Racine 2027 budget: Why the city would use $5.1M in savings

Originally published by Racine County Eye.

Overview:

Racine’s proposed 2027 budget would use $5.135 million in General Fund reserves, including $3.635 million for operations and $1.5 million for raises. City officials say savings help maintain services while recurring revenue falls short of expenses, but spending at this pace is not sustainable. The city projects $37.9 million in spendable reserves at the end of 2027; that is a forecast, not an exhaustion date.

Racine’s proposed 2027 budget would use $5.1 million in savings to pay wages and cover daily operations, drawing down a cushion built in part with pandemic aid.

Those savings help pay for services now, but they do not provide a lasting source of revenue. The city’s proposed 2027 budget book warns that spending reserves “at these levels is not sustainable into the future.”

The proposed draw is $610,000 larger than in the adopted 2026 budget. Finance Director Kathleen Fischer told the Common Council Oct. 6 that the city faces a structural deficit: recurring revenue is not keeping pace with expenses.

“Basically, you can think of it as a city savings account,” she said.

Mayor Cory Mason said in his Oct. 5 budget address that the proposal maintains core services. The question beyond 2027 is how the city would continue paying for them without drawing down savings at the same pace.

Savings built to buy time

The budget would use $3.635 million from the stabilization reserve for general operations and $1.5 million from a separate account set aside for raises.

Fischer said the council built the stabilization reserve using American Rescue Plan funds and the interest earned on those funds.

“Those were set aside years ago to be used over several years to try to stabilize the budget,” she said.

The withdrawal is therefore part of the reserve’s intended use, not by itself evidence of a financial emergency. The concern is how long the city can rely on savings while recurring expenses outpace recurring revenue.

The budget book attributes the larger draw to expired state grants for police overtime and the full cost of police and fire union contracts. It says the structural deficit is expected to persist in 2028 and beyond, forcing “hard budget choices.”

What would remain

The city’s audit shows about $45.3 million in spendable General Fund reserves at the end of 2025. The budget book projects $43.1 million at the end of 2026 and $37.9 million at the end of 2027.

The stabilization account alone would fall from $16.7 million at the end of 2025 to a projected $9 million in 2027.

Those totals include money the city maintains under reserve policies, not just savings available for unrestricted spending.

But planned draws do not always happen. The final amended 2025 budget assumed the city would spend $4.56 million from reserves; the audit shows the General Fund balance instead grew by $3 million.

The forecasts are not actual balances, and they do not establish when the city would exhaust its savings.

How to weigh in

Residents and city taxpayers can speak at the Oct. 14 public hearing, scheduled for 6 p.m. or immediately after the Public Safety and Licensing Committee meeting, in City Hall’s Common Council chambers, Room 205, 730 Washington Ave.

Speakers must attend in person, according to the city’s published hearing notice. The city’s YouTube stream is for viewing, not remote comment. Residents can also contact their alder, as the city’s budget information page advises.

The council is scheduled to debate amendments Oct. 19 and adopt the budget Oct. 20.

For more on the proposal, read Racine County Eye’s coverage of services, reserves and household tax bills and guide to the budget process and public participation.