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Poor economy, state changes shape county budget

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Walworth County has a new budget for the upcoming year. County supervisors approved the 2012 budget at their Nov. 8 meeting. To support the spending called for in the plan, the board levied $60.8 million in property taxes. That amount was essentially the same as last year’s levy, increasing just 14/100ths of 1 percent. The poor economy, changes in Madison and planning for the future are themes that shaped the 2012 spending plan.

• Poor economy. Since the 2008 banking meltdown, there’s been very little good news as far as the county’s economy is concerned. In fact, it seems that bad news has virtually doubled since 2007, the year before the national housing bubble burst. Unemployment, which stood at 4.4 percent in 2007, has nearly doubled to 8.5 percent. With fewer jobs, many people are having a hard time making ends meet. The amount of outstanding, unpaid taxes increased from $4 million to $8 million over the same period of time while the number of properties in the county that are tax delinquent has more than doubled from 1,566 in 2007 to 4,157 today.

The poor economy impacts county government in two ways — reducing revenues while increasing the demand for services. Even those who do have jobs appear to be tightening their belts. The one-half cent sales tax that the county receives has decreased by $1 million since 2008. As a result of the poor economy, controlling spending was a priority for the county board. The 2012 budget represents the lowest tax levy increase since 1996.

• Changes in state law. A change in leadership last fall, both in the governor’s office and legislature, had a significant impact on county finances and operations. Seeking to close its own budget shortfall, the state reduced its financial support to local governments. To prevent taxes from being shifted from the state to the local level, tough new tax caps were imposed on local governments. Finally, to fill the budget hole created by the loss of revenue, the state provided certain “tools” to local governments. These took the form of changes to collective bargaining and pension laws.

These three features of the state budget, tax caps, reduced aid payments and bargaining law changes, helped shape the county’s 2012 budget. With state revenues cut and taxes frozen, the only way that the county could maintain the level of services that we have traditionally provided was through the tools provided by the state Budget Repair Bill. The biggest tool in the box is the requirement that most employees pay toward their pensions. As a result, teachers and non-represented county employees have been contributing 5.8 percent of their wages toward their retirement since this summer. In 2012, all employees, with the exception of sworn law enforcement personnel, will be paying as well. This contribution will save the taxpayers more than $2 million next year and is the single-most important reason why the county was able to freeze the tax levy without significantly impacting services.

• Planning for the future. In tough budget times, there is a temptation for government leaders to “hunker down” and attempt to run existing programs the way they always have, but with dwindling resources. The game plan is to outlast the recession. These leaders reason that when the economy turns around, revenues will grow, allowing them to replenish depleted reserve funds, end employee furloughs and staff at previous levels. In my view, this is a dangerous strategy.

While history tells us that the business cycle will eventually reverse, I don’t believe that it will happen any time soon. Moreover, there is no guarantee that the recovery will restore employment and income to 2007 levels.

The 2012 county budget doesn’t count on a dramatic turnaround in the national economy. Instead, it is a two-fold strategy to strengthen our balance sheet while developing new, cost-saving programs. Money spent to make interest payments on county debt will not be available to fund operations. The 2012 budget permits the county to “call,” or redeem, a number of outstanding bonds early. Beginning this fall, we will call more than $6 million of outstanding debt. Retiree costs, likewise, can’t be wished away. The 2012 budget makes a $3.6 million payment toward our other post-retirement benefit (OPEB) obligation. Fully funding this commitment will mean that future tax dollars will be spent on programs, rather than paying retired county employees for their past service.

Two new programs that are included in the 2012 budget have the potential to reduce jail costs. The sheriff will be expanding the use of electronic monitoring for prisoners who are eligible for work-release. Rather than returning to jail at night, these prisoners will return to their homes, saving taxpayers the expense of feeding and housing them. GPS technology will permit jailers to know if these prisoners are where they should be and even whether they are consuming alcohol. An operating while intoxicated treatment court, meanwhile, will provide intensive supervision and treatment of repeat drunken driving offenders, with the aim of ending their alcohol dependence.

With potential recalls looming, it’s hard to say exactly what the direction will be from Madison for 2013 planning. If things stay the same, we will face another levy freeze. Having already built pension-sharing savings into the budget, reductions in service levels appear likely at this point. Planning for the 2013 budget, believe it or not, will begin in just a few short months.

Dave Bretl is the Walworth County administrator. Contact him at (262) 741-4357 or visit www.co.walworth.wi.us.