowing or debt service.
• CDD: Increase revenues from TID proceeds and expenses for the Affordable Housing Development program (14938) by $937,734 to reflect the actual amount of proceeds from TID closures.
• Engineering: Increase state revenues and expenses in the Reconstruction Streets Program for the Sommers/ Center/ Willard/ Hudson project (14075) to reflect an additional $82,114 in state funding from WISDOT.
• Finance: Increase the Transfer in from the General Fund and expenses for the Capital Budget Administration program (14667) by $25,911 to reflect the cost allocation plan and Finance inter-departmental billing in the 2024 Adopted Operating Budget.
• Traffic Engineering: Increase federal revenues and expenses by $1,261,042 for the LED lighting project (13065) to reflect actual grant awards.
• Transportation: Adjust reconnecting Communities Capital Project (14355) to reflect higher federal award and lower GO Borrowing (increase federal sources by $200,000, reduce GO borrowing by $100,000, increase total expenditures by $100,000).
• Water: Increase county funding and expenses by $2.0 million for the Pressure Zone 4 Interstate Crossing Project (15165) to reflect funding from a cost sharing agreement with Dane County.
Capital Projects - Arbitrage
In advance of the City’s annual general obligation debt sale each fall, agencies are asked to review all capital projects to ascertain the amount of borrowing proceeds needed. Through this exercise, agencies identified projects that will not spend down their full authorized budget within time frames required for arbitrage compliance under federal tax law. As a result, technical adjustments are requested to transfer funding across multiple projects. The transfers do not impact the total authorized budget for any capital project or program.
Body
WHEREAS, Clerk, Direct Appropriations, Fire, Police, and Streets, are projected to end the year with a $1,538,911 deficit after accounting for intra-agency transfers and other adjustments proposed in this resolution; and,
WHEREAS, the General Fund unassigned balance is available to cover the increased expenses; and,
WHEREAS, under 2023 Wisconsin Act 12 (Shared Revenue legislation), there is no limit on the amount of increase in the City’s 2024 budget and still remain eligible for future payments under the State’s Expenditure Restraint Incentive Program (ERIP); and,
WHEREAS, appropriating funding from the General Fund unassigned balance will help ensure the City’s 2025 adopted budget to qualify for a State of Wisconsin Expenditure Restraint Incentive Program (ERIP) payment in 2026; and,
WHEREAS, the appropriations from the General Fund unassigned balance and the appropriations supported by reallocations of federal American Rescue Plan Act (ARPA) funding to the General Fund included in this resolution ($8,038,911), as well as the increase in appropriations authorized in the Mid-Year Appropriation Resolution ($545,000 -- File 84378, RES-24-00514, adopted August 6, 2024), total $8,583,911; and,
WHEREAS, the Finance Director is authorized to determine which fund balances should be designated as “assigned”, consistent with Government Accounting Standards Board (GASB) standard; and
WHEREAS, the Common Council adopted a resolution in July 2021 (File 65935, RES-21-00487), that allocated the $47.2 million that the City received from the State and Local Fiscal Relief Fund (SLFRF) provisions under ARPA; and,
WHEREAS, the Common Council amended the plan through subsequent budgets and resolutions, which maintained the same level of funding for community priority areas; and,
WHEREAS, due to the timing of some of the remaining ARPA-funded projects included in that plan, the December 31, 2024, deadline for expending or obligating ARPA funding, and the need to make changes to the 2024 City operating budget to qualify for a state ERIP payment, changes will need to be made in how ARPA projects are funded; and,
WHEREAS, these changes in funding continue to implement the July 2021 ARPA allocation plan, as amended by the Council through subsequent budgets and resolutions, but accomplish it in a way that ensures ARPA funds are expended prior to December 31, 2024. And,
WHEREAS, the 2024 Adopted Operating Budget includes $4,300,000 within Direct Appropriation for compensated absence escrow payments associated with payments made by the City for health insurance benefits upon the retirement of employees; and,
WHEREAS, general fund agencies have paid out $2,701,388 in Compensated Absence Escrow payments through the third quarter of 2024; and,
WHEREAS, some agencies are able to absorb the cost of compensated absence escrow within their budget while others require a transfer from direct appropriations to cover these costs; and,
