How Inflating Project Costs and Budgets Impacts Your Taxes

Millions! Higher than necessary city taxes, unspent budget dollars, egregious reserves and overestimating projects are all contributors to higher compounding taxes each year. How?

Here’s an example: Let’s say the city engineer scopes a large $2.0M project and obtains city council approval to proceed. The project is completed and under budget at $1.85M saving taxpayers $150k. The engineer did the right thing by creating a buffer for unforeseen project challenges and costs and it looks good to come in under budget. Right?

Where does the $150k savings go? Sometimes the city staff or consultant (not city council) decides to use the remaining funds on projects not identified in the original plans. This happened in 2025 whereby excess mill & overlay road funds were used to remove trees from residential properties in the Shorewood Oaks neighborhood costing taxpayers an estimated $20k. Staff’s justification for these actions is usually because the equipment and resources are already deployed in place and the money is already budgeted, so let’s spend it. This type of side-project wasn’t planned, budgeted or even scoped, least of all presented to city council. But was it good for the residents who benefited or was it bad for the taxpayers who didn’t benefit? Your call!

This scenario holds true for the entire General Budget (Administration, Public Works, Parks, etc.) – unspent budgeted funds always gets either used or moved somewhere but never given back to the taxpayers in the way of a tax reduction in following years. The city staff and city council members spend 6 – 8 months planning for future budgets but they never demand the obvious “WHAT IF WE START BY SAVING TAXPAYERS MONEY” and decrease future tax increases in following years.

So where do “unspent” funds go? The city has multiple areas where they covertly or overtly place funds depending on your perspective. Think of them as deliberately separated savings accounts. In Shorewood, “Reserve Funds” are generally kept at 60% of an entire year’s budget for emergencies which mean in 2026 the Reserve Fund will not dip below $4.8M. Most cities maintain a Reserve Fund for emergencies between 35% – 40% of the annual budget. This means Shorewood could maintain a Reserve Fund of $3.2M for emergencies and deliver a $1.6M reduction in next year’s tax levy right off the top!

There are also “Capital Improvement Funds” (CIP Funds) which are monies designated for future equipment purchases, park improvements, street reconstruction, water, sewer and sanitary projects as well as recycling money all held in separate funds. CIP Funds are funded through higher than required taxes, unspent budget dollars, reserves, developer fees, grants and bonded loans.

In her first year of service, Shorewood Council member Michelle DiGruttolo has made it her mission to ensure that the staff knows City Council is in charge of budgets and unspent funding decisions. She has relentlessly pursued budget justifications and cost/benefits of purchases from city staffers scrutinizing everything from roadway projects, administrative staffing positions to police Flock cameras.

So, what does all this mean? Instead of an 8.9% tax levy this year, it could have been a 5% tax levy or less. In a time where inflation rose 21.3% between 2020 -2024, residents deserve a break from 9% tax increases. If that’s doing fewer projects for a couple years, delaying equipment purchases or new office furniture then so be it. Tell City Council members to give us a break and do the essential work and let the taxpayers catch their breath. Please!

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