LOCAL GOVERNMENT IN-SERVICEDECEMBER 15-16, 2011

In-Service Design Committee:

Alan Probst Steven DellerLocal Government Center Ag & Applied Econ

Kate Lawton Craig MaherLocal Government Center MPA Program

UW-Oshkosh

LOCAL GOVERNMENT IN-SERVICEDECEMBER 15-16, 2011

Objectives:

Outline a model for local government finance as a subset of the core competency

Overview of current conditions

Overview of a “take home” educational program for local elected officials

Overview of additional needs

LOCAL GOVERNMENT IN-SERVICEDECEMBER 15-16, 2011

Day I Noon-1pm: Box Lunch and introductions

1-1:30: What is happening at the state level as it pertains to local governments?

1:30-2 Types of local governments in Wisconsin

2-3 Major revenue and expenditure trends for counties and municipalities.

Objective: move elected officials from looking only at last year’s budget when setting this year’s budget. Focus on elected officials needing worry about the “big picture” and not the day-to-day details. (analogies, the Board of Directors setting general directions, or Generals thinking about the big picture).Plans is to put the template on-line

LOCAL GOVERNMENT IN-SERVICEDECEMBER 15-16, 2011

3-3:15 Break

3:15-4:30 Making the case for why public finances matters to CNRED

Karl Green – HousingPat Malone – County jail Arlen Albrecht – Local towns Art Lersch – Visioning with local governments

The “talking points” to be addressed: How was a request for technical information turned into an educational program. Role of the Educator. Balance between technical advice and educational programming.

4:30-5:30 How do we engage the community? Annie Jones

LOCAL GOVERNMENT IN-SERVICEDECEMBER 15-16, 2011

8:30-10:30 How do we analyze and discuss local trends (computer lab)?

10:30-11 Break

11-noon Local Governance Preparedness Index

Noon-1 Lunch: Dean Rick Klemme

1-2 Local Governance Preparedness Index (continued)

2-2:30 How to move to an action plan for local government elected officials. Steven Grabow

2:30-3 Review of the “Big P” program

3 Adjourned

LOCAL GOVERNMENT IN-SERVICEDECEMBER 15-16, 2011

Idea of a “take home” educational program for local elected officials

Balance of process and content

Built in the spirit of the Pulver-Shaffer Community Economic Analysis program (e.g., Take Charge but for local governments)

How do we engage the community in the conversation.

LOCAL GOVERNMENT IN-SERVICEDECEMBER 15-16, 2011

General Introductions

What do you hope to walk away with from this in-service?

What is happening at the state level as it pertains to local governments?

Per Capita Income

What is happening at the state level as it pertains to local governments?

State Government Total Tax Rev

What is happening at the state level as it pertains to local governments?

State Government Sales Tax Rev

What is happening at the state level as it pertains to local governments?

Property Tax Rev

What is happening at the state level as it pertains to local governments?

State Government Employment

What is happening at the state level as it pertains to local governments?

State Coincident Index

The Coincident Economic Activity Index includes four indicators: nonfarm payroll employment, the unemployment rate, average hours worked in manufacturing and wages and salaries.

What is happening at the state level as it pertains to local governments?

Leading Economic Indicators

Jan. ’08 GAO Report: Growing Fiscal Challenges will Emerge during the

Next 10 Years

“…in the absence of policy changes, large and recurring fiscal challenges for the state and local sector will begin to emerge within a decade.”

“Continuing on this unsustainable path will gradually erode, and ultimately damage, our economy, our standard of living…” -David Walker, Comptroller General, January 2008

GAO Report (Jan. 2008)

“Tax receipts would need to rise considerably faster than historical experience to enable the operating balance to remain in the historical range.”

“Substantial policy changes would be needed to prevent the fiscal decline in the state and local government sector.”

Long Term Fiscal Gap• The GAO simulation shows that by the mid-

2020’s states will be in strong fiscal distress

• Fiscal gap requires a 15.2% tax increase or a 12.9% spending reduction

• Tough choices on spending and tax policy – Balanced budget requirements– Bond ratings

Current and Future City and Village Financial Prospects 2010

Current and Future City and Village Financial Prospects 1997, 2004, 2007,2010

Quotes from Survey “I wouldn't say 2007-2010 was particularly stressful, but 2010-

2012 will be.”

“Levy limits and maintenance of effort requirements will ultimately deplete our reserves and force reduction/elimination of services.”

“Loss of jobs, forced foreclosed properties. Poor economy, reduced new homes to be built in our TIF district and no businesses to come to expand into our TIF district.”

“Limited funds based on population, hard to get grant funding.”

Quotes from Survey Con’t “No incurring debt and "good old fashioned home budgeting" has

helped this small municipality to thrive in this challenging economy.”

