We’ve published the 2020 budget, and it was another difficult one – and one that reflects our limited options to deal with rising costs.
Our biggest challenge this year: a hole caused by a more than $400,000 increase in our health insurance premiums due to large, catastrophic claims.
The budget balances and meets that challenge, avoiding service cuts,.
For 2020, after a tax cut in 2019, the city tax levy is proposed to be $11,490,735 for 2020, a 4.62% increase over last year. This means the city portion of most property tax bills will go up by about that amount. (Tax rates will not be set until later in November.)
Why the increase?
State law allows our “base” levy to increase by the amount of our new construction, and for a fully developed city like ours that is usually around 0. This year, that “net new construction” growth number is +0.2%; therefore the city’s base levy can grow by that amount. This is the 12th straight year where the city’s net new construction growth measured 1% or less.
However, there is an important exception to levy limits that allowed us to avoid significant pain in balancing our budget: Debt incurred after 2005 is excluded from our levy limit calculation.
Our debt grew by more than $700,000 in 2019, mostly to fund the recent water and wastewater plant and infrastructure upgrades, and costs related to our tax incremental financing districts.
We are applying some of that flexibility to fund the insurance increase and balance the budget. Without this exception, we would be facing a more than $400,000 shortfall and most certainly be talking about cutting services.
Check out the proposed 2020 budget here. Other budget highlights …
- Expenditures are expected to increase about 5.1% to just over $21 million. Removing debt service and refunded taxes, our expenditures will grow by about 1.75%, allowing us to receive an approximately $360,000 expenditure restraint payment from the state – a state aid that hasn’t increased significantly in more than a decade.
- Revenues are expected to increase 5.65% to more than $9.5 million primarily due to reimbursements from the TIDs and utilities for debt service.
- Other state aids will remain flat: Stated shared revenue is expected to come in at $2.87 million, with transportation aids at $979,008. Recycling aids will come at $82,000.
- The budget reflects the referendum passed in 2017, which has helped us keep funding for public safety stable and will for years. We have again segregated the extra revenue from the referendum to support the sustained funding of our paramedic program and the 2018 hiring of two new police officers. We feel it’s important to segregate the funds this way to ensure taxpayers can see the additional revenue is being spent in exactly the way we said it would. We will continue to deliver this transparency.
- The budget includes a 2% across-the-board salary increase plus step advancement for employees; police and fire union employees are guaranteed this per their contract.
We continue to be responsible stewards of taxpayer money, and we will continue to be. And there is strong data to prove this.
The Wisconsin Policy Forum — the gold standard, in my mind, of independent research on governments — recently released its Municipal Data Tool, and it shows we manage our finances, and live within our means, as well as anyone.
While their most recent data is from 2018, it shows us with the third-lowest property tax levy per capita among the 19 communities in the county. Similarly, we stack up well in their measures of net operating spending per capita (third lowest) and debt (also third lowest).
Check out the chart with this post, and do your own comparisons here.
While we are proud of how we compare, things must change when it comes to flexibility on how we raise revenue.
As I’ve said, we are too reliant on the property tax in Wisconsin, and South Milwaukee. We need alternative funding solutions for government, to ensure we can continue to deliver the services you have come to expect from us, enhance them where possible and maybe add new ones.
The proposed county sales tax legislation is one good option. There are others.
Let’s fix this, and not rely on one-time exceptions – and a system that almost encourages cities to borrow more to soften the impact of levy limits — to fund our budget.
Things only get harder from here. Indeed, this year’s budget – with the levy limit exception we are taking to adequately fund the rising insurance costs — sets us up for a really challenging 2021 budget. Next year, debt service will likely decrease again, putting us in an immediate hole.
As always, we’ll adapt. At the same time, we’ll work to fix our broken system of funding local government, turning to Madison for help.
We welcome your feedback on the budget at the formal public hearing at 6 p.m. on Monday, Nov. 18. The council will consider passage of the document the following night.
10 responses to “Responsibly Investing Your Money: 2020 South Milwaukee Budget Published”
The 2020 budget reminds me of the words in the Song Bad Bad Leroy Brown “looks like a jigsaw puzzle with a couple of pieces gone” . All the state aids look flat or down. Health insurance is up. The debt service is up and very confusing, with sewer and water improvements. The Mayor can change what cuts are made but something will be cut from 2019 budget . It has flat or decreasing revenues and increased expenditures due to some inflation.
You can not expect the operating budget to be any help in redevelopment of Downtown. In my opinion we will need to find other sources then the budget to fix downtown.
