Category Archives: 2011 Budget

April 10, 2011 · 3:59 pm

Recycled Revenue: State Budget Pain May Come Sooner, Not Later With Funding Cuts

Another update: I spoke with our city administrator about this, and the immediate impact to South Milwaukee may be minimal because we have a recycling fund balance. The bigger concern for us is the proposed loss of recycling grant funding from the state in 2012 and beyond. I will keep you posted.

Update: Milwaukee’s mayor wants a legal opinion on this.

It looks like we will feel some of the state budget pain in South Milwaukee well before 2012.

Check out this story in the Journal Sentinel about looming reductions in state recycling funding for local communities — cuts that could be felt in coming weeks, rather than in 2012 as first thought. From it:

With Walker’s budget reductions, the DNR was required to cut slightly less than $27 million from its budget. Nearly half that amount came from recycling grants, which normally go to 1,018 communities by June 1, said Mary R. Teves, DNR director of financial assistance.

After sending out the email, “my phone has been ringing off the hook,” as local officials try to confirm that their funding would be cut, and to find out by how much, Teves said.

For Milwaukee, the reduction would slice aid by $1.3 million, from $3.4 million to $2.1 million, Mayor Tom Barrett said. The city has budgeted $10 million for recycling this year, but the state aid cut would not take effect until June 1, for a reduction of some 22% for the last seven months of the year, he said.

What will the impact to South Milwaukee be, and what will our options be? I’ll keep you posted.

Keep in mind that we are expecting more than $126,000 in grant funding from the state this year for recycling, so the impacts will be real.

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March 2, 2011 · 10:13 am

Big Brother: Walker’s Argument for Meddling in Local Government

Here are the pertinent sections of Gov. Scott’s Walker’s budget brief that relate to local governments and his rationale for seizing more control over how local governments are run.

Property Tax Relief and Local Government

In challenging economic times, Wisconsin property taxpayers continue to have among the highest property tax burdens in the country. According to U.S. Census data, Wisconsin ranked ninth among the 50 states in property tax burden as a proportion of personal income in 2008 and has been in the top ten states most of the past three decades. In 2010, property taxes as a percentage of personal income rose to their highest level since 1996 as levy growth exceeded the growth in personal income.

Despite the significant budget challenges facing the state, the Governor recommends maintaining nearly $900 million in general fund support for direct property tax credits, including funding a $5 million annual increase in the first dollar credit enacted in the previous biennium. The Governor also recommends restraining the growth in property tax levies by extending county and municipal levy limits for the next two years and limiting the growth in levies to the greater of 0 percent or the change in equalized value due to net new construction. To further protect property taxpayers, the Governor recommends limiting the base allowable levy to the actual prior year levy. Additionally, if debt service would be lower in the budgeted year than in the prior year, counties and municipalities must pass those savings on to the taxpayers by reducing allowable levies accordingly.

In the context of local government aid reductions for schools, technical colleges, counties and municipalities, strong levy controls are important to avoid aid reductions from becoming tax increases for property owners and renters. Under current law, levies could be increased to offset the amount of the aid reductions, placing a significantly larger burden on property taxpayers.

Due to state budget constraints, current funding of county and municipal aid cannot be maintained. The Governor recommends reducing county and municipal aid payments by $96 million in calendar year 2012, with reductions to municipalities of $59.5 million and reductions to counties of $36.5 million. Recognizing that aid reductions may put a strain on local government budgets, the Governor, in his budget repair bill, has recommended providing the necessary flexibility to local governments to meet these reductions without a significant degradation of essential public services.

To provide assistance to local governments in meeting the constraints of diminished resources, county and municipal aid reductions would be allocated in a targeted manner so that low population and low value communities that will not be able to realize significant labor cost savings will see modest aid reductions. Due to larger full-time labor forces in more populous municipalities, measures to reduce labor cost pressures for those governments will yield greater savings, so those governments are generally better able to manage reductions in state aid. Low population, low value municipalities that rely heavily on county and municipal aid due to limited tax bases generally will see smaller savings from higher employee contributions to pensions and health insurance. To address these mismatches, the allocation of county and municipal aid reductions has been structured with aid reduction maximums based on valuation that rise with the population of municipalities to match the general tendency of compensation savings to be concentrated in larger municipalities. While individual municipalities will have varying abilities to meet these state aid adjustments, the allocation of aid reductions has been designed to align with the ability of local governments to absorb the reductions.

General transportation aids for counties and municipalities have been reduced by 10 percent for calendar year 2012 and will remain flat through calendar year 2013. The reductions in general transportation aids for municipalities are also targeted to lessen the impact for less populous communities. This was done by lowering the aid rate per mile of road by only 3 percent, protecting small communities with many miles of road and shifting reductions to larger communities with both the tax base and the employee compensation savings to absorb larger reduction amounts.

