The city soon will begin the 2013 budget process. This Q-and-A helps explain the fiscal situation the city is in coming into 2013:
Why does the city keep raising my taxes?
The city hasn’t raised the mil rate for at least four years. Increases in individual property taxes are due to property improvements, reassessment mandated by the State, or increases in non-city components of property tax, such as school district, county, and Southwest Tech.
But I pay my taxes at City Hall — isn’t that who’s responsible?
The city collects the overall property tax, but only about 26 percent is tax money used to operate the city; the rest we send on to the other taxing entities like the school district or the county. Even if the city completely shut down operations, your property taxes would only decline about one quarter.
Why can’t we just borrow what we need?
The city’s borrowing limits are set by the state; that limit is 5 percent of the assessed valuation of the city — currently about $557 million. Five percent of that is about $27.9 million.
But isn’t there a lot more borrowing capacity available?
Not really. Currently, the Common Council has a self-limit on borrowing of only 70 percent of what could be borrowed under state law, or about $19.5 million. Currently we’re roughly $2 million under that self-imposed limit.
That extra capacity can be used to fix our roads.
A lot more is needed. Just to keep replacing deteriorating roads at a 36-year rate, which is not very fast, it would cost the city about $11 million over the next four years. And then there’s the next four years. And the four years after that.
The self-imposed borrowing limit could be increased to, say, 75 percent, but that would only gain about $1.4 million in borrowing. And, of course, anything borrowed has to be paid back, so it’s not a sustainable route to replacing roads.
Those numbers jump out: $11 million to do roads over the next four years, just to maintain a sketchy 36-year replacement cycle. After some debt is retired this year, there is only roughly $4 million of borrowing capacity remaining.
The city could “max out the credit card” by borrowing up to 100 percent of the limit, but that’s something no council member thinks is a good idea. Reserve borrowing capacity is needed for who knows what: an emergency, a tornado that knocks out facilities, whatever.
But can’t we just cut other services to do the roads?
Sure, but most easy cuts have been made. Most of the budget is labor, to provide police services, maintain the streets and parks, provide needed services such as planning and zoning, treasurer’s office, city clerk’s office, and the like. For example, does anyone think it makes sense to cut police officers in a town where we have a growing college campus?
Last year hourly city employees took a big hit to their pay, in reducing hours to 37 per week as well as more contribution for benefits.
City Manager Larry Bierke has developed a staffing plan in which, through attrition, staff is reconfigured to create overlap and cross-training. That might save as much as $200,000 a year when finally in place, but it’s just a piece of the total needed, which is essentially $3 million a year to do what we need to do with roads and other projects. That’s out of an operating budget of about $8.2 million.
When people suggest cuts, it would be helpful to know what programs they think are less important to what we do as a city.
Why not raise taxes?
Frankly, I think a lot of people are hurting right now. We can’t be adding to their burdens without a darned good reason to do it, and in my view, that reason can’t exist until we have cut the budget as much as we can, and have exhausted all other possible sources of revenue. Whenever cuts are proposed, the special interests who like those programs come out of the woodwork and try to prevent that.
What else can be done?
All of this is one reason the Common Council has pursued the development initiatives it has. The new university residence hall on South Chestnut Street will provide $100,000 per year of a payment in lieu of taxes. Other off-campus university development will probably include something similar. So that’s one way we’re trying to find needed revenue to do the things we need to do, without raising taxes.
Other development adds to the tax base generally. The housing developments at 1070 W. Main St. and on Center Street will add perhaps $4 million to $5 million to the city’s tax base. That will help, but we need more yet.
Are there any problems on the horizon?
Possibly. Almost half the city’s basic revenue comes from shared revenue, i.e., state sources. Should the state decide to balance its budget by cutting that shared revenue, the city budget would take a huge hit.
That’s why we must remain prudent with our expenditures and look at borrowing with a jaundiced eye. It’s not an easy set of circumstances we face. We don’t have the money needed to do the roads; we also need to address EMS and Fire Department facilities at some point, and do so in a fiscally-responsible manner.
Where will all that money come from?
Good question. We need to continue to promote development, to add to our tax base which will help pay for what we need, to find new sources of grants and private funding.
And if anyone has credible ideas for how to get part or all of the additional $3 million we need each year, we’d love to hear them. It will take nothing less than all of us working together to get through this.
The Community Corner is a weekly column of opinion written by guest columnists UW–Platteville Chancellor Dennis Shields; Platteville School District Superintendent Connie Valenza; Chamber Director Kathy Kopp; Main Street Program Director Jack Luedtke; Common Council President Mike Dalecki, Platteville Recreation Coordinator Jordan Burress, State Rep. Travis Tranel, Platteville City Manager Larry Bierke and Police Chief Doug McKinley.