Source: Lake Geneva Regional News

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To increase or not to increase

by Lisa Seiser

October 13, 2011

Krause
Marsala
Revenues are down significantly in state aid, building permits and municipal court.

That anticipated loss of $216,000 is causing headaches for the city's leaders as they work through the 2012 budget process.

Those losses combined with expenditure increases of $70,000 for police, $15,000 for public works and $10,000 for fire services and city officials still must make some decisions on how to balance the 2012 budget.

As of last Thursday night, the city's deficit was about $40,000.

There appears to be at least three options being considered to deal with the deficit:

n Increase the levy, which will raise the tax rate less than 1 percent.

n Find more areas to cut.

n Pull more money from the parking and lakefront revenue-generating funds to place in the general fund.

Some cuts already have been discussed and included in the budget that knocked down an original $252,000 deficit late last week.

Much of that was due to the decrease in revenues, including a $76,000 anticipated reduction in municipal court revenues, a 63 percent reduction in building permit revenues and significant losses in state aid.

Preliminary numbers show the total Police budget at $2.5 million, the Public Works budget at $1.14 million and the Fire Department at $708,000. All three of those budgets increased slightly, mainly because of anticipated increases in fuel costs. The Police Department increases were from step raises as determined in the employee contracts.

Some department budgets decreased, including some with nonunion city employees because they now must pay half of their retirement. According to Comptroller Peg Pollitt, that was a $28,000 difference for the general fund because of the change.

Total city expenses for 2012 are estimated at $7.8 million, but numbers are too preliminary to determine the exact tax impact on property owners.

As for talks regarding increasing the levy, City Administrator Dennis Jordan told the council it would be a good idea to raise the levy this year. The tax levy can only be raised if there is valuation growth. For 2012, the city could raise its levy .92 percent because that is the amount of growth determined.

"If you have any growth, you can raise the levy by that much," Jordan said.

He said many municipalities are unable to raise their tax levy, which is the total amount of money to be raised from all property taxes in the municipality.

The levy increase also would likely make up for the city's deficit without requiring more cuts or increases in revenues.

The city's levy has not increased during the past few years.

If the city were to increase the levy to the maximum allowed by State Statutes, it would add 1.5 cents per $1,000 of assessed value or a total of $3 for a home valued at $200,000.

Jordan said the city must take advantage of the levy increase because all other costs are going up. He said eventually, if the levy is never increased, costs will continue rise and require a reduction in services or increased user fees.

"The more you don't take advantage to add on the levy, the more you will be squeezed in the future," Jordan said. "We will not have many opportunities to increase the levy."

Alderman Frank Marsala agreed with Jordan.

"For the last two budgets, I have wanted to increase the levy," he said. "We are setting ourselves up for a crash."

Jordan said when a municipality like Lake Geneva doesn't raise its levy, there will come a time when there isn't enough money to cover the services. He also said the state continues to cut shared revenues and transportation aids and he said he believes that will continue.

"It has turned out that (municipalities) were fools by not taking the levy increase when they could," Jordan said. "You've lost it and you will never get it back the way the current trend is."

Some aldermen seemed to be against a levy increase and suggested there were other ways to make up for the budget deficit. Alderwoman Arleen Krohn asked about taking more from the parking and lakefront funds to make up the deficit.

Alderman Todd Krause said the city has been criticized by taking $75,000 from each of those funds the past few years to help out the general fund.

Jordan said that type of solution doesn't address the levy issue.

Krause said the .92 percent levy increase is "a very small amount of overall affect on the taxpayers."

But, Alderman Terry O'Neill said his biggest concern is what the overall taxes will be for the city residents. Krohn agreed, especially following the city's revaluation process.

There were still portions of the budget officials hadn't looked at for possible cuts. Krause said that was another option other than a levy increase or taking more from the parking and lakefront funds.

City officials will continue budget talks on Tuesday night with hopes to complete the process in early November.

The city's budget and tax levy makes up just about 25 percent of a property owner's total tax levy. The tax bill also includes the school districts, technical college, state and county.