Finance director warns La Crosse faces rising debt-service needs, urges restraint in 2026 budget

Director of Finance Chad Hawkins told the La Crosse Common Council planning-session meeting that the city is facing sustained budget pressure from rising operating costs, increased borrowing and limits set by the state’s expenditure restraint program.

Hawkins summarized the city’s budget cadence and constraints and urged council members to treat municipal finances conservatively. “I look at the city budget like I do any other budget, my own personal budget, I treat this very similar,” Hawkins said, describing a nine-month capital improvement planning (CIP) process that overlaps a five- to six-month operating-budget process.

Why it matters: Hawkins said the city has begun to rely more on the debt-service portion of the property tax levy to cover borrowing, a trend that began in recent years and has increased the adjustment amount the city is allowed to levy for debt. He warned that continued expense growth could erode the city’s ability to receive state shared revenue tied to the Expenditure Restraint Program (ERP).

Hawkins told council members the ERP uses a state-set percent (last year about 3.8%) based on CPI; municipalities that keep expense growth under that threshold receive additional shared revenue. “If you do that, we’re gonna reward you with more additional shared revenue,” he said, and he cited the ERP shared-revenue amount La Crosse receives at roughly $1,200,000 a year. He said the city’s adjustment for debt service was $5,738,000 in the most recent levy worksheet and that the adjustment has risen in past years (previous years shown roughly $3,200,000 and $1.2 million in earlier years).

Hawkins flagged other pressure points: collective bargaining agreements that include multi-year wage increases (he cited an example of police contract steps that will raise costs, saying “the collective bargaining units . . . their 4% is gonna cost us 750,000 next year”), rising health-insurance costs and the loss of one-time federal funding sources such as ARPA. On ARPA he said, “ARPA, as bad as it was, has been a god saver for the city's annual budget the last few years,” and noted that ARPA funds are now largely exhausted.

Questions from council members probed the mechanics and consequences of the state requirements. Hawkins explained the city must certify police and fire spending levels under the state maintenance-of-effort rules tied to supplemental aid; if a department shows materially lower expenditures because of vacancies, the city could be put in a position of increasing certain expenditures to preserve shared revenue. He described how unfilled police positions often produce overtime costs that absorb some of what would otherwise appear as unspent salary dollars.

Hawkins also reviewed internal budget practice and policy recommendations: maintain the city’s policy general-fund balance (policy now 20% of operating, he said the current balance is about 23–24%), avoid using contingency for nonemergency items, be cautious about funding recurring operating costs with long-term borrowing, and be realistic about the operating costs that accompany new capital projects (maintenance and lifecycle costs).

On revenue and capital planning, he recommended taking available one-time fund balance prudently to help smooth the coming year’s shortfall but warned against relying on one-time sources annually. He offered a recommended CIP funding guideline (presented to council as approximately $16.75 million for the year) and reminded members that grant-funded positions and projects often include matching or administrative costs that the city must plan for in future budgets.

No formal decisions or motions were made during the presentation; the session was a briefing and Q&A. Hawkins identified upcoming procedural dates (budget parameter committee, Board of Estimates public hearings and City Plan Commission CIP hearings) and encouraged council members to attend or review documents on Legistar.

Ending: Hawkins said his goal is to help the council avoid major service or staff cuts and to return, if possible, to a point where operating and debt service can be funded from the general levy without additional levy adjustments. He asked council members to consider tighter budget discipline, earlier policy direction from the budget-parameter committee and realistic expectations about projects and staffing costs.