Dunn County portion of property tax bills has decreased over the last 10 years
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by LeAnn R. Ralph
MENOMONIE — Dunn County Board members and county officials often hear that there is “too much fat in the county budget. There is too much waste.”
They also are told, “Do more with less.”
Well — Dunn County, and other counties, too — are doing more with less, and the general property tax levy in Dunn County for 2023 is slightly less than the levy in 2016.
State aid for Dunn County is $18.5 million and represents 24 percent of the county’s budget, said Kristin Korpela, county manager, at a special meeting of the Dunn County Executive Committee held Saturday, March 25, just prior to a special meeting of the Dunn County Board to consider capital improvement projects for the 2024 budget.
In the 1980s, the state of Wisconsin was providing aid that accounted for 46 percent of Dunn County’s budget, instead of the 24 percent of the budget from the state now, she said.
The situation for Dunn County’s budget would be very different if the state was still paying 46 percent of the budget in state aid today, because Dunn County would receive $32 million annually in state aid instead of $18.5 million, Korpela said.
It is an issue of “the state stopped funding counties” rather than a county funding issue, said Kelly McCullough, county board supervisor from Menomonie and chair of the Dunn County Board.
“We are accused of spending too much money and are told we should do more with less, but we are already doing more with less,” he said.
Property taxes
Dunn County is levying almost exactly the same amount of tax levy without debt service for 2023 as was levied in 2016 — 7 years ago, Korpela said.
The property tax levy in 2016 was $19,232,000, and for the 2023 budget, the property tax levy is $19,182,000, so the property tax levy has decreased by 2.6 percent, she said.
The tax levy without debt service includes funding for libraries, bridge petitions and jail assessments, Korpela noted.
The tax levy with debt service is $24 million for the 2023 budget, and in 2016, the tax levy with debt service was $21 million, representing an increase of $3 million or 14 percent, she said.
From 2016 to 2023, the county’s operating budget, with the Capital Improvement Plan included, has increased by 22 percent, but the highway department levy, which was $6.8 million in 2016 and is $3.7 million now, represents a 45 percent decrease, Korpela said.
Many counties, as well as school districts and cities, village and towns, are borrowing money for capital improvements, such as road or street repair, equipment necessary to keep the roads open in the winter so people can go to work, or fixing leaking roofs on public buildings, because there is no room in the levy to pay for the additional expenditures and to free up money for additional operational costs.
Additional operational costs can include increased premiums for health insurance, raises in employee wages, increased fuel costs and increases in the cost for emergency services such as ambulance services, fire departments and police departments.
Levy limits
The state-imposed property tax levy limits allow the tax levy to increase by a formula that uses the amount of net new construction.
Counties with a large amount of net new construction can collect more in property taxes and have more money to spend on operational expenses and services for residents.
Other counties that do not have very much net new construction — like Dunn County — see very small increases in the allowable tax levy, even though expenses are increasing at a much greater rate for operational expenses and services for residents.
The cost of pavement, for example, has increased by 260 percent, McCullough said.
Without debt service included, if Dunn County’s tax levy had been able to increase at the percentage of the Consumer Price Index (CPI), Dunn County would be able to collect $1.6 million more per year in property taxes, Korpela said.
If the levy limits had been allowed to increase by the CPI with debt service included, Dunn County would be collecting $3 million more per year, she said.
County officials commonly hear that there is “waste and fat” in the budget and that there is misspending, Korpela said.
It’s a matter of math — what was, and what is now — is decreasing, Korpela said.
Over the past eight years, operating expenses have increased by 22 percent, while the tax levy with debt has increased by 14 percent, but the property tax levy without debt has decreased by 2.6 percent, she said.
Dunn County, as many counties do, uses debt to make capital improvements that, if the capital improvements are not completed, could end up costing taxpayers more in the long run, such as a roof that needed to be replaced which has now become a leaking roof that caused structural damage to the building.
2024 list
A few of the more expensive items on the 2024 capital improvements list include demolition of the government center boiler room and stack for $250,000 (the boilers were decommissioned in 2013 and the building has not been used since); $80,000 for a Government Center computer controlled lock system (would allow county staff to enter the building using their badges and would eliminate the possibility of someone losing their keys since it is not practical and cost effective to replace all of the Government Center locks if someone loses a set of keys); $100,000 on Judicial Center air handlers (the existing air handlers are original to the building and are 25 years old, and more efficient options would save money on utility costs).
