Slight tax increase in New Berlin

New Berlin - A proposed budget to pay for municipal services in New Berlin in 2012 calls for an estimated increase of $25 in city taxes for the owner of a home assessed at $251,000, officials said.

The proposed $34.2 million budget for the general fund, basically the operating budget, and debt service is 0.71 percent higher than this year and is headed for a Nov. 8 public hearing. The Common Council will adopt a final budget sometime after that.

The proposed levy would increase 1.77 percent, all because of additional debt service, said Mayor Jack Chiovatero. Department heads have not increased operating expenses while preserving services, he said.

After only minor tweaks so far by the Common Council to the mayor's proposed budget, Chiovatero said, "We've done a good job controlling costs and maintaining our excellent services to the public."

$2 monthly increase

But the spending plan includes an increase that is $2.11 per month for the owner of a $251,000 home, and he said of the council, "I don't know if they'll allow the $2."

The elephant that the city is dealing with for next year is debt payments that will go up more than the property tax levy. The city will pay $692,000 next year to pay off its debt, but the proposed tax levy would rise only $419,578, The mayor noted in his budget message.

The city borrowed more than $20 million in the last three years, more than 75 percent for road projects and the rest for major purchases such as a fire engine and dump trucks, Chiovatero said.

While the borrowing was going on, the Common Council insisted on keeping the tax levy at zero, Chiovatero said. He has been able to find money elsewhere in the budget for the debt payments. And that includes next year, but he has not been able to come up with enough, hence the proposed property tax hike.

Chiovatero said he views adding to the tax levy for debt repayment like paying off a credit card. It's fine to cut back on household expenses to pay that debt, he said, but eventually you're going to need a raise or you won't be able to pay the electric bill.

All that is true, said Common Council President Ken Harenda, but there are efficiencies and cost savings to be had. He is against the proposed levy increase, he said.

Aggravating the debt problem is that it will only get worse through 2013, he said.

Impacts to road projects

The city is facing major road projects that clumped together for three years, starting this year and going through 2013, he said. Roads going very bad and projects being delayed too long are the main reasons why, he said. But whatever the reason, New Berlin needs to do more than $10 million a year in road repair this year, next year and in 2013, he said. But it can borrow only $6.5 million under its own policy, he said.

So, tough decisions will have to be made, he said. On one side are the roads that need work and on the other side is the city's financial adviser who counsels city officials to take on no more debt until the current debt goes down.

To help meet the 2012 debt payment, Chiovatero proposes three things - using more of the portion of the city's room tax hotels pay that can be used for the debt; using more of the impact fees developers pay that can be used to help pay off the library and safety building; and using more of the fund where savings realized from previous road projects go. All three funds can stand being tapped into, Chiovatero said.

Helping the budget situation are the collective bargaining rules changes the state Legislature passed this year.

Among other things, those changes mean that city employees except police and firefighers will pay 5.9 percent toward their pensions, said Tami Potkay, director of human resources. No one paid toward pensions until August when employees not represented by unions started paying.

Higher insurance premiums

Another significant change coming from Madison is that the city can now make everyone except police and firefighters pay 15 percent of health insurance premiums. Currently, those not in unions already pay 15 percent while those in unions pay 10 percent under their contracts, which expire at the end of the year, including police and firefighters, Potkay said.

The city is negotiating contracts for 2012 with police and firefigher unions.

However, the proposed budget assumes no raises for any city workers, she said.

No layoffs or furloughs are contained in the proposed budget, either. The 2011 budget originally had 7.5 furlough days, but in early summer other ways were found to balance the budget, said Ralph Chipman, treasurer.

As in previous budgets, the 2012 proposed spending plan is backed up by $1 million from fund balance. While not all of that would be needed, whatever is spent will reduce the fund balance and that can't go on forever, Chipman said.

"I've talked about that a lot," he said.

The policy of keeping a minimum of 15 percent of the operating budget in the fund balance means the fund balance needs to stay at $5.1 million, he said. At the end of this year, it probably will be about $7.2 million, he said. If it goes down $1 million next year, it will stand at $6.2 million, so it could be tapped only one more time in 2013 for another $1 million before it falls to the minimum $5.1 million, he said.

Part of the reason for the need for extra cash next year will be a state aid cut of nearly $250,000, Chipman said. But the collective bargaining rules changes enabled the city to fill that budget gap, he said.

New Berlin was in a better position to take the hit because it gets so little state aid anyway, he said.

AT A GLANCE

Proposed 2012 budget (operating and debt): $34,237,591

2011 budget: $33,996,903

Difference: $240,688 or 0.7 percent higher

2012 Proposed Levy: $24,183,531

2011 Levy: $23,763,953

Difference: $419,578 or 1.77 percent higher

Proposed 2012 Tax Rate: $5.05 per $1,000 of assessed value

2011 Tax Rate: $4.98 per $1,000

Difference: 7 cents per $1,000 or 1.4 percent higher

NEXT STEP

WHAT: public hearing on the proposed 2012 New Berlin city budget

WHEN: 6 p.m. Nov. 8

WHERE: New Berlin City Hall, 3805 S. Casper Drive