Address to the Racine County Board of Supervisors County Executive James A. Ladwig October 11, 2011

Transcription

1 Address to the Racine County Board of Supervisors County Executive James A. Ladwig October 11, 2011 Mr. Chairman and members of the County Board: It is traditional to end these speeches by thanking the County Board and I intend to do so. But, for reasons I m about to explain, I want to begin by thanking you as well. As you know, this is my first budget address. More importantly, this is the first countywide budget that I have been responsible for developing and presenting. To say that the last several months were an experience would be an understatement. But to say that the task was an impossible one would be an even greater overstatement and that is why I owe you a debt of thanks. Working together with my predecessors especially with Bill McReynolds, during the years when the economy really began to unravel I believe that the Racine County Board of Supervisors has set a standard of prudent budgeting and sound fiscal discipline that would make any local government in Wisconsin proud. Consider what s already been accomplished: Strong undesignated, unreserved funds help us preserve an excellent bond rating; Tax stabilization funds help us ensure that we can deliver essential services even in adverse economic times; We have enthusiastically pursued innovative cost-saving methods, especially those that help control the growth of compensation costs; and We have consistently kept the general countywide levy increase at or below new construction. And our long-standing opposition to a local sales tax has not only protected local businesses, but has saved us from sudden revenue shortfalls in this period of stagnant economic activity. Those are some of the things that have already been accomplished. They have permitted us to adapt to the extraordinary challenges presented by continued economic slowdown and by historic changes in the way that the state government and local governments do business in Wisconsin. We have been able to build on the initiatives of prior years in order to develop a budget that positions us for the future not simply for 2012, but for 2013 and beyond, in the new reality for Wisconsin and for Racine County. Let s talk about that new reality as reflected in the State s budget and the legislation that more or less accompanied it: Act 10. Act 10 was intended to give local governments tools with which to continue their operations despite significant reductions in various types of state aid. Act 10 provided many local governments relief from most of their contractual or policy commitments to pay the employees share of Wisconsin Retirement System contributions. For Racine County in 2012, those savings will be 1

2 considerable on the order of about $1.5 million. But as I ll discuss a bit later those savings will essentially be offset by reductions in state aids. We hope for greater savings if the represented public safety employees agree to make WRS contributions at the same level as all of their fellow non-elected county employees. But the other significant change to public employee benefit payments a mandatory 12+% contribution by all employees participating in a state-funded health care program does Racine County no good, simply because we are not in one of those programs and, in any event, our active employees already contribute 15% of the premium costs. The third major change in Act 10 is the reduction in the number of things that are subject to collective bargaining for anyone but public safety employees. As I explained in my presentation at the last County Board meeting, this feature of Act 10 permits us to make changes in pay and benefits that will provide some near-term savings and some very important savings over the long haul. At this point, I want to compliment most county employees for the way that they have received and, in general, accepted these various changes in our compensation, benefits and conditions of employment. None of us me included is overjoyed about changes that now or over time may somewhat diminish the value of the pay and benefits we receive for the job we do. But I think that the great majority of our employees especially those who have taken the opportunity to really understand what the changes entail understand that, especially in extremely difficult economic times, we all must make sacrifices. I know that you share my gratitude to them for their patience and understanding throughout out the events of the last six to eight months. All of those actions by the Governor and State Legislature gave us some budgetary breathing room. But what the State giveth, the State also can take away. So, for example, we are seeing a reduction in state highway maintenance funding. We are seeing a 10% reduction in Youth Aids funding. We are also seeing a reduction in funding for conduct of income maintenance operations. And for a while, we thought we d see a 50% reduction in shared revenue. As things worked out, however, the State is only reducing our payment by 25%. As I will explain in a moment, holding the line on the levy increase in 2012 will not be too difficult. But holding that line again next year could present real challenges. That is why, in developing our budget, we had not only to think about meeting our needs for 2012, but also to look ahead, to 2013 and beyond, to ensure that we do not make our situation in future years any more difficult than it already promises to be. For example, this year we will be able to achieve some savings in compensation costs, because the salary increases we had budgeted for in 2011 have not all gone into effect. That permits us to budget for a small salary increase for 2012 without significantly increasing the amount budgeted for compensation. We may not have that luxury next year, as we prepare the budget for So how do we budget with an eye to the future? Here s an example of something that the practices of the State government in previous years taught us not to do: we are not 2

