We have published the proposed 2017 South Milwaukee budget, and I’m proud to say it preserves the city services you have come to expect while investing in some critical areas — this despite being one of the toughest budgets in many years.
More than ever, we are feeling the effects of more than a decade of state-imposed levy and spending limits.
Costs go up. But with constraints put us on by the state, it’s increasingly difficult for our budgets to keep up, leaving us to make hard choices to hold the line on expenditures.
This proposed budget does that. The bottom line in the published budget, summarized here …
- Expenditures are projected to be $19,716,658.
- Revenues are expected to be $8,952,205.
- The total tax levy is projected at $10,764,454, a 2.73 percent increase.
- As for tax rate changes, those will be determined at or after the Nov. 22 city council meeting where budget passage will be discussed. I’ll share those figures then.
Of course, all of this demands context for the complete picture.
First, it must be said the published budget is not the final word. In fact, we have already updated health insurance and other projections (both revenue and expense) that will force us to make additional changes, including potential cuts, in the version that goes before the council for approval on Nov. 22.
It’s also important to note what we were faced with this year, and why this year is shaping up to be worse than others in recent memory.
Our biggest constraint continues to be levy limits, which cap levy growth at net new construction growth. For us, that figure is 0.19 percent; therefore the city’s levy (excluding post-2005 debt service payments and refunded taxes) can grow by just 0.19 percent.
Our levy growth, minus exceptions, has been capped at below 1 percent 10 of the last 11 years. For small-growth cities like us, those in redevelopment mode, this is a significant handcuff and needs to be addressed by state lawmakers and the governor. I hope they have the courage to do so, and give power back to local governments in this most important of responsibilities.
With this in front of us, we then faced these new challenges for 2017 …
- Of biggest concern, our initial health insurance renewal came back with a 25 percent increase for the existing plan due in large part to poor claims performance in 2016. This is obviously not sustainable. So we went back to the market to shop for a new plan, and found one that significantly increases the deductible and other employee costs, but brings the city premium increase to 3 percent. That’s still a $100,000+ hit.
- We also had to deal with an approximately 4 percent increase in Wisconsin Retirement System rates for protective service employees – or about $200,000. The increase for protective service employees was primarily due to existing disability claims, and is out of our control.
- We also continue to refund Caterpillar property tax overpayments. In 2017, we will be paying them back $94,000, based on the findings from the Wisconsin Department of Revenue in 2013.
- Revenues are also off by about $71,000. A couple key drivers to this small decrease are a decrease in water utility tax equivalent due to depreciation of their building and a decrease in the sewer enterprise fund reimbursement, as they are performing their road repair work rather than the street department.
Faced with these and other challenges, we set out to balance the budget, and we have. It hasn’t been easy.
First, the proposed budget does not include any across-the-board salary increase for non-union employees. Those not at the maximum step of their pay grade would be advanced to the next step. Others who have exhausted their steps would not get an increase. There will be a 2 percent across-the-board salary increase plus step advancement for police and fire union employees, as negotiated in their current contract, which expire on Dec. 31, 2017.
In addition, the decision to not do a cost-of-living pay adjustment for non-union employees comes as our new health plan adds more out-of-pocket expenses.
We also shifted some employee costs from the operating budget to the Storm Water Utility and Insurance Reserve Fund to rightfully account for their time spent on these efforts.
So, it was a challenge, as big as we’ve had in recent years.
Still, we have found ways to reinvest. We need to.
Investing to enhance our city services can’t stop, even in tough budget times. In fact, some would argue that is exactly the time to do it, stepping up to drive growth, deliver efficiency and move our city forward.
This budget does so in several key areas …
- We have earmarked $25,000 in Storm Water Utility funds for a consultant to develop and execute an urban forestry work plan. Doing so will get us on the path to building a sustainable urban forestry program and planting more trees. This aligns with the 2014 study we commissioned, which recommends we bring on a consultant (recommended level: $50,000) to manage our program. We found the additional funding in the existing utility budget, so we do not anticipate this will lead to an increase in the existing fee.
- We also committing an additional $25,000 for economic development consulting work, money we anticipate spending on projects that will help to grow our tax base, as continue to make this a top priority.
- We have approved a deal with Oak Creek on partnering on the delivery of IT services inside City Hall and city departments. While we do not project this to save money immediately, we will see an increased service level for the same cost as the third party with which we have been working. I expect it to save money over time.
- We are also continuing to move toward LED lighting inside city buildings and, potentially, with some streetlights. We do not project budget savings in 2017, but we are confident this initiative will do so in years ahead.
So, where does this leave us? I feel this budget continues with our tradition of being responsible stewards of taxpayer money, balancing difficult realities like state-imposed limits, rising costs, and the desire to drive efficiency and innovation with the need to adequately fund the city services taxpayers have come to expect from us.
Of course, I welcome your thoughts on all of this, as always, either in this forum or at the budget public hearing set for 6 p.m. on Monday, Nov. 21, at City Hall. The city council will take up the budget for passage at its Nov. 22 meeting at 6 p.m. at City Hall.
As city leaders, this is one of the most important things we do every year. Be heard.