Note, two numbers seam inaccurate, Ambulance fess seam low by $250,000 and waste water sludge transportation fees seam high by $45,000.
Hmmm…. My salary doesn’t go up just because my expenses did. In fact my take-home salary is going down as of the first of the year because of health insurance premiums. Also, it is very rare that I would expect to see a $4+% raise.
Now I don’t pretend to understand the details of the budget, but I’m still having a hard time finding “investing for the future” part. Looks like lot of spending instead. I put some money away in case I need a new furnace. / car / roof / etc. Where is that? Or is the plan not to learn from the mistakes we made about not having the savings necessary to cover the unplanned water utility upgrade?
a few years ago they jacked up water rates to cover the new water utilities. now they need more money for water utilities? When they jacked up those rates they said it was big this one time, because we were set for the future. LIES.
I am hoping my fellow South Milwaukee-ans can realize corporate polluters can be made to pay for the cleanup of Mill Pond or Mill Pool.
One of the budget items showing the missing piece of the budget I belief is item 100-52100-50210 Fringe Benefits Police budget amount $1,359,387 increase of 5.85%. This cost along with all first responder fringe benefits should be the state responsibility, not the city. The City of Milwaukee is cutting 60 police positions because of it If a first responder ,is disabled on the job, it is hard for any city to cover it, The state could do a much better job.
I believe are state representative and the Crusher had first responder family members disabled on the job, THe state representative will be at Oak Creek Library 5:30 PM to 6:30 PM Monday November 11. May be someone can bring up the subject. Hopefully Oak Creeks favorite South Milwaukee alderman Joe can show up. The Oak Creek City Hall watchers love him for asking about luxury apartments..
And fringe benefits seem to be exploded, lived in sm 10 years, property tax up ~850, as of the 2018 bill. a 23% increase. if this is responsible, then I’m not sure what irresponsible budgeting would be.
A 23% increase over 10 years, a little more than inflation, including the referendum and even as costs have gone up much more than that in many areas. I call that responsible. And so do our auditors. http://www.in2013dollars.com/us/inflation/2009
The increase is limited to 22% because of what the state did in 2014. since 2014, the property tax bill went up by 15%. Total inflation from 2014-2018 was 6.1%. SM property tax bill up 15%. And now you are jacking rates up 4.6% (on top of all the referendums, which means the referendums are costing the city even more then projected.). Which means inflation since 2014 has been about 8.5%, and SM property taxes up ~20%.
Not sure how thats responsible.
Auditors seem to tell you exactly what you want to hear, or the message you want to put out. And you now are going up another 4%? So
“Our debt grew by more than $700,000 in 2019, mostly to (1) fund the recent water and wastewater plant and infrastructure upgrades, and costs related to our (2) tax incremental financing districts.”
“Our biggest challenge this year: a hole caused by a more than (3) $400,000 increase in our health insurance premiums due to large, catastrophic claims.”
I’d like to make a few points regarding the statements above from the mayor’s post:
(1) Water customers are paying for the infrastructure upgrades (per the recent price increases), so I don’t understand how the city can claim its debt is rising due to the water and wastewater plant and infrastructure upgrades. Maybe the city “signed” for the loan, but the payments are coming out of the pockets of the customers of the water utility.
(2) TIF districts are supposed to help build a larger tax base for the city, so how is it that the city keeps creating and awarding TIFs, yet they seem to always be costing us money. I have yet to read a blog or article about the return on investment (ROI) of any TIF awarded by the city. Does the city keep any records that show the expenditures for TIFs and the ROI generated by the TIFs? A simple two-column comparison, TIF by TIF, left column expenditures, right column ROI? If so, please post it and blog about it so residents can see the positive financial impact of the TIFs.
(3) First, I hope that all are well. As my grandfather said: Your health is your wealth. This is more an observation than a question. Something has to change in the profit-driven healthcare system. It is ridiculous that city healthcare premiums should rise by $400,000 in one year due to insured employees using the insurance to pay for medical expenses — no matter how catastrophic the expenses are. The rising cost of healthcare is out of control, enriching the insurance companies and middle-men, while threatening to bankrupt the people who need medical care. Pay close attention to the healthcare policies of the next election cycle. I’m not sure what the best plan is, but things cannot remain as they are now.
In my opinion health care is a mess. This is at the national level and needs to be addressed at the national level with some sort of bipartisanship.That, is probably not going to happen. The City of South Milwaukee like all cities is caught behind it. This means all of us, in South Milwaukee will need to be more creative in running the City, the School system and are lives.