Another capital improvement for 2024 is the Judicial Center chiller at $400,000.
Chillers are used to achieve proper temperature control.
The chiller is original to the Judicial Center and is past the end of its life for a chiller.
The Judicial Center was finished in 1998 and is 25 years old.
The new chillers are more energy efficient, and a new chiller would avoid breakdowns.
The capital improvement plan for 2024 also includes $1.4 million for highway equipment, which would include three new plow trucks, a track dozer, a sign truck and skid steer trade-in.
Dustin Binder, highway commissioner, has pointed out in the past that when highway equipment is more than 10 years old, the maintenance cost for each piece of equipment doubles and the trade-in value decreases.
Short-term borrowing
Although Dunn County has not typically used short-term borrowing, using short-term borrowing would make sense for items like squad vehicles that would be replaced many times over before they are paid off with long-term borrowing, Korpela said.
If $310,000 is spent on squad vehicles for the sheriff’s department, they are “long gone” before they are paid for with long-term borrowing, she said.
Most police departments and sheriff’s departments replace their vehicles every three to five years.
Long-term borrowing can extend out for 10 years, 20 years or even 40 years.
At the end of the year, $500,000 could be borrowed from a local bank. The money could be borrowed, levied and paid off in 2024, Korpela said.
The debt property tax levy on a $150,000 property to borrow $500,000 would be $18.91, she said.
Michael Rogers, county board supervisor from Menomonie, noted that when he started serving on the county board six years ago, he thought there was too much fat in the county budget.
“There is no fat. It’s hard to balance the budget,” he said, noting that new county board members must be educated about the county’s finances.
The county board “is not wasting money. We do not have it,” he said.
The Dunn County Board can control the county’s portion of a property tax bill for a $150,000 property, but the county board has no control over what a resident’s local school district levies or what Chippewa Valley Technical College levies, Korpela said.
So what you are saying is that the county portion of the property tax bills has decreased over the last 10 years, said Michael Kneer, county board supervisor from Menomonie.
“Yes,” Korpela said.
There has been some talk on the state level of increasing state-shared revenue, McCullough said.
If Dunn County does short-term borrowing now, the county may not have to in the future if the state-shared revenue is increased, he said.
On the other hand, if the county does continue short-term borrowing after this, the taxes will be maintained — that is, the $500,000 will be paid off in one year and will not be accruing principal and interest over the years when the next $500,000 is borrowed, and taxpayers would not see an increase over the initial increase of $19, Rogers said.
Debt
Dunn County makes one payment per year on the principal of borrowed money and two payments per year for interest, said Dr. Beata Haug, Dunn County’s chief financial officer.
The county has an AA bond rating, and that drives the interest rates that are offered to the county, she said.
If the county borrows $3 million every year for capital improvement projects, the county also will be paying off debt at a greater rate than the borrowing, Dr. Haug said.
“We are paying off principal faster than we are borrowing. That’s why the numbers (for overall debt) continue to drop (even though the county continues to borrow money),” Korpela said.
If Dunn County borrows $3 million per year for the next five years, the amount of overall debt still decreases, Dr. Haug said.
For example, Dunn County pays off $4 million one year and borrows $3 million, and then the next year pays off $5 million and borrows $3 million, she said.
What does Dunn County get for continued borrowing at $3 million per year? asked Gary Stene, county board supervisor from Colfax and vice-chair of the county board.
The county gets new roofs before they deteriorate farther and replaces parking lots that have not been repaved in 25 years, to name a few, McCullough said.
General fund
Dunn County’s general fund is currently sitting at 60.6 percent of general fund expenditures, Dr. Haug said.
The recommendation is that counties maintain 25 to 33 percent of the general fund expenditures in the general fund balance, she said.
The St. Croix County Board has adopted a policy that when the audit of the county’s books is completed each year, any money in the general fund that is over 33 percent of the general fund expenditures is transferred into the capital improvements fund.
St. Croix County’s population is double the population of Dunn County.
2023 budget
In 2022, Dunn County started a subscription with ReforMedicine [a direct pay medical clinic], and $1 million was transferred from the workers’ compensation fund to the health insurance fund, Korpela said.
As it turns out, Dunn County only needed $50,000 of the $1 million, she said.
The workers’ compensation fund also had $326,000 paid in more than was paid out, she said.
The Dunn County Board authorized borrowing $1 million for the 2023 budget, but it looks like Dunn County will not have to borrow the $1 million, McCullough said.