3 drawing on one-time funding to cover recurring costs. Take, for instance, the roughly $306,675 that we ll receive as a result of the dissolution of the Southeast Wisconsin Regional Transit Authority (SERTA). Just as homeowners use one-time money to pay down their home mortgages, we will use the funds to pay off bonds early. This will enable the County to avoid interest payments of approximately $154,000, for a total savings to taxpayers of $460,000 over the remaining life of the bonds. Here s another example of budgeting for the future: as part of the 2009 stimulus funding, we have received from the Federal government a one-time payment of $704,365, to help us cover retiree health care costs. Rather than simply using that money to reduce our 2012 retiree health care premiums, we ve placed it in our retiree health care reserve. By doing so, we can smooth out cost fluctuations over time and, as a result, save money for taxpayers and retirees alike. We re also budgeting for the future by continuing to adapt and adjust the ways we do business. For a while, it looked as though the State was going to centralize the administration of income maintenance functions Medical Assistance and related programs and take away from the counties the amounts they were contributing toward local administration of those programs. Over time, the State realized that regional collaboration made more sense, and we are budgeting for a collaborative effort with neighboring Kenosha County. We expect that collaboration to pay dividends in 2012 and beyond. We anticipate that our ACE program will continue to keep our costs of juvenile corrections down. But, what is even better, we believe that we will see several counties also take advantage of the program to reduce the number of their youth in State juvenile corrections. This will be a win-win. In tight fiscal times, they can make major reductions in their juvenile justice costs, while we leverage the years of ACE s success to generate revenue that keeps our tax levy down. While I m on the subject of cooperation and collaboration in the justice system, I want to acknowledge Sheriff Chris Schmaling s initiative in contracting with the Town of Burlington to provide patrol services. That arrangement is a perfect example of how we can work with other local governments, both within our county and across county borders, to the benefit of all our residents. And in this budget you ll notice an important forward-looking measure that promises to provide savings next year and for years to come. We intend to merge the Planning & Development Department with the Public Works Department, to create a new Department of Public Works and Development Services. Public Works and Planning and Development have, in many respects, related and even complementary responsibilities; and they are already located in the same building. Especially now, with slower permitting and related activities, we have the opportunity to achieve economies of scale by combining these two departments, cross-training staff, and ultimately saving money while maintaining the high standard of service both departments consistently deliver. Our plan includes the ability, as necessary, to ramp up staffing when better economic times bring with them greater activity on the permitting side. By the way, this consolidation will have no effect on our ability to continue providing planning and zoning services under contract with the Village of Caledonia. 3

4 We will, of course, be working with the relevant County Board committees and presenting proposed changes to the Code of Ordinances necessary to accomplish this consolidation. As I have said, this budget looks forward to 2013 and the years beyond. This focus on the future is not limited to finding ways to reduce county government costs or to generate non-tax revenues to help keep the levy in check. From the day I took office, I have said that I see my primary responsibility to do what I can to help bring jobs to Racine County and to retain jobs with employers that are already here. County government finance can help employers realize the value of being here. The county s low property tax rate should be attractive. So should be the county s lack of a sales tax. The county s commitment to providing the infrastructure needed for vibrant economic activity should also help attract and retain businesses. But the overall benefit of these features of Racine County s stewardship of its resources may not always be enough to encourage local firms to expand here or new ones to come here. Right now, it s a buyer s market for those firms that are looking to expand or move. Many local governments whether working with state governments or on their own are able to offer very attractive relocation and retention packages. Racine County cannot afford not to be competitive. Racine County Economic Development Corporation has been aggressive and, in my opinion, pretty darn shrewd in using its Revolving Loan Fund to attract new businesses and to encourage existing ones to stay and grow with us. The problem is that it s been so successful in lending funds through this program that it s nearly out of money just at a time when the manufacturing sector is turning around and firms are poised to make important investments in plants and jobs. It s time that Racine County helped RCEDC continue its work of advancing the economic development of the entire county. For that reason, this budget will include $1 million in borrowing, and those funds will, in turn, be provided to RCEDC for its revolving loan fund. RCEDC will keep using those funds to encourage business activity in our county. But make no mistake RCEDC will have to get my OK before making any loans from this fund, so our taxpayers can be sure that the money will be lent to good prospects that will help us grow Racine County jobs. Because of our tradition of fiscal prudence, we have an excellent credit rating, and this is a great time for us to borrow. It is my intention to make these investments in the county s economic future not only in 2012, but for several more years, for a total investment of $4 million. At the same time, it is also my intention to keep our total indebtedness in the $50 million range. Now, let me turn from the overarching picture to the bottom line the property tax levy for our 2012 budget. As you know, we can have as many as four separate tax levies: The general countywide levy, which is paid by all county property owners; The library levy, which is paid by property owners in municipalities that do not operate libraries; The county schools levy, which is paid by property owners in municipalities west of I-94; and 4

5 The bridge aids levy, which is paid only by property owners in towns. I ll begin with the last three levies, all of which share two important characteristics: First, each one is dictated by factors over which we have no direct control the number of town bridge projects, our post-retirement obligations for former county schools employees, and library usage data; Second, partly because they are not under our direct control, none of them is subject to the State s levy limits. The bridge aids levy, which is a way for towns to share the cost of bridge construction, is paid only by property owners in towns. This year, the bridge aids levy will be $47,250. The county schools levy, which pays post-retirement costs for former employees of the old county schools district, tends to fluctuate from year to year, depending on the number of retirees and some other factors. This year, the county schools levy will actually go down, from $682,829 last year, to $669,010. The library levy is likewise subject to fluctuation, often because of changes in usage of the municipal libraries from year to year. In 2010, library usage throughout the county went up perhaps that is another sign of the economic times. Lakeshores Library System has submitted its annual request according to the formula adopted by the County Board in Using that formula, the library levy for this year will be $2,174,062, which is slightly higher than last year s levy of $2,134,929. Finally, there is the general countywide levy. As was the case last year, the operating portion of the general countywide levy will remain flat no increase whatsoever. On the debt service side, the levy will slightly decrease, from $5,761,091 to $5,758,025. I am conscious of the continuing difficulties faced by Racine County residents. I am also conscious of the county s obligation to deliver to its residents the services that they need, but at a price that they can afford. This budget takes full account of all those considerations. I am proud to present this budget to you, and I look forward to working with the County Board, during the departmental hearings and deliberations, to ensure that this budget fully meets the needs of the people we have been elected to serve. Thank you again for your attention and for your careful stewardship of Racine County s resources. 5