City faces budget cuts
Options include 62-cent tax rate hike
By Bert Lehman
Clintonville residents can voice their opinion about the city’s budget at a public hearing set for 6 p.m. Monday, Nov. 14.
Over the past couple months, the city’s Finance Committee has been working with city department heads to make cuts in order to balance the budget. The committee met Monday, Nov. 7, and discussed four different budget scenarios.
• The first scenario is to adopt the presented budget that the Finance Committee has been working on, with no further cuts made. This scenario would raise the tax rate 53 cents to $9.44 per $1,000 of equalized value. This equates to a property tax increase of $43.87 on a home valued at $80,000.
• The second scenario keeps the tax rate at the existing level of $8.90 per $1,000 of equalized value. In order to accomplish this, the city would need to cut another $112,029 from budgeted expenses to balance the budget.
• The third scenario includes a smaller tax increase than the first scenario. To achieve that, the $112,029 in cuts that the city would need to make would be split in half, with a property tax increase covering half of the $112,029 and use of undesignated fund balance to cover the other half. This scenario would yield a tax rate of $9.17 per $1,000 of equalized value. This amounts to an increase of 26 cents, and equates to a property tax increase of $21.44 on a home valued at $80,000.
• The fourth scenario calls for the city to use its maximum tax levy capacity, but still meeting all the requirements so the city doesn’t lose its expenditure restraint funds. This option would not require more cuts to the budget or use of undesignated fund balance. This scenario would yield a tax rate of $9.52 per $1,000 of equalized value. This amounts to an increase of 62 cents, and equates to a property tax increase of $49.47 on a home valued at $80,000. This scenario would provide the city with $39,550 extra to use on other items.
Committee Chairman Mark Doornink told the committee that any additional cuts would require the city to consider reducing city services or combining departments to still maintain an operational level.
“We have a problem of revenue, not expenses,” Doornink said. “If you look at year over year expenses, I think we’re down about $41,000 from last year, so we’ve actually cut $41,000 of expenses from last year to this year.”
Doornink also pointed out that the level that spending is reduced this year affects what the city is allowed to spend next year, as the baseline for the expenditure restraint is set from that.
“So to further cut another $112,000 is where we would have to start next year,” Doornink said.
Doornink added that the costs to operate the municipal outdoor swimming pool are not included in the budget. The fourth scenario using the maximum tax levy capacity would provide the city with funds, and the option to use it to open the pool in the future.
Committee member Jim Supanich asked if the city plans to open the swimming pool in 2018.
“I think we’re to the point where we need to renovate or rebuild the pool,” said Park and Rec Director Justin McAuly. “That would be something the community would have to decide on.”
He said the pool definitely will not be open in 2017.
Doornink said he wants the community to be aware that not raising taxes has an impact on the amount of funds the city has available in future years.
Committee member Mike Hankins added that even if the city decides not to open the pool again, funds will be needed to reclaim that area.
New revenue ideas have been discussed by the committee, but those options are not included in the budget, Doornink said. The committee will continue to explore these options to possibly use in future budgets.
Committee member Lance Bagstad recommended the city continue to pursue new revenue options, but added that the city needs to decide on a tax rate that it is comfortable with while new revenue sources are being pursued.
“To cut another $112,000 with the lasting impact that has, doesn’t put us in a better position,” Bagstad said. “Whatever that rate is and however we get there, it has to be desirable for everybody moving forward.”
Hankins said he was concerned about once again using undesignated fund balance to balance the budget.
Supanich said he agreed, but he is also concerned about how much the tax levy is increased.
“Concerns I keep hearing from people I talk to is the taxes continue to go up, the services keep going down and there is no real reason to live in the city anymore,” Supanich said. “We have to raise the taxes to cover the shortfall here, but I want to make sure that we raise them to a level that covers what our needs are, but nothing more if we can.”
Clintonville City Administrator Chuck Kell said the city’s undesignated fund balance is around $1.4 million. He added that even though the city used undesignated fund balance to balance the budget the last two budget cycles, the city didn’t use the funds. Through savings found by department heads, the city actually increased the undesignated fund balance in 2015 and projects to do the same this year.
Bagstad said there is no guarantee that funds used from the undesignated fund balance to balance the budget will be returned at the end of the year. He added that using undesignated fund balance gives a false impression that the budget it balanced.
“Then we forget to make it a priority to look for other revenue sources,” Bagstad said.
He said this false impression can lead to not looking for new revenue sources.
Alderman Brad Rokus said the undesignated fund balance is the city’s safety net, and it needs to be preserved for the future.
“This is our opportunity to make a hard decision. It’s not going to be popular but it’s the right thing to do,” Rokus said. “It’s going to be right moving forward for everybody else that will have to sit in these chairs versus just kicking the can down the road and letting somebody else deal with the struggle.”
Doornink said after the 2017 budget is passed the city needs to explore ideas to help citizens improve their properties, which in turn will increase property values.
The Finance Committee did not recommend a specific budget scenario to adopt.