City still examining 2016 budget options
By Angie Landsverk
When the Waupaca Common Council meets on Nov. 17, several 2016 city budget scenarios are expected to be discussed.
“I’ll bring some more options,” said Kathryn Kasza, the city’s finance director and treasurer, at the end of a special Oct. 28 council meeting.
During that meeting, she presented three ways to cut $200,000 out of the proposed budget to meet the city’s levy limit and also told the council the city has the ability to pay down debt and reduce its levy and tax rate to support next year’s budget.
Her comment about providing more scenarios came after Ald. Paul Mayou said his preference would be to keep the mill rate level and pay off more debt, while Mayor Brian Smith said he would like to see the city round off a possible tax rate decrease to 1 percent.
The city’s proposed 2016 General Fund expenditure budget of $4.87 million is down about 8.7 percent from the current budget of $5.34 million.
When the department heads presented their budgets during an Oct. 13 budget workshop, they and the council learned about $175,000 needed to be cut in order for the city to meet its levy limit.
Under Wisconsin’s Levy Limit Law, the factor determining how much a municipality may increase its property tax levy from one year to the next is the community’s rate of net new construction.
Waupaca’s net new growth of .26 percent equates to a $9,156 increase in the levy.
The proposed budget is being supported by a proposed tax levy of nearly $3.54 million, which is $9,156 higher than the city’s present levy.
The proposed tax rate with that levy is $8.80 per $1,000 of assessed valuation, which compares to the present rate of $8.72.
The department budgets presented last month did not include a wage increase, and Smith wanted a 1 percent increase for all employees included in the budget.
Therefore, the city actually needed to make $200,000 in cuts to meet its levy limit.
Staff identified potential cuts and revenue sources. The council did not take action on any of the scenarios.
As Kasza shared the updates with the council, she also said it needs to determine what direction it wants to go with the city’s debt fund.
An analysis of the city’s Tax Incremental Financing districts by Ehlers & Associates found the city has the opportunity to refinance several CDA bonds with a State Trust Fund Loan, she said.
Robert W. Baird & Co., the city’s financial adviser, estimates doing so would save the city $1.7 million in interest costs, Kasza said.
She said the city is also prepaying a $90,000 coupon this year.
Refinancing the bonds would bring in some additional funds and reduce the levy required, she said.
“This fund is sitting in a very good position,” Kasza said of the Debt Service Fund. “If you want to pay debt down, you have the capacity to do that.”
The council’s decision to hire Ehlers & Associates to analyze the city’s TIF districts and to also prepay $90,000 gives the city the option to reduce its levy and tax rate, she said.
This means a 0.7 percent or 4-cent decrease in the city’s tax rate is possible.
The mayor said if the city refinances the bonds, he wants the savings to go toward getting the tax rate decrease to 1 percent.
He also referred to the wage increase county employees will receive, which is 1.25 percent, when he said, “Remember, our employees will end up in the negative.”
City employees are bearing the cost of an increase in their health insurance premium, and the proposed 1 percent wage increase will not cover the higher premiums they are paying.
The public hearing on the city’s proposed 2016 budget is scheduled for 6 p.m. Tuesday, Nov. 17, in the council chambers.
That night, the council is expected to take action on next year’s budget.
During last week’s meeting, the council approved the budgets for the city’s water, sewer and Waupaca Online funds.
The council also voted to submit a Simplifed Rate Case to the Public Service Commission to seek the maximum water rate increase allowed under that scenario of a 3 percent rate increase.
Kasza said the last time one was done was July 2011.
When she looked at the fund’s revenue trends over the last couple of years, she saw the water fund did not meet its revenue projections.
The utility’s costs go up, while water usage goes down due to conservation, Kasza said.
She said it is a healthy fund, and she would rather see small water rate increases than for the fund to get behind.
Kasza did not recommend an increase in the sewer rate.
The fund has a positive cash flow, she said.
Waupaca Online will also end 2015 in the positive.