The city of Superior is facing a couple of lean years.
At a time when interest income and building permit revenue is down, the city is facing cuts in shared revenue, and transportation and mass transit aids through the state with no ability to recoup those losses through property taxes.
For the next two years, the city will spend less than it does now to run city operations despite anticipated increases in costs.
"We were having some difficulty getting our general fund budget balanced," said Finance Director Jean Vito.
To make the numbers work, the budget adopted by the council includes changes in the newly adopted Capital Improvement Program. The new capital program will increase funding for the animal shelter at the expense of funding for new squad cars, the Special Area Management Program and sidewalk improvements for the next three years. It also eliminates plans to improve North 28th Street and shifts it to less expensive improvements on East Fifth Street to balance a $351,000 reduction in spending from the city's general fund budget over the next two years.
Funding for the capital project budget will actually increase by $100,000 in 2012, with a $451,000 reduction in 2013.
Despite the changes, the city will still spend more on capital projects next year than it has since 2005.
Mayor Bruce Hagen said the funding from North 28th Street could still be shifted to the side streets off Tower Avenue north of Belknap Street when the state Department of Transportation reconstructs the highway to North Third Street in 2013.
"The DOT won't be responsible for the laterals coming off of Tower Avenue," Hagen said. "... That money could be reallocated for that."
The city's share of the 2013 project on Tower Avenue already stands at $4.7 million and is included in the long-range capital budget.
"At this point, the CIP is balanced, so if there is any requests for anything else, it would have to come from somewhere else," Vito said.
Hagen said with the challenges anticipated in the 2013 budget, one of the things city finance staff will begin to do immediately with the 2012 budget is monitor the city's finances closely.
The general fund covers the day-to-day operations of the city.
"Most notably, actions that happened during 2011 with the state, their affect on us locally has been very large," Vito said.
In the past, Vito said limits in local spending used to affect only the expenditure side of the city's budget. However, the revenue side has been impacted by the legislature this year.
Shared revenue, a significant source of money in the city's budget, is being cut again, as it was in 2004 and 2010. Since 1999, when shared revenue made up 37.1 percent of the city's funding, cuts have reduced that to 29.3 percent in 2012, shifting the burden to local taxpayers. While property taxes made up only 42 percent of the city budget in 1999, property taxes now represent 46.3 percent of the 2012 budget.
"Quite frankly, when I heard the cut we were getting for 2012, I was a little bit relieved that it wasn't as much other communities," Vito said, adding the average cut was about 9 percent and Superior only lost about 4.5 percent.
Staffing and services levels are expected to remain the same under the 2012-2013 budget, however, there are no salary increases included in the budget and staff will now pay 5.8 percent of their salaries to the Wisconsin Retirement System and 12.8 percent of health insurance costs, up from 5 to 10 percent employees already paid.
Property taxes cannot increase this year as a result of the state's 2011-2013 biennial budget, something Vito said she doesn't expect will change into the future without legislative action.
In addition, the city will continue to review every vacated position to determine it is essential to providing city services before it is filled.
Vito said in future budgets, she's not sure the city will be able to balance its expenditures and revenue without looking at changes in the level of service the city provides.
Sitting with Public Works Director Jeff Goetzman, Vito said: "We scrounged around trying to find $5,000 here or $10,000 here, and we just couldn't find it."