Other Local Government Initiatives

The Governor recommends providing additional tools to local governments to manage expenditures by:

  • Removing recycling mandates;
  • Allowing municipalities to merge police and fire departments to create greater operational efficiencies; and
  • Eliminating library maintenance of effort funding requirements.

I’m not sure what the last bullet point refers to, but I will find out. And it’s disappointing to hear that we’ll be receiving less transportation aid from the state under Walker’s budget plan — another way he’ll stick it to local taxpayers.

You can find this language, and even more flawed arguments in favor of less local control, on pages 50-53 of this document.

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February 28, 2011 · 11:55 pm

Waiting for the Coming Cuts …

We should know more Tuesday about the scope of cuts South Milwaukee will face with in coming months, as Gov. Scott Walker delivers his budget address.

It surely won’t be pretty, as we prepare for a significant cut in shared revenue from the state.

As you can see in our 2011 budget, shared revenue is a significant line item for us. We were projecting more than $3.1 million in these types of revenuves this year, the same as our 2010 budgeted amount, but more than $100,000 less than what we received in 2009.  

So even a 10 percent cut in this line item is significant — potentially more than a $300,000 hit to a budget that is already fat-free. At this point, any additional cuts are almost certainly going to mean a reduction in services … and that’s a sobering thought.

I’ll keep you posted as we begin to navigate through this.

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November 30, 2010 · 10:56 pm

City Council Approves 2011 Budget

The South Milwaukee City Council approved the 2011 budget on Tuesday night in a 7-0 vote.

The details (and context) are not much different than what I reported in my previous post found here.

But here is some updated information …

  • The city tax levy will increase 1.86 percent, from $10,001,640 to $10,188,003. This is actually lower than the increase called for in the initial draft of the budget.
  • The city tax rate will increase 2.13%, from $7.09 per $1,000 of assessed valuation to $7.24 per $1,000. That means for the owner of a $150,000 home in South Milwaukee, the city portion of that person’s property tax bill we be $1,086 in 2011, up less than $23 from 2010.
  • Changes from the proposed executive budget include a small increase in auditing fees, a decrease in fees paid to Milwaukee Area Domestic Animal Control and a small increase in the Police and Fire Commission budget due to the looming search for a new fire chief.

I should also point out some of the fears raised about the local impact of state budget woes for the back half of 2011 and beyond. A potential loss in shared revenue, among other impacts, looms when the new governor and legislature hammer out the 2011-13 biennial budget.

Why is this potentially significant for us? Shared revenue is a more than $3.1 million line item for us, so any cut could hurt. I’ll keep you posted.

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November 28, 2010 · 11:31 pm

2011 Budget Update: Hearing Monday, Council Meeting Tuesday

You have your best (and probably last) chance to weigh in on the proposed 2011 city budget on Monday.

A public hearing on the budget is planned for 6 p.m. at City Hall.

Then, on Tuesday, the City Council will meet to discuss and consider approving the 2011 document. That meeting is at 7 p.m. Here is the agenda.

You can learn more about the proposed executive budget in my previous post on this, and you can check out the actual document here. Keep in mind that the version we consider on Tuesday — and the final version — will likely change slightly as final numbers come in.

Of course, I am interested to know what you think about the proposed budget. Post your comments below … or, better yet, make your voice heard at the public hearing on Monday.

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November 4, 2010 · 10:07 pm

Developing Story is Not a Pretty One in Cudahy

Not much surprises me anymore, but the email I received from Lara Fritts on Thursday did.

The message from the Cudahy economic development director had a simple, but pleading, subject line: “Please Help!”

Inside was a pretty amazing scenario. You can see the full email text here. I’ll give you a summary …

Lara is a full-time economic development director, and she has two part-time interns. Last week, the Cudahy Finance Committee approved a budget that cut the two interns. Then, at another meeting last night, the Finance Committee re-opened the Cudahy Economic Development Department budget — and proceeded to cut Lara’s hours to part time, and her salary to $40,000 per year. And this was done without Lara in attendance. (She was teaching a course at UW-Milwaukee.)

“The rationale provided,” Lara wrote in her email, “was there was more development that occurred with the previous part-time position.”

Wow. While Lara says this decision isn’t final — the reduction in hours and salary still must go before the Personnel Committee and the whole budget still must be approved by the council — the fact that it is even under consideration is surprising.

I realize times are tough for communities, and Cudahy is no exception. Neither is South Milwaukee.

But now is NOT the time to be cutting back on economic development. Now is the time to invest in that area. Just as it is in the private sector, you invest in your core during times of struggle so you can emerge even stronger on the other side. And I can’t think of a more core mission for local government than economic development.

