Dunn County Board narrowly approves $1 million in borrowing for 2023 budget
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By LeAnn R. Ralph
MENOMONIE — The Dunn County Board has narrowly approved a resolution authorizing up to $1 million in borrowing for the $92.55 million budget for 2023 if it is necessary to borrow the money.
Approving the resolution would be necessary to balance the budget so that the expenditures match the revenues, but it may not be necessary to actually borrow the money, said Kristin Korpela, county manager, at the Dunn County Board’s November 15 meeting.
By state law, counties are required to have a balanced budget.
By state law, counties also have revenue limits that only allow counties to levy a certain amount in property taxes.
Borrowing up to $1 million, if it is necessary, would fill the gap between Dunn County’s allowed revenue and the expenditures, so that Dunn County has a balanced budget.
To balance the 2022 budget, the Dunn County Board approved moving $1 million out of the self-funded worker’s compensation fund to the health insurance fund, Korpela said.
The $1 million that was added to the health insurance fund probably will not be needed this year because of the savings the county will have due to using ReforMedicine (pronounced “reform medicine”),” she said.
ReforMedicine is described on the ReforMedicine website as a “direct pay medical clinic providing family medicine and primary care for all ages.”
According to the website, there are ReforMedicine locations in Eau Claire, Menomonie, Hudson, and there will be a clinic in Chippewa Falls in 2023.
“What we do not know is — can we reallocate the money? And we do not know that right now. We are seeking guidance,” Korpela said.
Vacancy rate
Another factor that will likely contribute to not needing to borrow $1 million is the county’s employee vacancy rate, she said.
“The labor market is a little bonkers,” Korpela said.
Dunn County, as is true of a number of counties in Wisconsin, is experiencing a relatively high turnover rate in employees because other counties, or businesses, are able to hire the employees at a higher salary.
When people leave Dunn County positions, they leave at a higher rate of pay than the new employees that will be hired to take their place, Korpela said.
A certain number of Dunn County employees also have retired recently or will be retiring in the next few years.
Hiring new employees at a lower rate has an impact on the budget for salary and fringe benefits, Korpela said.
Over the last five years, salary and fringe benefits have averaged 3 to 5 percent less than what was budgeted, but in the last several years, salary and fringe benefits have been 10 to 12 percent less than what was budgeted, she said.
Dunn County will have 3 percent to 7 percent of “wiggle room” when the budget is analyzed mid-year, Korpela said.
Financial tool
Dr. Beata Haug, Dunn County’s chief financial officer, is working on developing a financial tool that will complete monthly projections as related to the budget to help track the budget and actual spending on a quarterly basis, Korpela said.
The information after the first quarter may not be especially useful since some invoices the county pays are on a 30-day or 60-day delay, she said.
In March, Dunn County will have valid numbers through January, so that would not be much of a projection, Korpela said.
By mid-year, the numbers will be more reliable, and by the third quarter, the numbers will be even more reliable, she said.
By the third quarter, Dunn County will know how much has been over-budgeted for salaries and fringe benefits due to changeovers in employees, Korpela said.
“Actual” borrowing
The resolution states that Dunn County “could” borrow up to $1 million and allows county officials to consult with the county’s financial advisors, Korpela said.
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The resolution to actually borrow the money will come before the Dunn County Board in another resolution that will authorize the borrowing and will approve the interest rate, she said.
Preparing the documents necessary for the county to borrow up to $1 million requires a three-month lead time, so if it is necessary to borrow up to $1 million, the resolution that would actually borrow the money will could come before the county board in September, Korpela said.
At that point, the Dunn County Board could say, ‘”we don’t want to borrow $1 million. Find it someplace else,’” she said.
In response to questions from county board members about interest rates, “it is impossible to speculate right now,” Korpela said.
“Our goal is not to borrow money if we don’t have to,” she said.
Services provided
Vaughn Hedlund, county board supervisor from Boyceville, reminded the county board that the proposed budget the board had approved prior to taking up the resolution pertaining to borrowing up to $1 million was something “we all worked on together.”
The 2023 budget was not written by the county manager or the county board chair, “we all worked on it and said, ‘this is what we are going to do,’” he said.
The county’s budget does not force any of the departments to spend all of the money budgeted, Hedlund said.
Money that is left over at the end of the year from the budget is then deposited into Dunn County’s general fund so that the county has a cushion if it is needed.
The recommendation from financial advisors is for municipalities to have between 25 percent and 33 percent of general fund expenditures saved in the general fund.
As of December 31, 2021, Dunn County had nearly 61 percent of general fund expenditures in the general fund.
“We will spend what we need. That’s what good county government does. It spends what it needs to provide the services to the people who voted (you into office),” Hedlund said.
The CFO and the county manager are working hard on a way to track the budget spending during the year so that numbers are available, Hedlund said, noting he had asked at the executive committee meeting if it would be possible to track spending throughout the entire county budget.
