A budget is the city’s yearly revenue and expenditure plan. However, it is much more than a financial document. It is one of the central policies adopted by the Common Council each year with the aim of responsibly stewarding city resources and effectively providing city services. There are two major budgets adopted by the city each year:
- Operating budget (day-to-day expenses, wages, utilities, purchases of items intended to last less than a year)
- Capital budget (infrastructure, city property, long-term equipment purchases)
Budget Process
There are different versions or phases during the development of the city’s budget.
| Budget Version | Decision Maker |
|---|---|
| Requested budget | Department Directors |
| Executive budget | City Administrator and Mayor |
| Proposed budget | Financial Affairs Committee |
| Adopted budget | Common Council |
Local government is like a holding company running multiple small businesses, and due to this complexity, developing the budget can be a complex process. Here is a typical timeline for developing the budget:
Revenues and Expenditures
Wauwatosa, like most municipalities in Wisconsin, relies heavily on the property tax. This is due to multiple factors including declining shared revenues from the state and limited options for alternative taxes by state law. The State of Wisconsin also imposes a tax levy limit on municipalities which ties allowable increases in the property tax levyThe total amount of property tax money that a taxing unit (such as the schools, city, county, etc.) needs to raise to provide services. to net new construction within the city.
Unlike a business, city government exists, not for profit, but to deliver services to and protect its residents, and therefore most of its expenditures in all categories go toward the wages and benefits of the employees delivering those services.
Balancing the Budget
Whenever there is a gap between revenues and expenditures, the city has basically three options to close it:
- Increase revenue through fee increases
- Increase revenue through property tax
- Cut expenditures
Finding Efficiencies
Cutting expenditures does not always mean reducing government services, though it is often the case. Ideally, when city staff needs to reduce expenditures, they will first look for ways to make current operations more efficient and less expensive.
It’s important to note, however, that there are only so many efficiencies to be found before reducing service levels becomes necessary, and therefore finding more efficient means alone is not an adequate long-term solution.