Budget Ponderings

It's been difficult to cobble together the ramifications on Whitefish Bay from Gov. Scott Walker's 2011-2013 budget proposal.

Firstly, the village itself appears to have a . That's $210,000 in cuts.

To put that in perspective, the village's annual budget is $13.8 million... so a $210,000 cut is 1.5 percent, which is a manageable figure.

The bigger issue is that the budget proposal also implements a zero percent tax levy increase mandate. Whitefish Bay's annual tax levy increase is usually in the 1 to 2 to 3 percent range each year, driven by a variety of factors, but mostly two: healthcare premium increases, and as of late, debt service increases.

Health premiums have been climbing at a fast clip, and last year they increased 10 percent, this year by more than 8 percent. Whitefish Bay's debt service has increased the past  four to five years mainly due to our accelerated pace of infrastructure rehab, namely, road, sewer, and water line construction.  These past two years, Whitefish Bay has spent more on construction than it has in decades – and with numerous sewer projects on the horizon, debt service will continue to climb.  (WFB has an outstanding credit rating, and indeed has a relatively low debt load.)

Debt service increases are usually exempt from tax levy increase limits.  Apparently, that will continue to be the case, meaning Whitefish Bay's sewer projects will be able to go forward. (Whew.)

A $210,000 reduction in aid from the State, plus a typical $200,000 to 300,000 (2 to 3 percent) increase in the cost of keeping the village open each year makes things tough. Mandate that all of that figure is cut, and zero of that is passed on to residents...and suddenly you have an elephant in the room.

And ...Whitefish Bay is in good financial shape. As a reminder, our municipal tax rate is the third lowest in Milwaukee County. Most communities will have it far tougher.

Move on to the Whitefish Bay School District, and the issues are far bigger.  According to this analysis, the district could be headed for a $700/student cut, around $1.8 million on their $32 million budget, or 5.6 percent. Add in the typical 2 to 3 percent yearly inflation, and you're around $2.5 million in cuts. (Perpetual disclaimer: I do not have any real data on this situation, I'm just taking a quasi-informed guess.)

Regardless of the final numbers, with the state budget the way it is, restricting this loss of revenue from being made up by local taxation, cuts around the edges won't close a gap that size. That means district layoffs or, as Gov. Walker argues, increased pension and health contributions and/or reductions in benefit plans.

This is why I'd argue for a some alteration of the zero percent tax levy increase proposal.  It is understandable what Gov. Walker is proposing, namely, he doesn't want a tax shift from the state down to municipalities, allowing them to raise taxes locally to make up for the loss in state funding.

On a macro level, the theory may make sense. On a micro level, it removes the ability for localities to make decisions for themselves. Each local community should do what it does every year, namely, decide what level of service the community wants and what level of support is acceptable and necessary to do it.

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(By the way, the last time I wrote about the budget, I was accused of spreading liberal propaganda, which gave me a good chuckle.)

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