Budget 2016-Keeping Taxes Low

financial-houseOn Tuesday, September 20, starting at 6:00 p.m., the City’s Appropriations Committee will meet.

The Appropriations Committee is really nothing more than the Common Council sitting to discuss the annual budget. However, when sitting at the Appropriations Committee, there typically are less structure and fewer rules.

Perhaps the most important thing the Council does each year is pass the City’s budget. This week is the second meeting in that process, and is the first time the Council begins to see what City staff is suggesting. The Council has asked staff to come back to the Council with a no-tax-increase proposal. For more information, click here.

Keeping taxes low is important. It is one of the reasons people move to Mequon. Government at all levels spends money and raises tax too easily.

In my prior terms on the Council, I was one of the more outspoken aldermen advocating for controlling expenses and keeping taxes from increasing. I authored a policy that the City lived under for a number of years that kept the total dollars levied constant except for growth. I voted against tax increases. I made creative proposals for cutting costs. I think these were sound policies.

However, keeping the tax rate constant becomes more difficult each year. Costs increase regardless of how frugal the City is. Although city revenues increase even without an increase in the tax rate (development growth, fees, and so forth), those revenue increases typically do not keep up with inflation or natural price increases.

For at least the last 15 years, the City has found ways to do more with relatively constant revenues despite cost increases. For example, the budget for the year I first became an alderman (2001, or 15 years ago) provided for $10,309,323 in real estate taxes. This year, the budget provided for $10,268,517 in real estate taxes. That is a decrease over a 15-year period.

Please remember that the City receives only about 20.7% of your real estate taxes (23.8% if you do not have public sewer). If your real estate taxes have increased, it is either because the value of your home has increased faster than other Mequon homes or because other taxing authorities (the other 80.3% of your bill) have increased the amount they take from you.

Significant efficiencies have been found. That has been a focus. Moreover, some new revenues were generated. Total budgeted revenues (including taxes) increased by a total of 7% over those 15 years, or a little less than 1/2% per year. However, the inflation rate increased by about 2% per year over that period, and many costs, like health insurance (even though employees pay a much larger share) and the costs of roads, have increased far in excess of the inflation rate.

Sooner or later, flat revenues will not work. Costs increase. Either revenues will need to increase, or real programs and services will need to be cut or eliminated and maintenance will need to be deferred irrationally.

I recognize that all government entities say the same thing. However, federal and state government have the benefit of the income tax, which naturally generates additional dollars as incomes rise. The City relies primarily on real estate taxes. The only way city revenues increase is through increased rates or accelerated growth.

I am not suggesting the rate will go up this year. It might not, but I do not know. However, I believe that the City must maintain its excellent police, fire and ambulance services, must keep roads in decent repair, and must maintain its buildings and other capital assets reasonably well. I also do not think most City residents want to eliminate the relatively small amount of money the City spends on things like parks and the pool. Most of the rest of the City’s costs are mandated by state law, so we cannot eliminate those. There may be room for some more savings, but ultimately revenues need to increase. The city has made some long term investments to increase tax revenues through new development, but that will not be enough.

I will continue to be an advocate for low taxes and frugal spending. However, I also want to be certain the City provides good services, maintains its properties, and is fair to the people who provide services.

These are difficult issues. Your input is certainly welcome.

 

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