Madison finance committee warned federal funding changes could affect Pheasant Branch flood project, immunizations and affordable housing funding

Madison’s Finance Committee received an update April 7 on federal executive actions and related court rulings that staff said are creating immediate uncertainty for FEMA and EPA grants, a CDC immunization award and federal tax-credit financing used on local housing projects.

The briefing summarized three near-term risks: a FEMA building-resilient-infrastructure grant tied to the city’s Pheasant Branch flood mitigation work, a $1.8 million CDC immunization supplement that funded four project positions, and federal tax-credit and greenhouse-gas grant funding that helped finance the Triangle B1 affordable housing project.

Why it matters: staff said the city could face reimbursement interruptions or delayed closings on projects that count on federal money, and that changes in tariffs and tax policy could raise construction costs or depress demand for federal tax credits used to finance affordable housing.

Attorney Mike Haas said the legal situation is unsettled but that courts so far “are still in place, ordering that the administration not withhold funding based upon the executive orders issued by the president.” He added some cases allow withholding if other statutory justifications apply and that staff are monitoring grants still being withheld despite injunctions.

Finance staff summarized the federal budget context and said a March continuing resolution keeps FY2024 appropriations in place through the near term while Congress negotiates FY2026 priorities. The presentation cited estimates that the continuing resolution would increase the federal deficit by about $7 billion over 10 years and described competing House and Senate budget approaches now under negotiation.

On grant-specific impacts, staff said FEMA had issued a communication affecting a building-resilience/stormwater (BRIC) award tied to the city’s Pheasant Branch flood mitigation project. Jim, the city engineer, told the committee the work is one single project at the old Sauk Trails Business Park on the city’s West Side, with a public-works contract in the roughly $8–9 million range and anticipated BRIC grant funding of about $6.5 million. City staff said less than $1 million has been reimbursed so far and that they do not yet know whether the FEMA communication will be subject to legal challenge or how it will interact with the existing public-works contract.

Public health director Janelle told the committee the CDC supplemental immunization grant at issue was $1.8 million and was intended to support outreach and work on vaccine access and hesitancy through June 30. Janelle said the city submitted required final billing April 4 and that about $385,000 remained unspent when the federal action occurred. The department has issued 30-day notices to three of four project-funded positions; one position was retained using vacancy savings. Janelle said the county and city are assessing what of the project’s findings can be folded into ongoing immunization work and warned that broader adult- and child-vaccine supply and funding could be less secure going forward.

Matt Wachter of Planning, Community and Economic Development reviewed the department’s federal-funding exposure. He said community development and the redevelopment authority (CDA) have been the most reliant on federal money historically, citing housing choice vouchers and section 8 as major flows that fund operating needs. Wachter said many capital-side federal funds do not pass through the city budget directly (for example, Section 42 low-income housing tax credits), and he flagged two project-level problems: the city will not be able to draw $6–7 million from an EPA greenhouse gas reduction fund at Triangle B1 at closing because the EPA tried to claw those funds back and the matter is in court; and future HOME/ERA federal rounds cannot be assumed available for later phases of city projects.

Wachter also told the committee that tax-code changes and tariffs pose financial risks: lower corporate tax liabilities would reduce demand and pricing for tax credits, and recent tariff proposals could push up construction costs or delay deliveries for equipment that has limited domestic substitutes. He said staff are talking with contractors and exploring different construction options but that those strategies cannot fully eliminate price or timing risk.

Committee members asked whether other stormwater projects are at risk (staff said Pheasant Branch is the only project tied to the FEMA BRIC notice but that the city might shift local stormwater utility funds if needed), how investment income and reserves might cushion a recession, and whether affected public-health positions were temporary (Janelle said the positions were grant-tied project positions with benefits, not permanent ongoing roles).

The meeting began with a unanimous vote to adopt the consent agenda (items 2–12) and ended with a unanimous motion to adjourn.

The presentation and Q&A were described by staff as a continuing update; no formal policy changes or new directives were adopted during the meeting.