That said, South Milwaukee does what it can in this area. We hold our own with one person (Danielle Devlin) working hard to lead our economic development efforts, oversee our TIF districts and manage our Parkcrest housing development. It’s not ideal. I’d actually like to see us move toward one full-time economic director down the road. It’s an investment that pays countless dividends for communities likes ours.

Cudahy is a great example of this. Our neighbor to the north is nothing short of a model for proactive economic development for small cities.

Consider some of the accomplishments of the city’s economic development team in the past year or so:

Those are just some of the things that immediately came to mind. There are more.

What happens to these and other similar initiatives if the proposed cuts become a reality? It remains to be seen.

After all, there is still time for Cudahy to do the right thing here. Investing in economic development is the right thing.

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October 21, 2010 · 11:17 am

Holding the Line: Details on the Proposed 2011 South Milwaukee City Budget

The proposed 2011 city budget is available, and I feel good about it. I think you will too.

Before I get into the details, let me say thanks to City Administrator Tami Mayzik, City Clerk Jim Shelenske, Mayor Tom Zepecki, Finance Committee Chairman Pat Stoner and the department heads for all of their hard work in coming up with what I think is a sensible, fair and thoughtful budget — one that avoids much of the pain being felt by other communities, the county and state.

So here is some of the key information:

  • The 2011 executive budget includes a tax levy increase of 1.95% — below the state-imposed city levy limit increase of 3%. The proposed city levy is $10,196,526, compared to the 2010 budget of $10,001,640.
  • Total expenditures are projected to increase 0.6% from $19,043,365 to $19,158,448. This includes a 2% salary increase for union and non-represented employees (after no increase in 2010) and an 8.7% increase in health insurance premiums (even as we ask them to contribute 10% more to their premiums in 2011). Fuel budgets are also higher, and the fire hydrant rental fee — which the city pays to the Water Utility — is increasing 35% due to the water rate increase. We’re also budgeting for the purchase and maintenance of an emergency alert system in 2011, something I have pushed for as a way to keep residents better informed during situations like the flooding and water main break emergencies of the past year. One key reduction in expenses is our debt service payment, since the city did not do a borrowing in 2010.
  • Total revenues are projected to decrease 0.2% to $9,750,378 from $9,769,739. Our state shared revenue payment is expected to remain the same as 2010, our transportation aids will increase by $63,000 and our connecting street payments will remain close to the same as this year. We’re also anticipating a reduction in municipal court revenues in 2011 due to the struggling economy.
  • One significant revenue source, again, will be an expenditure restraint payment from the state for keeping spending increases below a certain threshold, for us 3% . The projected amount of this payment is $347,907. For purposes of this payment, our expenditure increase is 2.23% for 2011 — a number that gets to our “general fund” spending and does not factor in paramedic expenditures and debt service costs.
  • The proposed budget also balances thanks in part to a transfer of $160,000 from the city’s “rainy-day” non-lapsing fund. This is the second straight year we’ll be shifting money from this fund to cover our budget, and it’s in large part due to continued abysmal rates of return on our investment income. As investment returns rebound (hopefully some day soon) we likely won’t have to continue these transfers. Until then, I am OK with it.
  • Staffing levels remain the same as in 2010. We’re also adding an engineering intern to allow us to continue our sidewalk maintenance program.

You can see the draft budget on the city website here.

One point to keep in mind: Tax rate information is not yet available and won’t be until later in November. I’ll pass on that information when I know it, and that will allow you to calculate your estimated city tax bill for your property.

So, what’s next? The City Council held a budget information session on Wednesday and voted to published the proposed “executive” budget in the local newspaper. That will be done on Thursday, Nov. 4. A budget public hearing is scheduled for Monday, Nov. 29, at City Hall, and the City Council is expected to adopt the budget at its meeting the following night.

In the meantime, I’ll keep you posted on any new details that come up. Keep in mind that this is still a proposed budget, so the final numbers could, and likely will, change as we get a better handle on final 2010 revenues and expenses.

Of course, I’d like to know what you think of the proposed budget. Vote in the poll on the right-hand side of this page, post your comments below, and contact me anytime.

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September 27, 2010 · 11:03 pm

It’s That Time of Year Again: Key Budget Dates Set

It’s budget season, and I promise to keep you informed on the city budget process as it unfolds in coming weeks.

Here are some key upcoming budget dates:

  • Wednesday, Oct. 20: Executive budget review
  • Wednesday, Oct. 27: Additional budget review (if necessary)
  • Thursday, Nov. 4: Publish proposed budget
  • Monday, Nov. 29: Budget public hearing
  • Tuesday, Nov. 30: City Council meeting to adopt budget

Check out the complete listing of important dates here.

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