WHEREAS, various city agencies require intra-agency transfers to their budget to cover projected deficits in major expenditure categories and account for other technical changes based on 3rd quarter projection; and
WHEREAS, Fleet Services is projecting a deficit of $833,422 in salaries ($300,000), supplies ($230,000), and purchased services ($270,000) due to increased costs for equipment and repairs, largely driven by inflation and ongoing supply chain issues, and a carryforward encumbrance ($33,422); and,
WHEREAS, Fleet requires an additional $833,422 in budget authority for these expenses, which can be offset by increasing the budget authority for inter-departmental billings to agencies; and,
WHEREAS, other agencies require increased budget authority for corresponding inter-departmental charges within agency budgets, which are described in other sections of this resolution related to general fund balance, intra-departmental transfers, and other funds; and
WHEREAS, various non-general fund agencies require intra-agency transfers to their budget to cover projected deficits in major expenditure categories and account for other technical changes based on 3rd quarter projection; and,
WHEREAS, Public Health is requesting transfers within the salaries and benefits major expenditure categories, across various program areas; and,
WHEREAS, the intergovernmental agreement with Public Health requires that transfers across programs are approved through a resolution, even if the transfers are within the same expenditure category; and,
WHEREAS, various non-general fund agencies require increasing their total budgets by a total of $4.9 million by appropriating funding from agency revenues, grants, and federal sources; and,
WHEREAS, the adopted budget includes a $15.7 million general fund subsidy to Metro Transit, which can be used for operating expenses including debt service payments; and,
WHEREAS, Metro Transit must allocate a portion of the subsidy to pay for debt service for federal reporting purposes; and,
WHEREAS, the CDD budget for Affordable Housing Development (14938) included $4.9 million in funding from the closure of TIDs 29, 39, and 47, and the actual proceeds were $5.8 million; and,
WHEREAS, the City received additional intergovernmental revenues from the county, state, and federal governments through cost sharing agreements and grant awards for projects in Engineering, Traffic Engineering, Transportation, and Water; and,
WHEREAS, the Finance Department Capital Budget Administration program reflected the cost allocation rate from 2023 and needs to be increased by $25,911 to reflect the 2024 rate; and,
WHEREAS, several capital projects have not fully spent down their authorized borrowing proceeds within two years and transfers of funding across programs are needed for compliance with arbitrage rules under federal tax law.
NOW THEREFORE BE IT RESOLVED, the Common Council amends the 2024 adopted operating budget by appropriating $1,538,911 from General Fund unassigned balance to cover deficits in the following agencies:
• Clerk: Salaries ($100,000), Benefits ($70,000), Supplies ($115,000), and Purchased Services ($8,500)
• Direct Appropriation: Transfer out to Capital ($25,911). (Technical correction so that the transfer out amount is the same as the inter-departmental billing in the Finance Department budget, based on the 2024 cost allocation plan.)
• Fire: Salaries ($304,400)
• Police: Salaries ($173,800); Purchased Services ($71,300)
• Streets: Inter-departmental charges ($670,000); and,
BE IT FURTHER RESOLVED, that the following ARPA funded projects are amended
• Men’s Shelter (Bartillon Drive): Transfer $4.0 million in unspent ARPA funding from the grant fund to the General Fund to be used for ARPA-eligible General Fund expenditures. Increase the General Fund’s Direct Appropriation Transfer to Capital by $4.0 million to maintain level funding for the Men’s Shelter project.
• Darbo Drive Property Acquisition: Transfer $2.5 million in unspent ARPA funding to the General Fund to be used for ARPA-eligible General Fund expenditures. Increase the General Fund’s Direct Appropriation Transfer to Capital by $2.5 million to maintain level funding for the Darbo Drive project.
• Unsheltered Homeless Support: Transfer $779,400 of unspent ARPA funding to the General Fund to be used for ARPA-eligible General Fund expenditures. Decrease the General Fund’s Fund Balance Applied to offset the transfer in from grants. This savings in Fund Balance in 2024 has been appropriated in the 2025 budget through a Common Council amendment to continue supporting unsheltered homeless services, including operations at Dairy Drive and the new Men’s Shelter in 2025.
