Municipalities, school districts prepare for fiscal challenges
Between 90 and 200 jobs are on the line in the Janesville School District in part because of Gov. Scott Walker's proposed cut in state school aid.
Janesville public schools Superintendent Karen Schulte made that statement shortly after Walker's budget address Tuesday. She was speaking about all district employees, not just teachers.
Schulte said she was disappointed that Walker didn't provide any numbers in his speech.
Schulte was among local school and municipal leaders reached by the Gazette late Tuesday afternoon for comments about Walker's budget address.
Janesville School District
Schulte said she wants to work with the governor to improve education in Wisconsin, but she criticized Walker on several occasions during a press conference Tuesday.
"I think people are depressed" about Walker's moves, Schulte said. "I personally think these are draconian measures that are being taken."
Walker wants to add jobs in Wisconsin, Schulte noted, "but the reality in Janesville is people are going to be losing their jobs."
Unclear, Schulte said, is the effect of a proposed reduction in the school revenue cap. The cap is a combination of state aid and local property taxes.
School board President Bill Sodemann, when asked about the possibility of a referendum to give the district more taxing authority, said the people of Janesville already have suffered much and would not look forward to higher taxes.
A referendum, Sodemann said, would be "a real jobs killer for Janesville."
The district was expecting a $10 million shortfall in its budget before Walker's cuts. Officials have said Walker's aid cut would mean the loss of perhaps another $5 million, but officials said Tuesday they didn't yet know the full impact.
Sodemann said it appears Walker's intent is to keep school districts from raising property taxes to fill budget holes created by Walker's aid cuts.
Walker has said schools would be able to cover their losses through his budget repair bill, which would require employees to pay half their pension contributions and would allow school boards to set employees' health-insurance premium contributions.
Janesville does not have that flexibility, however, because its teachers union and one smaller union already have contracts that supersede the Walker bill and protect those employees until the contracts expire in June 2013.
The school board Friday asked those unions to re-open their contracts and give the district financial concessions. It's not yet known whether that will happen. Schulte said it is important that those unions come to the table.
Schulte said she would make her budget-cutting proposal at the school board's March 8 meeting, and it will touch on every line item in the school district budget. Specific staff cuts might not be known fully until the board votes on a staffing plan April 12.
City of Janesville
The governor's budget would limit what Janesville could raise in taxes and would cut state aid, creating a double hit in revenues, City Manager Eric Levitt said.
While he didn't have all the information late Tuesday, Levitt believed some major impacts on Janesville would include:
-- A two-year freeze on property tax levy increases starting in 2012. Levies had been capped at annual increases of 3 percent.
Each percentage increase in the property tax levy raises about $240,000. The freeze would prevent the city from raising about $720,000.
"I think that's an attempt to try to provide taxpayer relief, and I understand the intent," Levitt said.
"On the flip side, it will create challenges for the city," he said.
-- A $96 million reduction in county and municipal aid in 2012 that translates to an average cut of about 9.2 percent, Levitt said. He estimated $800,000 to $900,000 less in state aid for Janesville.
Walker said municipalities could offset the losses by asking employees to contribute more to their retirement and increase payments for health insurance premiums.
Levitt isn't sure how that would close the gap in Janesville.
Janesville recently signed two union contracts, which insulate those employees from paying into their retirement but call for them to contribute 9 and 10 percent of health insurance premiums over two years.
Levitt pointed out that even if all city employees were paying the suggested state rate for retirement benefits—which is not possible because firefighters and police officers are exempt—the city would save $350,000 to $400,000, well short of the financial impacts from state aid cuts and levy freeze.
He also suspects Janesville might lose more than 9.2 percent of its state aid while communities with lower property values would lose less.
-- Elimination of the state mandate to recycle. This would save Janesville money if the city decided to eliminate recycling, but Janesville recently made sustainability a priority.
The city spends about $800,000 to recycle and gets a $320,000 grant from the state to offset part of that cost, Levitt said.
Walker's cuts and freezes help on the tax side, Levitt said, "but on the services side, I think that's going to create challenges going forward in 2012."
Last year, the city instituted a budget scorecard that tried to measure how taxpayers rate their services.
"I think this year that will be an even more valuable tool," Levitt said. "There are going to be clear choices."
Town of Beloit
Beloit Town Board Chairman Dave Townsend came home early from work Tuesday to watch and read about Walker's proposed budget.
