Posted: Dec. 8, 2009

New Berlin — Although the city's property tax levy will not go up for 2010, city officials are clearing the decks for some budget battles to make up a multi-million dollar budget shortfall looming in 2011.

Knowing that many residents have been laid off or taken pay cuts and that some businesses are just hanging on, the Common Council passed a 2010 budget with no property tax increase. Along with staff reductions, the city is achieving the no-increase levy by using $1.833 million of the city's reserves.

Mayor warns of service cuts

But that will catch up to the city in 2011 when leaders will be looking at a revenue shortfall of $3.6 million to $4.6 million, Mayor Jack Chiovatero estimates.

He warned of drastic service cuts in 2011 along with possibly substantial tax increases.

To avoid that scenario, Chiovatero had wanted to use only $1 million of reserves and implement a 3.59 percent property tax levy increase next year.

But noting that residents and businesses desperately need property tax relief next year, the council overrode him last week, 5-1. Although acknowledging that cuts will have to be made, the majority of aldermen said the city can devise a three-year budget plan to put the money back into the fund balance.

The council was to vote Tuesday after press deadline on how to develop that plan.

Council vs. committee

Alderman Ted Wysocki said before the meeting that the Finance Committee, of which he is chairman, should make a recommendation for a three-year plan to the full council.

But the mayor said, "It's my budget and my job and I want the whole council to be in on it."

Only three aldermen sit on the Finance Committee and that leaves the other three without a vote until the full council consideration, Chiovatero said.

He supported the Finance Committee gathering information and seeing if certain things are feasible.

After his veto was overridden, Chiovatero said he needed aldermen to tell him what services should be cut.

But Council President Ken Harenda said there will be no drastic cuts with officials working together. Among other things, they will look at potential revenue sources suggested by Alderman Ron Seidl that have been put on the back burner, he said.

The revenue sources include looking into naming rights to park pavilions, selling advertising on the city Web site, having advertisements inside of tax and utility bill envelopes, having small plaques on park benches and having memorial trees and bushes. He also suggested a campground in Quarry Park to be developed to help offset costs.

Alderman David Ament said those ideas need to be explored.

He acknowledged, however, "There will be some pain." But despite that, property taxpayers need relief next year.

"I think it was the right thing to do," he said. He noted that the city has weathered dark predictions.

Prioritizing services

Wysocki said he is thinking about proposing a survey in the city's spring leaflet. It would be aimed at which services are most valued, he said.

"We need to get a read on the community as to the priority of services," he said. Also, the Finance Committee has asked the city's financial consultant to come Jan. 14 with recommendations on priorities and resource allocation, Wysocki said.

Time, however, may be of the essence.

Greg Johnson of Ehlers & Associates, the city's financial advising firm, advised the council last week to have the plan in place in March to protect the city's bond rating. He was concerned that Moody's Investors Service would see the city dipping into reserves for operating expenses and possibly lower its bond rating. The fact that the fund balance will still be reasonably healthy would be a point in the city's favor, he said, but he advised a quick response.

A lower bond rating could cost thousands of dollars in higher interest rates, Chiovatero said.

Wysocki doubted that a plan could be approved that fast. But he also said Moody's could look at all the measures the city has put in place in the last two years and see a determination to be fiscally proactive.