Posted: Nov. 24, 2009

New Berlin Mayor Jack Chiovatero has vetoed the Common Council's action to draw money from the city's reserve funds to keep the property tax levy from rising.

The mayor's budget had already called for using $1 million from the fund balance in lieu of taxes to limit the levy increase to 3.59 percent for the 2010 city budget. But aldermen wanted to draw an additional $833,000 from reserves for no levy increase.

That additional amount from reserves is simply too much, the mayor wrote in his veto message.

"The action taken by the council will place the city at risk for future budget shortfalls and reduced bond ratings," Chiovatero wrote.

The New Berlin Common Council will meet Monday night to discuss the veto and possibly hold a vote to override Chiovatero's veto.

In an interview today, Chiovatero reiterated his feeling that overusing money from the fund balance could put put "the city's financial stability in jeopardy."

He said he decided to veto the $833,000 withdrawal based on a report from the city's financial advisers Ehlers & Associates.

The report noted that with "the continuation of the economic downturn and anticipated declines in revenues next year," overusing fund reserves to lower the tax levy "will extend structural deficits into 2011."

"Increasing the use of reserves to balance the proposed 2010 budget is not a strategy the city of New Berlin can sustain to pay for ongoing operating expenditures," the Ehlers report says. "Moody's Investors Service opined as recently as August 2009 this practice could place pressure on the city's existing bond rating of Aa1."

But Common Council President Alderman Ken Harenda said that a plan for how to put back the money would at least blunt any threat to the city's bond rating. Details of that plan were not revealed.