• Other Projects: Transfer $ 69,967 of unspent ARPA funding from 6 completed projects with remaining balances to the General Fund to be used for eligible General Fund expenditures. Completed projects with remaining balances include 1) Services to Residents who are Undocumented ($2,815); 2) Connection to Basic Needs ($2,561); 3) Occupy Madison Solar ($20,083); 4) Summer Youth Employment ($22,076); 5) SBER Pop-Up Shops ($911); and 5) Neighborhood Business District Support ($21,521). Decrease the General Fund’s Fund Balance Applied to offset the transfer in from grants. And,
BE IT FURTHER RESOLVED, that the Common Council amends the 2024 Operating Budget to authorize the following transfers from Direct Appropriations to the following agencies to cover costs for compensated absence escrow payments:
• Fire: $1,208,000
• Parks: $230,000
• Police: $980,000
• Streets: $165,400; and,
BE IT FURTHER RESOLVED, that the Common Council amends the 2024 Operating Budget to authorize the following transfers across expenditure categories within departments:
• Attorney: Transfer $5,000 from salaries to purchased services
• DCR: Transfer $4,000 from salaries and $37,000 from benefits to purchased services
• EDD: Transfer $22,000 from salaries to purchased services
• Engineering: Transfer $80,000 from salaries to supplies ($40,000) and purchased services ($40,000)
• Finance: Transfer $25,000 from purchased services to supplies
• Parks: Transfer $150,000 from salaries to supplies ($50,000) and purchased services ($100,000)
• Streets: Transfer $75,000 from salaries to supplies ($50,000) and purchased services ($25,000); and,
BE IT FURTHER RESOLVED, that the Common Council amends the 2024 Operating Budget to authorize the following intra-agency transfers and revenue adjustments within Fleet:
• Increase the budget authority for salaries by $300,000
• Increase the budget authority for supplies by $230,000
• Increase the budget authority for purchased services by $303,422
• Increase the budget authority for inter-departmental billings to other agencies by $833,422 to offset the increased expenses; and,
BE IT FURTHER RESOLVED, that additional adjustments to Fleet inter-departmental charges for Streets, Sewer, Golf, and Parking Division, are described within this resolution under the sections for appropriations from general fund balance and other fund transfers; and,
BE IT FURTHER RESOLVED, that the Finance Director is authorized to approve additional adjustments to Fleet inter-departmental charges so long as the adjustments are net neutral to general fund agencies and are offset by agency revenues within enterprise agencies; and
BE IT FURTHER RESOLVED, that the Common Council amends the 2024 Operating Budget to authorize the following transfers across expenditure categories within departments:
• Landfill: Transfer $15,000 from purchased services to salaries ($10,000) and benefits ($5,000)
• Sewer: Transfer $1,550,000 from contingent reserve to purchased services ($1,500,000) and inter-departmental charges for fleet charges ($50,000)
• Stormwater: Transfer $10,000 from purchased services to supplies
• Parking: Transfer $99,442 from salaries to inter-departmental charges for fleet charges
BE IT FURTHER RESOLVED, that the Common Council amends the 2024 Operating Budget for Public Health to transfer funds across multiple programs to comply with the intergovernmental agreement, as detailed in the attachment to the resolution titled “Public Health Transfers for File 86200.”
BE IT FURTHER RESOLVED, that the Common Council amends the 2024 Operating Budget to appropriate additional funding and commensurate expenditures for the following non-general fund budgets:
• CDA Fund: Increase federal revenues and expenses by $3.6 million to reflect updated costs related to administering Section 8 Housing Vouchers.
• Golf: Increase revenues by $514,000 to offset higher than budgeted expenses for salaries ($450,000), purchased services ($50,000), and inter-departmental charges for fleet ($14,000) to reflect projections.
• Monona Terrace: Increase revenues by $650,000 to offset higher than budgeted expenses for salaries ($250,000), benefits ($200,000), supplies ($45,000), and purchased services ($155,000).
• Police Grant Fund: Increase grant revenues and associated expenses related to the City’s reimbursement for the Republican National Convention by $14,975.
BE IT FURTHER RESOLVED, that $3,790,806 of the General Fund subsidy to Metro Transit is allocated within the Metro Transit enterprise fund to pay the agency’s debt service costs; and,
BE IT FURTHER RESOLVED, that the Common Council amends the 2024 capital budget for the following agencies and capital projects:
• CDD: Increase revenues from TID proceeds and expenses for the Affordable Housing Development program (14938) by $937,734 to reflect the actual amount of proceeds from TID closures.
• Engineering: Increase state revenues and expenses in the Reconstruction Streets Program for the Sommers/ Center/ Willard/ Hudson project (14075) to reflect an additional $82,114 in state funding from WISDOT.
• Finance: Increase the Transfer in from the General Fund and expenses for the Capital Budget Administration program (14667) by $25,911 to reflect the cost allocation plan and Finance inter-departmental billing in the 2024 Adopted Operating Budget.
• Traffic Engineering: Increase federal revenues and expenses by $1,261,042 for the LED lighting project (13065) to reflect actual grant awards.
• Transportation: Adjust reconnecting Communities Capital Project (14355) to reflect higher federal award and lower GO Borrowing (increase federal sources by $200,000, reduce GO borrowing by $100,000, increase total expenditures by $100,000.
• Water: Increase county funding and expenses by $2.0 million for the Pressure Zone 4 Interstate Crossing Project (15165) to reflect funding from a cost sharing agreement with Dane County; and,
BE IT FINALLY RESOLVED, that the Common Council amends the 2024 Adopted Capital Budget to transfer funds across multiple projects to comply with arbitrage rules under federal tax law, as detailed in the attachment to the resolution titled “Capital Project Transfers for File 86200.”