Madison roadwork could avoid the scrutiny directed toward vertical construction projects as the city builds its 2010 capital budget in the midst of up to a $2 million cut in state aid.
“The question shouldn’t be: Should we take on additional debt?” said Alderman Michael Schumacher. “Given the financial situation, we’re going to take on debt. So it becomes a question of: Will this create good debt or bad debt?”
Good debt, Schumacher said, is the kind worth absorbing regardless of the economy because the money can stimulate growth by increasing the tax base. Bad debt, he said, stems from projects that do not generate income for the city.
Roadwork, Schumacher said, is not as likely as, for instance, the proposed Central Library project to spark debates regarding good or bad debt, and that could give road projects an edge in attracting the limited capital budget money.
Andrew Statz, Madison’s fiscal efficiency auditor, said after a preliminary examination of state budget numbers, Madison likely will lose $1.4 million to $2 million in state aid compared to last year’s allotment.
City officials expected the decrease after Gov. Jim Doyle earlier this year warned Wisconsin’s city leaders to brace for such cuts as the state dealt with its $6.6 billion budget deficit. However, the cuts — mixed with local revenue shortfalls, such as a projected drop in Madison building permits — could signal delays on several city projects.
The city has either considered or started financing for major projects such as the $43.6 million new Central Library, a proposed Central Park, a downtown public market and the renovation of the Villager Mall on the city’s south side.
Rachel Strauch-Nelson, spokeswoman for Madison Mayor Dave Cieslewicz, said all of the projects remain on the table, but those that could boost city income through property tax revenues would take priority.
Madison also will net a $163,000 increase in state highway aids, thanks to increased highway financing added to the state budget for Wisconsin counties and municipalities.
Statz said the increase is appreciated, but it does not pad the city budget for more work.
“When you’re talking about a few hundred thousand for multimillion-dollar projects,” he said, “that might not go very far.”
The city’s University Avenue resurfacing is expected to continue into 2010, and the estimated $12 million reconstruction of the intersection at Mineral Point and Junction roads is looming.
Still, even if roadwork is an easier sell than new building projects for the budget, some road contractors are letting caution guide them.
“The option, really, is just survive,” said Thomas DeBeck, president of Middleton-based Speedway Sand & Gravel Inc., which gets about 60 percent of its work from Madison road reconstruction projects. “Whether that’s looking at other areas or cutting staff, we’ll do what we have to.”
Speedway is working on such Madison projects as the reconstruction of Aberg Avenue and the final phase of the East Washington Avenue reconstruction, and DeBeck said there is a strong argument for the city to keep the road projects coming.
“Streets are wearing out,” he said. “So are water lines. These things need to be repaired. If you can’t afford it, then my advice is stop using them.
“But when I say that, I get a lot of funny looks.”
Schumacher said even after city staff finishes the capital budget, aldermen will continue arguing for projects in their districts. The best thing for developers and project advocates to do, he said, is to build a case for why the city should take on more debt for a particular job.
“It’s going to be that much easier,” he said, “if you can prove we’re going to need the project down the road anyhow.”