“Wisconsin doesn't provide municipalities another revenue generating source other than property taxes, user fees, revenue sharing, and other State aids, the overall financial conditions of most Wisconsin municipalities will be depressed greatly for the following reasons: Increased cost of operations & maintenance; the replacement of aging infrastructure and the increasing costs associated with it; and the continued cuts in State revenue sharing and continued imposition of levy”

Quotes from Survey Con’t “We could have somewhat adequate revenues if the Council would

allow reasonable Property Tax increases.

They required 0% last budget (2010)and are demanding 0% or a reduction for 2011.

Significant property tax increases in 2008 and 2009 for debt service intended to respond to a long term infrastructure maintenance deficit helped address that issue, but that was after 12 years of belt tightening and expanding demands for municipal services.

Now there is no cushion and the anti tax/fee fervor is as hot here as anywhere. Yet most everyone wants us to do more...”

What is happening at the state level as it pertains to local governments?

What is happening at the state level as it pertains to local governments?

What is happening at the state level as it pertains to local governments?

What is happening at the state level as it pertains to local governments?

What is happening at the state level as it pertains to local governments?

Type of WI Local Government by Population (2005)Cities Villages Towns Counties

less than 500 - 129 251 - 500-999 7 106 480 - 1,000-4,999 88 127 487 2 5,000-9,999 33 20 37 3 10,000-24,999 36 17 4 21 25,000-49,999 14 3 - 19 50,000+ 12 - - 27 Total Number 190 402 1,259 72

Average Population 16,097 2,055 1,328 77,174

County

City/Village

Town

10,000 20,000 30,000 40,000 50,000

Wisc Employment (FTE)

2007 2002 1997

Wisc Employment (FTE) 2007County City/Village Town

Education Total 411 0 0Elementary and Secondary Instructional Employees 385 0 0All Other Elementary and Secondary Education 26 0 0Libraries 275 2,476 63Public Welfare 12,194 177 1Hospitals 1,214 65 0Health 5,457 832 30Highways 3,662 3,655 1,337Air Transportation 371 32 1Water Transport and Terminals 1 16 0Police Protection Total 5,035 9,669 323Police Officers Only 3,645 7,616 278Other Police Employees 1,390 2,053 45Fire Protection Total 60 4,549 254Firefighters Only 40 4,343 238Other Fire Employees 20 206 16Corrections 3,740 100 0Natural Resources 597 229 1Parks and Recreation 1,227 1,657 28Housing and Community Development 62 440 3Sewerage 8 1,250 49Solid Waste Management 207 1,383 70Financial Administration 1,374 1,614 356Judicial and Legal 3,014 413 14Other Government Administration 1,826 2,121 1,046Water Supply 2 1,631 21Electric Power 10 498 0Transit 1,081 634 0All Other and Unallocable 1,656 1,564 136

What is happening at the state level as it pertains to local governments?

Limits to the flexibility of Local Governments….

Property Tax Limits (or TELs)

Limits on Fees and Charges

Bankruptcy is NOT an option

Empowering the flexibility of Local Governments….

Cooperative Agreements to provide services

         

  Not at all Not very much Somewhat A lot Don't Know

Improved productivity through better management

7.0 12.3 60.8 17.0 2.9

Contracted out services 16.8 33.0 39.9 9.3 1.2

Consolidated departments 42.2 22.5 26.0 8.1 1.2

Pursued regional cooperative agreements 24.4 23.8 40.1 8.7 2.9

Reduced hours for public facilities 51.7 27.0 18.4 1.7 1.2

Eliminated services 39.5 34.9 24.4 0.6 0.6

Drawn down cash reserves to meet daily operations

30.0 22.4 34.7 11.2 1.8

Raised property tax levies 13.5 32.8 50.3 3.5 0.0

Adopted or increase user fees and charges 12.9 18.7 54.4 13.5 0.6

Created or expanded enterprise funds 39.6 25.4 20.1 5.9 8.9

Pursued grants from federal/state government 4.1 5.3 44.4 46.2 0.0

Refinanced outstanding debt 36.6 15.1 34.3 13.4 0.6

Increased short-term debt 56.5 18.8 20.0 4.1 0.6

Delayed routine maintenance expenditures 17.9 27.2 39.3 15.0 0.6

Delayed capital expenditures 11.6 18.5 39.9 28.9 1.2

Laid off workers 73.4 11.6 13.9 1.2 0.0

Hiring freeze 44.5 12.7 28.3 12.7 1.7

Across the broad budget cuts 28.9 25.4 33.0 12.1 0.6

Targeted budget cuts 12.1 20.8 51.5 15.6 0.0

Response strategies: 2011 Wisconsin Municipality Survey

Response strategies: 2011 Wisconsin Municipality Survey

Bottom line

Municipality have pretty much played out all the “marginal” adjustments and “accounting fixes” that are possible; extended periods of fiscal stress will necessity structural changes.

Most serious problem?

Tendency to think in the short-term by local elected officials….

”we set policy by tweaking last year’s budget”

Tendency to “micromanage” administrators...