BOSCOBEL - The City of Boscobel faces a deficit under its proposed budget for 2023. In spite of an overall reduction in general fund spending of nearly 6 percent, the city still comes up short $181,000.
The budget proposal comes from the Council’s Finance Committee, which worked with City Administrator Trish Smith and financial consultants from Ehlers Public Finance Advisors, a Minnesota-based corporation with offices in Waukesha.
A public hearing takes place on Tuesday, December 27 at 7 p.m. in council chambers. A budget overview and meeting notice can be found on Page 6. A detailed breakdown of the budget is available at City Hall.
The committee had earlier recommended that the city add staff to both the Streets Department and City Hall. Those plans have now been scrapped, given the financial realities.
“After working more on the budget, we do not think it is feasible as of right now,” explained Mayor Brenda Kalish
Tax increase for next year
In Wisconsin, property taxes are the primary source of revenue for municipalities—about 44 percent, here in Boscobel, according to the budget figures.
But when it comes to raising taxes, the state statutes are both strict and complicated. The law imposes a “levy limit” on property taxes: Tax rates can only be raised if there’s overall growth in the tax base from new construction. For Boscobel, that amount would add $3,336 to this year’s budget—about enough to pay for the phone and internet bills at City Hall.
Borrowing money, however, is exempt from these levy limits, and Boscobel, like many other municipalities, have turned to debt to fund the budget.
The legislature says a city can raise taxes to cover the amount it pays on its debts (its “debt service.”) So the more debt service, the more revenue it can levy from taxpayers (up to a point).
By increasing the amount of debt the city claims on this year’s books, then, Boscobel can raise an additional $98,161 in taxes, which would add about 90 cents of tax to every $1,000 worth of real estate—or $90 on a $100,000 house.
When it comes to the other $82,000, the city hopes to make it by hook or by crook—cutting expenses over the course of the year or dipping into cash reserves as necessary.
Long-term problems
The other major revenue source for Wisconsin municipalities comes from the state through “shared revenue,” which is a portion of the state sales taxes, and accounts for about 27 percent of Boscobel’s budget. That number has been steadily shrinking, according to research from the nonpartisan Wisconsin Policy Forum.
When adjusted for inflation, shared revenue payments have dropped by 63 percent from 1990 to 2020, according to the Forum. Which helps explain why Madison is now sitting on a $6.6 billion budget surplus.
“What Boscobel is experiencing is what every village, town, city, and county is experiencing: Wisconsin’s system of financing local government simply does not work,” said Jerry Deschane, the Executive Director of the League of Wisconsin Municipalities which provides resources for municipalities and lobbies on their behalf. “We’re keeping local government’s head under water. We’ve strapped local systems of government to funding that doesn’t keep up with inflation.”
Boscobel’s debt service has steadily increased—the 2023 budget sets aside more than half a million to pay off debts. Last year, the city paid for a police officer’s salary out of borrowed funds. (This year, that salary has moved into the operating budget.)
“If a local government is paying for operating expenses with debt, that’s a government that’s run out of options,” said Deschane.
And while its debts have increased, the city’s cash reserves have not. The 2023 budget puts the general fund balance at $211,245, the lowest it’s been in at least five years.
For future budgets
The Finance Committee has made building this general fund balance its priority in coming budgets. Cash on hand can only help offset unplanned expenses—like skyrocketing inflation rates, for example.
But unless the city enacts dramatic budget cuts, the crunch will continue. In the meantime, the city is exploring other options: For example, making people pay fees for services like garbage and snowplowing, instead of spreading those costs across all taxpayers.
Another avenue is to ask the voters by referendum to approve an increase in property taxes—the only vehicle the city has to exceed statutory levy limits.
“We’ve been noticing not a linear progression, but more of an exponential progression in how many communities are undertaking these referendums,” Brian Romer, Municipal Advisor at Ehlers, told the Finance Committee members. Very few communities, he added, have enough new construction to keep up with even basic costs like wages and benefits, to say nothing of longer term growth of their communities.
Changes at the top
Ultimately, according to Deschane, solutions will have to come from the state legislature. “We know we need to reconnect Boscobel to the economy,” he said. “It’s not growing because it can’t grow under this system. The League is not advocating any one solution; we think there are a variety of ways this can be done.”
As it happens, Boscobel’s senator, Howard Marklein, chairs the Senate Committee on Finance in Madison. In an email to the Dial, he said that discussions about shared revenue and school funding are already underway in advance of February’s budget process.
“While I believe we will provide tax relief to all taxpayers, I have also consistently said that we must fund our priorities first. Funding for our communities and schools is among our main priorities. This has not changed, and I will continue to work to make sure that we fulfill our obligations while protecting taxpayers.”
As a lobbyist, Deschane’s view of the capital is “very optimistic,” he said. “Legislators recognize that there’s a serious problem out there, and they’re willing to work on it. Will that make everyone happy? Probably not. Will it avert a crisis? Yes, I think it will.”
