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Consideration of amendment to the 2024 Budget to reflect 2023 capital project carryovers
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Submitted by:
John Ruggini and Thania Cervantes
Department:
Finance Department
A. Issue
Earlier this year, the 2023 Operating Carryovers were approved. Presented here for approval are the capital project carryovers
B. Background/Options
A carryover is a budgetary mechanism by which spending authority is transferred from one fiscal year to the next. This is most often necessary where a project budgeted for in one fiscal year (2023) is not completed so that remaining committed but unspent funds associated with the project are transferred to the following fiscal year (2024). While the City adopts a five-year capital plan, only the first year of the plan is actually authorized. In this case, the 2023-2027 plan was adopted in February 2023 and the 2024-2028 plan was adopted in December 2023. We are now requesting the 2024 fiscal year of the 2024-2028 plan be amended for the unspent 2023 funds.
Capital projects are typically complex infrastructure projects (such as street and utility construction) or large equipment purchases (such as a Fire engine) that often span multiple fiscal years so carryover funds are not uncommon. The Capital Budget is adopted separate from the Operating budget but once approved, they are combined in the City’s financial system so spending can be tracked. Capital projects have multiple funding sources including property taxes, special assessments, grants, surplus funds (cash) and bonds (borrowed money). The majority of capital carryovers typically represent bond funds that have been borrowed but not yet spent. Of the $16.5 million requested for carryover, 61% are bond funds. These borrowed funds legally must be spent on capital projects within two years of having been borrowed Staff actively monitor these timeliness requirements.
I am requesting that $16,465,418 be carried over as compared to the $12,216,435 in the prior year for previously approved capital projects. There is no funding included for new projects. The table below organizes the carryovers by justification:
|
Justification |
Sum of Amount Recommended |
|
Project delayed |
1,836,230 |
|
Project in progress |
5,928,400 |
|
Project surplus - will be transferred |
207,628 |
|
Punch list items |
2,463,396 |
|
Future year construction |
2,705,140 |
|
Annual budget rolled over |
1,211,463 |
|
Work in 2024 |
2,113,161 |
|
Grand Total |
16,465,418 |
From the perspective of an Alder, it is important to monitor delayed projects and understand the reasons for delays and any impacts on future capital budgets. For example, often future projects are contingent on the completion of a current project. From a staff perspective, we are often juggling limited staffing resources, changes to contingent projects that we don’t control (such as the Department of Transportation), scope changes, pricing changes or delays in land acquisition to name a few. The table below shows which projects have been delayed. At the meeting, staff can speak to the reasons for the delays and any potential impacts.
One new project has been added to be funded by carryover. There is $28,296 in surplus funds in project 6034 - Library Book Return Replacement. Staff recommend that these surplus funds be used to purchase a mechanical lift. This lift is intended to replace the use of tall ladders that are currently being used for tasks such as lighting maintenance, clock repairs, HVAC repairs/maintenance and any other task that requires staff to work elevated from the floor. This is an employee safety issues as ladders are one of the leading causes of workplace accidents. The City does not currently own one.
A full listing of all the carryovers is included as an attachment. The majority of the projects are funded with bond proceeds which cannot be used for purposes other than capital projects and are often restricted to specific types of projects. The Capital Budgets can be found at the web page below if you’d like more detail on a particular project.
<https://www.wauwatosa.net/government/departments/finance/budget> <https://www.wauwatosa.net/government/departments/finance/budget>
C. Strategic Plan (Area of Focus)
This carryover supports the strategic goal of maintaining city infrastructure.
D. Fiscal Impact
As all of these projects were previously budgeted, there is no fiscal impact on the 2023 Budget.
E. Recommendation
I recommend amending the 2024 Budget by increasing capital project expenditure authority up to $16,465,418 for prior year unspent funds.