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Municipal officials brace for tightest budgets in decades: Cuts are expected; Wisconsin's levy limits are contributor
(Milwaukee Journal Sentinel, The (KRT) Via Acquire Media NewsEdge) Jul. 27--From diesel fuel and road salt to overtime pay and health insurance premiums, rapidly escalating costs of operating local governments are about to collide with state-imposed levy limits, causing municipal officials to brace for their tightest budget squeeze in decades.
Although early in their work on 2009 local government budgets, many municipal officials already are preparing for rising costs and slow growth in an economic downturn to hit the brick wall of 2% levy limits.
"I've told my members, 2009 will be the worst year they have seen in the history of this state for budgets," said Ed Huck, executive director of the Wisconsin Alliance of Cities, which represents the state's largest cities.
"People are going to lose their jobs, flat out; we're going to see pink slips in many cities."
The signs of local government budget distress are many.
In Milwaukee, the Common Council is considering a $20 per car local vehicle registration fee to pay for street repairs next year and help the city break even on this winter's higher than projected snow removal costs. Meanwhile, in his 2009 budget proposal, Mayor Tom Barrett has recommended closing four neighborhood libraries, eliminating a firefighting company and cutting back on tree pruning and brush collection.
In Princeton, in Green Lake County, city officials went to referendum in April and won voter approval to exceed their levy limit to make ends meet in the 2009 budget. As a result, the property tax levy will increase by more than 87% and the municipal tax rate will go from about $5 per $1,000 of assessed property value to $9.
Even in fast-growing communities once cushioned from the constrictions of levy limits by a provision allowing them to exceed the limit based on the value of new construction, the downturn in the economy and, especially, the housing market will take a toll on budgets for next year.
Diane Gard, Oconomowoc city administrator, said residential building permits in the once-booming community in Waukesha County's Lake Country this year could be less than half of last year's total of 94. In 2005, 166 residential building permits were issued.
"This is going to be a much tighter budget for us," Gard said of the 2009 budget she is just beginning to put together.
"In the past we've been fortunate with new construction, and we were able to exceed the levy limit, but growth has slowed and we'll be more constrained by the limit going into next year. I think it's going to be a real challenging budget for us."
Bob Langmesser, chairman of the Town of Waterford in Racine County, said rising costs of road salt, diesel fuel, asphalt and employee overtime pay generated by record snow and flooding this year are colliding with levy limits and lower state-shared revenue. He said he has serious concerns about the town's 2009 budget and called the financial crunch for next year the worst he's seen in 17 years as town chairman.
"There isn't a municipality in the state of Wisconsin that's not going to have problems. Some are going to hurt worse than others depending on how they're run, but they're all going to have problems," Langmesser said.
Levy limits were imposed on local governments by the state in 2006 as a way to reduce the property tax burden on Wisconsin property owners.
For 2006 and 2007, municipalities and counties were allowed to increase their property tax levies by 2% or by the change in property value due to new construction. For 2008, the limit was increased to 3.86%. But for 2009, it reverts to 2%.
Local governments may exceed the limit if they have approval of their residents through a referendum.
Most government officials believe that with the economic downturn affecting the budgets of families as much as municipalities, voters will be in no mood to vote to raise their own taxes.
But Dan Thompson, executive director of the League of Wisconsin Municipalities, disagrees. Citing the successful referendum in Princeton, he said that when faced with the potential for reductions in municipal services, such as police and fire protection, as a consequence of budget cuts, voters will approve tax increases.
"The conventional wisdom is that voters will vote 'no' on these referendums," he said.
"When push comes to shove, when voters are forced to decide between taxing themselves more or cutbacks in services, in a lot of communities, voters will vote to tax themselves more. But I know I'm very much in the minority in this opinion."
To see more of the Milwaukee Journal Sentinel, or to subscribe to the newspaper, go to http://www.jsonline.com.
Copyright (c) 2008, Milwaukee Journal Sentinel
Distributed by McClatchy-Tribune Information Services.
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