“The borrowing ends. We’re done, at least into the future.” – David Bretl, Walworth County Administrator
By Maureen Vander Sanden
SLN staff
Despite the ongoing impact of a sluggish economy, Walworth County Administrator David Bretl proudly reported Sept. 6, when he unveiled his proposed 2013 budget, that years of conservative budget practices are finally paying off.
His administrator’s budget effectively freezes the $60 million county levy, while whittling away two of the obligations that have dominated budget resources since 2005 – debt service and other post employment benefits (OPEB).
With a number of capital improvements over the past decade, including remodeling the Health and Human Services Department, an addition to the jail, a new Lakeland School, Judicial Center, nursing home and remodeling the Government Center, the county took on an aggressive borrowing schedule.
Successfully managing the debt, Bretl said, was a “terrific challenge,” noting that for a number of years, debt service payments had increased $1 million annually. He likened the obligation to funding an entire department.
“Increased debt service necessitated cuts elsewhere in the budget,” he wrote in his budget letter.
In 2000, in order to stay beneath the state-imposed budget cap, the county began borrowing for road projects since the state exempted debt service from the cap.
Last year, the county called $4.7 million in promissory notes, Bretl reported.
“I am pleased to say that this budget continues that trend and expands it one step further,” he stated.
In the proposed budget, the administrator includes continuing to aggressively pre-pay debt, calling $2.6 million in bonds.
Secondly, he was eager to report, he does not project the need to borrow now or into 2017.
Calling it the proposed budget’s “biggest accomplishment,” Bretl said, “the borrowing ends. We’re done, at least into the future.”
“Frankly, I never thought I’d see the day when we’d wean off borrowing for roads…we’re beginning to move in a positive direction,” he added, crediting staffers.
Last year, the county’s debt exceeded $40 million. At the end of 2012, it will be at about $30 million, and down another $5 million if Bretl’s budget is approved for 2013. In 2014, the county will see payments toward its debt service decrease by about $3 million.
Another accolade for the county’s fiscal restraint over the years, Bretl reported, is its success managing its OPEB fund.
In 2005, the county was faced with more than $25 million to pay for health benefits to retiring employees, a commitment that arose over years through union contracts and by ordinance, yet with no funds set aside.
That year, the county took a two-fold approach to bringing the obligation under control, Bretl explained.
First, it ended the benefit for new hires, and secondly, began to designate significant funds toward the OPEB trust, with $3 million included in the last three budget cycles.
“While we are not yet fully funded, our total projected OPEB obligation, we are at a point where our required annual payment has dropped significantly,” Bretl wrote in his budget letter.
Citing it as one piece of the budget’s “good news,” the upcoming budget only proposes including $500,000 toward the obligation – a significant decrease from previous years.
Under the proposed budget, levy dollars that would have normally been paid into the retirement trust can be used to fund projects that might have otherwise required borrowing.
Specifically, the combination of lowered debt and OPEB payments allowed the county to take the roads program off its borrowing, according to Bretl.
Impacts of lagging economy
Highlighted in the proposed 2013 budget is the continued downward trend of property values.
This year, falling 6.65 percent, Walworth County’s decrease was the fourth largest decline in the state, among 72 counties, Bretl reported. Over the past three years, Walworth County has seen a $1.6 billion decline in property values, making it more difficult for homeowners who pay taxes, Bretl said.
Interest in county investments, which helps offset the need to fund programs with property tax dollars, is down significantly since 2008, according to Bretl.
At that time, the county realized about $1.6 million in investment income. Next year, it is projected to earn just under $500,000.
Similarly, the county has seen a $1 million decline in sales tax revenue during that period.
Revenue generated from real estate through the Register of Deeds and the Land Use and Resource Management departments has also been on the decline and is not projected to improve next year, according to Bretl’s budget.
Revenue relating to permit fees, for example, is down more than $400,000 and $100,000 respectively since 2006.
Criminal justice initiatives
With some collaboration and innovative thinking, the county has successfully held off on a $10 million jail expansion that was included in the 2010 budget letter. Besides the cost of bricks and mortar, the county would have been faced with the daily operational costs of an expanded jail and staff.
Since then, county board supervisors and leaders within the county’s criminal justice system have introduced initiatives that Bretl reported, reduce jail costs, preserve public safety and reduce recidivism.
Those programs include expanded use of electronic monitoring implemented by the sheriff this past summer, drunk driving court, and the Commitment, Accountability, Treatment and Evaluation (CATE) program for drunken drivers.
Including $100,000 in his budget, Bretl hopes to expand on such programming.
He also includes $283,000 to replace the sheriff’s office 1978 tactical response vehicle; $50,000 for security improvements at the courthouse; and $1.2 million for renovation of the indoor and outdoor shooting range on Hodges Road in Elkhorn.
Given the same night the county was recognized for its eighth consecutive year of proven distinguished budgeting practices by the Government Finance Officers Association, the Sept. 6 meeting was just a first look at the budget.
This month, several committees will be able to take a stab at it, before the finance committee sets a preliminary budget for approval by the full County Board.
A public hearing on the preliminary budget is scheduled Oct. 30, with formal adoption scheduled Nov. 13.
