FOCUS Explains the City of Marshfield Budget Process

In the last four years, the tax rate has increased less than 2 percent in total. This year, the City Budget proposal includes a 1.9% increase over last year’s budget. Originally, this was a 2.7% increase, but the City was able to reduce that amount after a broad mix of reductions from across multiple departments, and a change in employee health insurance plan design…

Just like a home budget, the City of Marshfield must manage how money is spent. Residents have the power to get involved in the budget process and are encouraged to do so.

Property taxes are the most important locally-generated component of the City’s revenue sources. All required funding that cannot be generated from State aids, licenses, fees, etc., must be derived from the property tax levy.

Operating with a $47 million budget, the City uses these funds to fulfill public services such as public safety, street maintenance, and parks. It sounds like a lot of money, but after factoring in the cost of required services, the City faces a lot of challenges to ensure the lowest possible tax increase for residents while still affording the best possible level of service.

For example, about 27% of City services is for Public Works (streets), with approximately 22% going to Public Safety (police, fire). That leaves about half of the budget for the rest of the City, including Quality of Life (parks, trails), General Government, Economic Development, Cemetery, Debt, etc…

Fortunately, some City projects fall outside the general fund and have considerable funding coming from outside of Marshfield City government. These include Wenzel Family Plaza and some capital road improvements.

Bottom Line in Simplified Terms: For an increase of $16 per $100,000 of property value, you’re getting fire and police protection, improved streets, parks, trails, economic development that brings new industry and jobs to the community, and access to all of the amenities of the City (pool, library and community center, etc…).

City Administrator Steve Barg said that the City is making a conscientious effort to fulfill street needs and facility maintenance, but is also attempting to be responsive to the needs and requests of those citizens who want to see quality amenities and opportunities for recreation in our community.

As City Administrator, Barg has the responsibility to develop and present the annual City budget, working in cooperation with the Finance Director and other City department/division heads.

THE BUDGET PROCESS

The process begins in May, when the City Administrator seeks the Council’s parameters for the upcoming year’s budget.

“Historically, this has been a time when our elected officials set guidelines for the level of spending and taxation that would accept,” explained Barg. “However, in recent years, due to State restrictions (levy limits, Expenditure Restraint Program, etc.), the sole request made of Council members at this meeting has been to determine how much of a tax rate increase (if any) they would be willing to consider.”

Other key points in the budget process are:

  1. Department heads submit requested budgets to the Finance Director (by July 31st)
  2. Finance Department staff conduct “technical reviews” to make sure that the requested budgets are calculated accurately and correctly, while simultaneously the City Administrator reviews the budgets, following up with individual department/division heads on any questions or concerns
  3. Department heads and the City Administrator meet to cooperatively cut budget expenses in order to meet desired goals/parameters (usually 2 afternoons in mid-September)
  4. City Administrator presents/highlights the proposed budget to the Mayor/Council (1st Council meeting in October)
  5. The Council holds a series (3 maximum) of meetings to refine and approve a proposed budget to bring to the taxpayers for consideration
  6. A public hearing is held on the proposed budget, and the budget is then approved (with or without any last-minute changes), thereby establishing the annual levy and tax rate.

At some level, a large number of City employees are involved in preparing the annual budget in one way or another, though ultimately the major players in budget development are the department/division heads and their support staff who compile and submit budget requests.

In the final stages, the Finance Director, the City Administrator, and the City Administrator’s Administrative Assistant complete the budget document for submission to the Mayor and City Council.

CHALLENGES OF THE BUDGET PROCESS

Preparation of the City budget is not an easy process, and has become increasingly challenging each year.

Barg highlighted the following issues that contribute to this:

  1. Relatively flat State aid payments (shared revenue, transportation aids, etc.)
  2. State law restrictions that prevent communities from establishing tax levies beyond certain maximum amounts
  3. A growing number of state/federal mandates that require communities to provide certain service levels, but that often don’t offer funding assistance to cover the costs
  4. Increases in areas such as employee health insurance premiums, cost of street repairs, etc.
  5. Generally rising expectations from citizens

In the last four years, the tax rate has increased less than 2 percent in total (17 cents). This year, the City Budget proposal includes a 1.9% increase over last year’s budget. Originally, this was a 2.7% increase, but the City was able to reduce that amount after a broad mix of reductions from across multiple departments, and a change in employee health insurance plan design.

“In order to reduce the approximately 2.7% tax rate increase that was where we stood at one point in the process, we cut approximately $150,000,” said Barg. (Right now, each 1% tax rate increase equates to roughly $190,000.)

General cost increases (such as fuel, supplies, utilities), labor agreements with police and fire unions, and rising costs of health insurance are all contributing factors to the required increase.

If the 2018 proposed budget is passed, the City’s tax rate would increase from $9.12 to $9.29 (these numbers are both rounded to the nearest cent) per $1000 of assessed value. This means that City taxes on a $100,000 home (excluding the impact of any reductions, such as the lottery credit) would be $929.

In basic terms, the increase will result in about $16 more per $100,000 assessed property value. Also of note, the consumer price index is 1.9 percent.

WHAT THE CITY IS DOING TO OVERCOME CHALLENGES

The City of Marshfield is diligent in its preparation of the budget, which includes participation in the Expenditure Restraint Program (ERP). This State program is designed to reward communities who restrict their spending increases to staying within certain levels. The 2 criteria used for this determination are the rate of inflation (determined by the applicable CPI figure) and 60% of their valuation growth through new construction (up to 2% maximum).

Barg explained: “For example, let’s say (hypothetically) that the rate of inflation in Wisconsin from October 1, 2016 through September 30, 2017 is 1.5%, and the City of Marshfield experiences 1% growth in valuation in 2016 due to new construction. In this case, in order to meet the eligibility requirements, the City would need to hold its general fund spending increase (2018 budget over 2017 budget) to no more than 2.1% (1.5% inflation + .6%, or 60% of new construction value).

There is a one-year lag, so qualifying for ERP in your 2018 budget means that you’ll get a 2019 ERP payment, with the actual amount depending upon how many communities qualified that year, as the State’s total allocation for this program is a ‘finite pie’.

In recent years, this amount has been approximately $400,000 for the City of Marshfield. And if you don’t qualify one year, you can always try again the next year, since each year is treated separately.”

HOW TO GET INVOLVED

Each year, the City welcomes public interest and participation in the budget, whether through phone calls, e-mails, or letters to the Mayor, Barg, or Council members.

“I always make sure that all concerns and suggestions are shared with our elected officials and the affected department heads,” said Barg. “While the process is not glamorous or exciting, the annual budget dictates City spending on the programs and services that citizens receive in areas like police/fire protection, street repairs, park/trail upgrades, etc…For this reason alone, it’s definitely something that our residents and property owners should watch and provide input/feedback on to the Mayor, City Council, and the City Administrator.”

Residents are also welcome to attend one or more of the special Council meetings on the budget, and can express their thoughts under “Public Comments’ at the start of each of these meetings. Suggestions, concerns, and thoughts are always welcome.

“Our City staff and elected officials don’t expect residents to understand it all, or to make comprehensive proposals for change,” said Barg. “Just let us know your thoughts on spending/taxing issues, and we’ll make sure they are heard and considered by everyone here.”

Find Contact Information for your Alderman here.

The recommended 2018 budget will be brought before the Marshfield Common Council tonight, Oct. 10, with a series of budget hearings to follow. Watch the meeting here.

 

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