He estimated the town would lose between 8.8 percent and 12 percent of its state aid.
"That's about $20,000," Townsend said. "That is something we can probably manage."
Townsend tacked an "if" onto that. If the town's levy increase is capped at zero percent or the value of new construction, the town might not be able to make up for the loss of revenue without "a slight reduction in services," Townsend said.
City Administrator Dan Wietecha noted a couple surprises in Walker's address.
"We were expecting cuts this year for cities. (Those cuts are) held off until 2012," he said. "There's potentially a little bit of ability to adjust for that."
The other surprise is the proposal to require municipalities with declining debt service to reduce their levies. The implications are unknown, Wietecha said, but Evansville is anticipating declining debt service next year.
"It makes our options tighter," he said.
Evansville School District
School Board President Michael Pierick said Walker's address was "long on rhetoric, short on substance."
"The governor has been very secretive through this whole budget process, and his budget address seems to continue that theme," he said. "There's nothing to indicate … the so-called tools that he's providing to school districts will actually provide the so-called savings that will equal the cuts that are apparently coming."
Town of Delavan
Political opponents Dorothy Burwell and Ryan Simons are in agreement on this one: Simultaneously cutting state aid and limiting levy increases doesn't give the town of Delavan many options.
"My first reaction is I'm not sure how Gov. Walker is going to cut our aid and at the same time give us the tools to make balanced budgets," Burwell said.
She's not optimistic the town will get much flexibility when it comes to new construction.
"Well, that's going to be zero," Burwell said. "Nobody's building."
The town the last two years has increased property taxes at the maximum amount allowed—3 percent—in order to balance decreasing aid, Simons said.
The town will need to be creative to find revenue sources other than the $2.3 million it raises in taxes, Simons said.
County Administrator David Bretl said: "The devil is in the details. It was a fine speech, but he couldn't deliver all of those details."
Bretl said he's been critical of past state budgets that have dealt with fiscal problems by "kicking the can down the road and deferring the issue."
"On the positive side, something is being done, but the magnitude will be large," Bretl said.
Spending cuts will force local governments to debate what essential services should be saved.
"Essential services mean different things to different people, so we'll be having that debate at the county board level over the upcoming months," Bretl said.
UW-Whitewater Chancellor Richard Telfer said it's hard to tell from a 30-minute budget address how UW-Whitewater will be affected.
"It's going to take a while, frankly, to process," he said. "Clearly, there are some huge cuts for higher education and other areas, and that, of course, is a concern."
Walker proposed cutting $250 million from the UW System.
"It's bigger than any (cuts) that we've had before because it's a base cut. We don't know what it amounts to," he said.
School Superintendent Steve Guenther said there's a lot to sort out, but based on what he knew prior to Walker's address, "it's pretty devastating for education across the state."
Walker's proposal to eliminate enrollment caps on virtual charter school programs could hurt a lot of schools, he said. Guenther is a "strong opponent" of open enrollment, noting his district loses about $300,000 in state aid through open enrollment annually.
Local legislators respond to Gov. Scott Walker's budget speech on Tuesday afternoon.
-- Mary Lazich, R-New Berlin, 28th Senate District: "There are serious fiscal issues facing the state of Wisconsin. I applaud Gov. Walker for delivering a straightforward, honest assessment of our budgetary issues and a comprehensive plan to solve them."
-- Joe Knilans, R-Janesville, 44th Assembly District: "With a $3.6 billion deficit looming, there is no question that Wisconsin is out of money. Gov. Walker's stated goal with his proposed budget is to implement long-term financial practices that will put Wisconsin in a better financial position not just for the next few years, but for generations to come."
-- Evan Wynn, R-Whitewater, 43rd Assembly District: "Gov. Walker's proposed budget balances the budget without job-killing tax increases, illegal fund transfers, and it brings the structural deficit down to the lowest levels in recent Wisconsin history: From over $2.5 billion to less than $250 million."
-- Andy Jorgensen, D-Fort Atkinson, 33rd Assembly District: "Gov. Walker's plan does not reflect the 'shared sacrifice' of which he's spoken, and of which many Wisconsinites have told me they would accept. His proposal balances our fiscal woes squarely on the backs of middle class families and the less fortunate, in favor of big new breaks for the upper crust."