The proposed 2016 South Milwaukee budget will be published today, and it is one of our more difficult ones in years. But I’m proud to say we are able to maintain the city services you have come to expect.
Expenditures are budgeted to increase slightly by 0.87% to just shy of $18.9 million. Revenues are budgeted to be down 3.17% to $9.036 million. And while the budget meets state levy limit requirements, it calls for a 4.6% increase (or $464,603) in the city tax levy, bringing it to $10.4 million from just over $10 million in 2015.
The levy increase demands some context. For starters, this was a very tough decision, but a necessary one, as we attempt to do what we can to avoid cuts to our services and avoid dipping into our reserves.
State-imposed levy limits (for us, +0.167% in 2016) allows for exceptions around certain debt service expenses and the costs of refunded taxes. This gives us flexibility to increase levy to help fund expenses like these, which are out of our control …
- $208,000 of the increased levy is due to tax refunds we owe to Caterpillar and Time Warner Cable. I’ve written about this before, but here are the basics: The state assesses industrial users like Cat/Bucyrus, and in recent years they challenged their assessment with the state – and won. The result is a significant repayment due in 2016, with smaller amounts due in coming years. The state also determines what equipment is tax exempt for businesses like Time Warner Cable and has determined that a significant portion of their equipment is exempt from personal property taxes. Therefore, a repayment is due there as well.
- The city is also faced with $69,000 in reduced payments from the state for “exempt computer aid.” Years ago, the state exempted computers (among other items) from the items communities can count toward personal property tax collections. To make up for this, the state reimburses communities for lost revenue. The state is significantly reducing that payment in 2016, and we are feeling that pain.
- The city is also facing another $52,000 shortfall due to an anticipated decrease in our expenditure restraint payment from the state in 2016. This is money the state pays to communities who keep their spending in check – funding we have been proud to receive for many years. With more and more communities eligible for the program, our 2016 “reward” will be smaller, and we must account for that.
So, that’s almost $330,000 of the potential shortfall right there.
Much of the rest of the levy increase comes from our decision to update our compensation system for 2016 – and offer most employees a 2% pay raise. Such a raise has already been negotiated for our unionized police officers, and the firefighters’ contract expires at the end of 2015. We are extending that raise to most of our non-represented workers as well.
This coincides with a vote last week by the city council to re-examine and reclassify (where necessary) all of the non-union jobs in city government and adjust our pay matrix accordingly – the result of a compensation study we just completed, the first in seven years.
One other key point needs to be made here: We are also not proposing to use any funds from the tax stabilization account to “buy down” the levy and balance the budget. For 2015, we used $145,000 to do just that, so that is also a significant revenue reduction. I think this is a responsible approach that allows us to keep this fund for emergencies and other uses down the road, as state and county support for our services always seem to be in increasing jeopardy, and we may be faced with difficult decisions in the years ahead.
Among other budget highlights:
- The revenue number includes a reduction in anticipated collections for “Other Violations,” which encompasses all police and most of the court fines, except parking violations. This reduction was based on the actual collections over the past several years. That said, we will be asking the common council to take a comprehensive look at city fines and fees later this year, comparing our fine and fee structure with that of other communities. Information is being gathered now for this discussion.
- The budget includes flat health insurance costs, as we have decided to leave the state health insurance plan and contract with Humana. This helped us avoid significant increases for 2016 under our current plan, while giving us flexibility for the future around plan design and more certainty around rate increases.
- We have also included $15,000 in funds to the Storm Water Utility budget to fund the city’s portion of the proposed Oak Creek Watershed study. This is our portion of the larger project being funded by the city, county, Milwaukee Metropolitan Sewerage District and Southeastern Wisconsin Regional Planning Commission.
So, what does this all mean for your tax bill? That remains to be seen. The tax rate won’t be set until the council approves the budget, potentially at its December 1 meeting. (A budget public hearing is set for 6 p.m. on Monday, November 30.)
In the meantime, I am proud that we were able to work within state-imposed mandates and funding cuts to at least maintain our service levels. We remain as committed as ever to being responsible stewards of taxpayer money – and that means delivering maximum value for your tax dollar.
Residents have come to expect a certain standard of city services, and it is my job as mayor to make sure we deliver on that expectation, while also driving innovation and efficiency around how we deliver those services. And we’re doing that.
This budget delivers on that promise.