New Berlin — How to put the brakes on roadwork that's finding its way into more of the money needed for city services is something the city is considering as it develops a budget for next year.
In past years, the city has borrowed money mainly for roads and other big purchases, such as fire trucks, but has not raised property taxes. Paying off that road debt has become more problematic, given the city's available funds.
The city is on a road to disaster unless something is done, Treasurer Ralph Chipman warned the Common Council last week.
If it keeps borrowing the same amount it always has, "the levy increase is basically going to explode," Chipman said.
Dealing with debt
City officials are between a rock and a hard place, Alderman Dennis Horbinski said.
"As I've been saying for a couple years, we really need to pay our credit cards," he said, but he noted that about half the complaints he gets are about roads that need work.
The consensus on the council still was to have no levy increases.
John Fillar, newly appointed alderman for the 7th District, applauded the council for keeping the levy at zero for both debt service and operating costs.
"The goal should include debt, otherwise we will be tempted to push that off and have a time bomb," Fillar said.
With department heads working on zero levy increase budgets, the council will now await suggestions from its Finance Committee on how it can pull off road work without raising taxes. The committee should have its recommendations to the council in July.
Hitting a zero levy increase will not be easy for department heads.
Even with no raises for nonunion employees and small raises for police and fire personnel, Chipman predicts spending would exceed this year's levy by $568,728. That would require a 2.35 percent property tax levy increase, he said. The increase to the tax rate would be about 10 cents per $1,000 of assessed value, he estimated.
Even if just the operations levy were held to zero, the council will have to cut $181,819 from the estimated total needed to offer the same services as this year, Chipman said. The 2014 operating budget is roughed out at $34,453,562, which is a 0.1 percent increase over the 2013 budget.
These projections are with a best scenario budget, he cautioned.
Complicating things is the fact that the 2014 budget will likely have to rely on $1 million in budget reserves to make up the difference between tax revenues and expenses. About $1 million of the reserves will probably be needed this year, too, Chipman said.
While the reserves are a bit more than needed for the city to maintain its enviable AAA bond rating, that rating could be in trouble in a couple years, Chipman said.
Offering a little budget leeway is a small growth in the city's tax base, meaning that the city can raise more money with the same tax rate. However, the council is aiming for a zero levy increase, which refers to the amount raised and not the tax rate.
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