“We’ve never had that before. The numbers will be up-to-date quarterly to see where we are so you will know if we need to borrow,” he said.
Benefits
The first “where-as” in the resolution states the money will be used for highway projects and capital improvements. Will those expenditures come before the county board for approval if needed? asked John Calabrese, county board supervisor from Menomonie.
“Yes,” Korpela said.
What are the benefits of having the $1 million in the budget now if the county board has to approve the borrowing later on anyway? Calabrese asked.
The resolution allows Dunn County officials to work with a bond advisor to formulate a request that could come to the Dunn County Board as a resolution to actually approve the borrowing, Korpela said.
Without the resolution, there is $1 million in the budget that is unfunded, and then Dunn County does not have a balanced budget, she said.
The resolution allows Dunn County to have a balanced budget now, and allows the preparatory work with the bond advisor to bring the resolution if the money actually has to be borrowed, Korpela said.
By state statute, Dunn County is required to have a balanced budget on November 15, she said.
Acceptance
Michael Rogers, county board supervisor from Menomonie, noted that the Dunn County Board has been discussing the budget for months.
Rogers said he has voiced his opposition in the past to the county borrowing money, but now that the budget process is nearly completed, the budget should move forward, he said, adding that the county board should start earlier about where to cut the budget and how not to borrow money.
“It is where we are at. I do not agree completely, but I have accepted it,” Rogers said.
For the past several years, the Dunn County Board has met at the end of February to discuss the county’s Capital Improvements Plan for the coming year.
The CIP allows the county to plan and prioritize for capital improvements so that the expenditures are even from year to year instead of spiking when the county can no longer ignore a problem, such as a leaking roof or county vehicles, such as trucks for plowing snow, that are 25 years old.
The CIP is based on the assumption of borrowing $3 million per year, but even with borrowing $3 million per year, as other debt is paid off every year, over time, the debt service payment will decrease.
Call the question
Gary Stene, county board supervisor from Colfax, called the question on the resolution authorizing the borrowing of up to $1 million.
The resolution requires a three-quarters vote in the affirmative to pass, and on the first vote, the resolution failed on a vote of five “no” to 21 “yes.”
There are 29 Dunn County Board members, and a vote of 22 in the affirmative was required to pass the motion.
Three county board supervisors were absent from the November 15 meeting: Brian Johnson, county board supervisor from Colfax; Diane Morehouse, county board supervisor from Menomonie; and Hilary Robinson, county board supervisor from Menomonie.
Voting against the motion to authorize borrowing up to $1 million were Luke Wilsey, county board supervisor from Boyceville; Korlee Witzel, county board supervisor from Menomonie; Larry Bjork, county board supervisor from Menomonie; Patrick Breslin, county board supervisor from Boyceville; and Sean Breslin, county board supervisor from Menomonie.
Removing $1 million
The Dunn County Board is required to have a balanced budget by state law, so before the meeting can be adjourned, $1 million will have to removed from the 2023 budget, said Kelly McCullough, county board supervisor from Menomonie and chair of the Dunn County Board.
“We have to find $1 million before we can leave,” he said.
The supervisors who voted “no” could reconsider their votes if the county board board approves a motion to reconsider the original motion, said Andrew Mercil, county clerk.
Nick Lange, Dunn County corporation counsel, confirmed that the county board could vote to reconsider the motion on approving the resolution.
Someone from among those who voted “no” would have to introduce the motion to reconsider, Lange said.
Could Dunn County use more of the American Rescue Plan Act (ARPA) funds for the $1 million in the 2023 budget? Rogers asked.
The money also could be taken out of the county’s general fund, McCullough said.
“We need a balanced budget, and we are here until a balanced budget passes. We need a three-quarters vote to change the (2023) budget, which was already passed,” he said.
Recess
McCullough declared a 10 minute recess to allow the county board chair, the county manager and the corporation counsel to research several items pertaining to the budget.
When the county board meeting reconvened, Wilsey said he would be willing to make a motion to reconsider the resolution for borrowing $1 million.
“I am comfortable with changing my vote,” he said.
During the 10 minute recess, Wilsey said he had talked to other county board members and now had a better understanding that the actual borrowing of the $1 million would come before the county board at a later date and that the resolution was more of a formality to balance the 2023 budget.
Larry Bjork said he would “reluctantly” second the motion to reconsider.
Diesel fuel is $5.50 a gallon, and an increase of $28 in property taxes on a $150,000 house “means nothing to a farmer,” he said.
The Dunn County Board must “tighten its belt,” Larry Bjork said.
The motion to reconsider the motion on the resolution to borrow up to $1 million was passed on a voice vote.
The motion to approve the resolution for borrowing up to $1 million was approved on a roll-call vote of 24 “yes” to two “no.”
Witzel and Patrick Breslin voted against the motion.
