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A Tale of Two Budgets and Two Financial Situations

At the October 9 County Board meeting, County Executive Bob Ziegelbauer introduced his budget for 2019.  County property taxes will go up approximately 1.5% for most taxpayers.  In addition, the County is proposing to borrow $6.5 million to fund a bridge on Rapids Road, road resurfacing projects, and equipment in the recycling center.

At the October 15 Manitowoc Common Council meeting, Mayor Justin Nickels introduced his budget for 2019.  The proposed City budget raises taxes approximately 0.7%.  In addition, the Mayor is proposing to implement a $20 wheel tax as a replacement for special assessments, and is adding investment in infrastructure.  He is also adding three new public works employees and is creating a Parks Planner position.

This article will provide a preliminary, high level view of these budgets and how the approaches greatly differ from one another.

County Budget Commentary

Noteworthy about the County’s tax increase is that this is the first tax increase in 13 years!  This is simply astonishing.  If you are an observer of government, you know that this is almost unheard of.  Yes, it is possible to hold the line on taxes, despite all we’ve been told about how government must keep spending more and more.  The County doesn’t typically borrow, but when it does, it is usually for a large purchase that will be around for decades, enabling the loan to be paid back easily.  (Examples from past years include the Communication Project in 2009, new Public Health Building in 2013, UW-Manitowoc expansion in 2017, etc.)  The County’s debt is extremely low—it is projected to be in the neighborhood of $29 million for 2019—That is approximately $363 per person.

Detractors of this budget are suggesting that the borrowing is irresponsible and that it would make more sense to raise the County sales tax instead.  I have gone into detail about where I stand on the sales tax, and especially the claim that it is needed to keep up our infrastructure (see article here).  Given the low County debt, and a concrete plan to keep the debt in check, it is unwise to raise a tax when borrowing in this fashion can be done responsibly.

City Budget Commentary

I believe that the Mayor is being a bit disingenuous is when he says that our current tax rate of $8.2055 per $100,000 of equalized value is barely more than the $8.14 we paid in 2006.  That’s true, but what he doesn’t mention is that the tax rate was $6.85 in 2010 (his first budget), $7.64 in 2011, etc.  To be fair, the rate has been relatively flat over the past handful of years, but it has been creeping up.  For this budget, I just don’t think that any of the four new positions are justified (with the “Parks Planner” seeming especially touchy-feely), and it gives the impression of tax more to spend more mindset that isn’t doing much of anything to add value.

The City’s debt in 2018 was around $50 million—That is approximately $1,518 per person.  This is obviously far more than the County’s per person debt level, which is why the noise about the County’s debt load seems more like a talking point than actual concern.  Here, too, though, we must look at the big picture and realize that the City’s debt exceeded $70 million several years ago.  In order to get the City’s debt down to $50 million the City neglected infrastructure for several years, and to get the infrastructure back to where it needs to be, the debt will be increasing to $54 million by 2022.  The City’s finances are in better shape than they were ten years ago, but there’s still plenty of work to do.

The wheel tax concept needs to be given some serious thought and analysis, and will be the topic of an upcoming Periscope article.  –article summarizing County budget –County budget document  –article summarizing City budget –Video of City Council meeting where budget proposal was made

Questions for Discussion:

What is an appropriate level of debt for a local government?

Are current tax levels appropriate?

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