By LeAnn R. Ralph
MENOMONIE — The Dunn County Board has reviewed a preliminary budget of $90.8 million for 2022, representing an increase of $7.5 million over the 2021 budget.
The biggest challenge was meeting the levy limit set by the state, and the proposed 2022 budget meets the levy limit of $22,513,348, said Keith Strey, Dunn County’s chief financial officer, at the Dunn County Board’s October 13 meeting.
When the county board reviewed the budget requests for 2022 at the July 28 meeting, there was a deficit of $4.9 million.
A compensation and class study increased wages for county employees by about $625,000.
The increase in wages was offset, however, by a $704,000 reduction in health insurance costs and contributions to the Wisconsin Retirement System.
The deficit also was offset by an increase in sales tax revenue of about $144,000.
Using $3.2 million in American Recovery Plan Act funds for county road work also helped reduce the deficit, along with a variety of other reductions, which included delaying the hiring of a child support position for $11,715, delaying two scheduled facilities projects for $235,000, reducing the contribution to the Dunn County Economic Development Corporation by $23,000, delaying the highway department roofing project for $700,000, delaying the hiring of a second assistant corporation counsel until July 1, 2022, for $64,000, removing the funding for a vacant mechanic/welder position for $88,000 and increasing the amount of general fund applied to the budget by nearly $200,000.
The 2022 budget includes $3 million in debt for the capital improvement plan adopted by the county board last spring, Strey noted.
Borrowing
Excessive borrowing to solve budget problems is not fixing the deficit issue, but is only delaying and compounding the problem, said Michael Rogers, county board supervisor from Menomonie.
The county is borrowing $1.95 million for highway projects, and $3.1 million in ARPA money is going toward highway projects. In addition, the $727,000 wheel tax will be expiring next year, he said.
The county is using borrowed money to circumvent the levy cap and is wasting COVID money on backfilling budget deficits, Rogers said.
Although he had initially voted to support $3 million in borrowing per year for capital improvement projects, Rogers said he no longer supports the capital improvement plan.
CIP
The capital improvement plan approved by the county board earlier this year calls for borrowing $3 million per year to cover a variety of capital projects, such as replacing aging vehicles, continuing with building maintenance, such as replacing roofs, and replacing obsolete office and computer equipment.
Limiting borrowing to $3 million per year allows the county to make progress on building maintenance, for example, while still paying off other debt, so that eventually, the county’s debt level will decrease.
The alternative is for the county to borrow money “as needed” to balance the budget, so that one year, the county might borrow $1 million, and then $8 million the next year, and $6 million the next year and then $3 million the following year — resulting in total borrowing of $18 million over four years.
Under the capital improvement plan, the amount borrowed would be $12 million over four years, while at the same time planning for projects and keeping control of building maintenance.
Pro & Con
Mike Kneer, county board supervisor from Menomonie, asked for a response from Strey and Paul Miller, county manager, concerning Roger’s comments.
Every year, the budget weighs the pros and cons of borrowing across all departments and considering all of the requests from all of the departments, Miller said.
For many years, county administration and the county board has had to prioritize which services Dunn County can afford for its residents, he said.
The county is not in a position to do the ideal, which would be to balance the budget without borrowing money, Miller said.
For the highway department, it is a matter of using the ARPA money for road work or else eliminating services and programs, he said.
As happens every year, the adopted budget is a balancing act that reflects the priorities of the Dunn County Board, Miller said.
“Is it ideal? Far from it. Is it what any of us would choose if we were in charge? Not at all. It is the reality we face given levy limits, increasing expenditures and high demands for the services we are asked to provide,” he said.
“Are we kicking the can down the road? Yes. But no more so than any other year,” Miller said.
There will come a time when the county board must make even tougher decisions. Balancing the budget is becoming more difficult every year, and the county is trying to do the best that can be done with the resources that are available, he said.
“It does not solve the problems. The problems are beyond our making and beyond our capacity to solve,” Miller said.
Levy limit
The state’s levy limit law allowed an increase in the property tax levy of $300,000 for Dunn County, but $300,000 does not even cover the increase in labor costs, Strey said.
The state’s levy limit law allows municipalities to increase the amount of property tax they can levy by a percentage of the net new construction in the municipality.
The levy limit law also allows municipalities to pay for debt service outside of the levy limit.
For example, if a municipality could only levy $150,000 in property taxes but borrowed money to pay for fixing a road that resulted in an annual debt service payment of $25,000, the municipality could levy $175,000 in property taxes each year until the debt is paid off.
When Wisconsin passed the levy limit law, the law provided an exclusion for debt, or in other words, created an incentive for debt, Strey said.
The law is forcing local units of government to issue debt “to get things done. To get projects done,” he said.
“That’s the cold, hard reality from an economic, from a financial, perspective,” Strey said.
There are certain services that people want, or services that are mandated by state law, but there is no reimbursement for the mandated services, he said.
“It’s really a whole package of things,” Strey said.
Tax base
The tax base growth in Dunn County last year allowed the county to increase the property tax levy by $300,000, Strey reiterated.
Dunn County has often had an increase in equalized value of 5 percent or 6 percent, but because of the levy limit law, the county is only allowed to levy an additional 2 percent or less, he said.
“We do not even get the benefit of the tax base growth,” Strey said.
“We can have all the growth we want, but with the structure of the levy limit law, we don’t get to capture it,” he said.
The Dunn County Board unanimously approved the preliminary budget, which will allow Strey to publish a budget summary.
The Dunn County Board will hold a public hearing on the budget and will formally adopt the budget at the Nov. 9 meeting.
