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County supervisors call reduced funding for economic development in 2022 budget 'punitive'

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A handful of La Crosse County supervisors spoke out against funding for economic development that has been reduced in next year’s budget, some calling the move “punitive” against certain organizations.

The funds in question are membership fees the county pays as part of its Economic Develop Fund, an agency that oversees a longstanding revolving loan program and work that supports development in the region.

Those partners will receive only about a third of the funding they have received in the past, though, according to the county’s 2022 budget book, and officials have expressed disappointment in the move, some saying the cut in funding was due to personal grievances between certain county and business leaders.

“To me, it is more than contentious. I see this as punitive,” said La Crosse County supervisor Vicki Burke at Wednesday’s Executive Committee meeting.

Committee members were specifically critical of the fee for the La Crosse Area Development Corporation, which is budgeted to receive $5,000, compared to the roughly $34,000 officials said the group has gotten in the past.

Vicki Burke

Burke

Along with a reduction in funds, this year’s membership fees have been formatted differently in the budget to show each dollar amount headed for individual organizations. Previously the board has approved just a lump sum, which was then divided internally amongst organizations.

County leaders said the change was the culmination of years of reviewing the EDF program, and was an effort to offer a “modest” fee combined with a willingness to collaborate with the groups on an as-need basis.

“We’re looking at being more intentional about where we put our EDF dollars rather than handing over a large amount of money to any one organization,” said La Crosse County Board chair Monica Kruse.

Supervisors understood this new formatting, but some were concerned about how amount was calculated for each organizations.

Last year, the county dedicated $50,000 to its EDF members, though the breakdown of that lump sum was not immediately available. This year, it is dividing $17,550 amongst the La Crosse Area Chamber of Commerce, Downtown Mainstreet, Inc., 7 Rivers Alliance and LADCO.

Monica Kruse

La Crosse County Board chair Monica Kruse

LADCO is budgeted with the second to highest membership fee, with 7 Rivers receiving slightly more at $5,250. The Chamber is budgeted to receive $4,000 and DMI $3,300.

LADCO president and former La Crosse Mayor Tim Kabat told the Tribune that most of the organization’s operating budget is built up of fees such as the one from the county, largely to help pay for its staff and marketing. The reduction from the county, which is about 85% less than past funding, will have an impact, he said.

“But we’re going to deal with it,” Kabat said.

Officials stated that LADCO is asking for “a considerable amount more” for its membership payment, and questioned how fee amounts were decided for each partner, some saying it was “punitive” and used no criteria.

County staff said there was no set formula and that it took its cues from the organization. Kruse said it was “equity based,” where each group starts with the same amount of dues which are then adjusted based on each organization’s needs.

Steve O'Malley

O’Malley

Community development specialist Brian Fukuda further explained that staff bases the funding on dues structures that each organization uses internally, and stated that LADCO did not have that, leaving staff to land on a number on its own.

“We’ve requested different numbers from them to say, ‘Is there a due structure? Is there a number that makes more sense?’ Because nobody really knows where the $34,462 a year that we’ve given them in the past comes from,” Fukuda said. “There just isn’t a due structure that they have. They didn’t give us a specific number, that’s why $5,000 is plugged in.”

Patrick Scheller

Scheller

Officials pointed to a meeting of the EDF Board last week where several supervisors said they were disappointed by the conversation between county leaders and LADCO, which Kabat took leadership over only five months ago.

“I was not comfortable at that meeting,” said supervisor Patrick Scheller, who added that there were comments made that were “less than professional.”

“I believe there is some personal animosity here. I don’t want that to be translated into policy,” Scheller said, adding he did not support the fee change.

“I think the county’s reputation in that discussion was diminished,” Burke said, calling the discussion “unacceptable.”

Brian Fukuda mug

“We as a county cannot ever indicate that we are not willing to work with someone,” Burke said. “We need an assurance that LADCO is an accepted member of the community that we support fully and that we don’t need any animosity indicated in the way that it was.”

Kruse responded to these concerns saying that she and other leaders “assured LADCO that we are more than willing to continue working and cooperating with them.”

O’Malley told the committee Wednesday that Kabat had “misrepresented” communications between LADCO and the county, while LADCO states it had tried to meet to discuss the issues with county leaders without success.

“We raised, discreetly, concerns about long-term relationships and that ended up being twisted,” O’Malley said. “We will continue to work with LADCO.”

LADCO disputed these claims in statements to the Tribune, and Kabat said, “We have not misrepresented anything.”

“Moving forward, LADCO is excited to work with our member businesses and partners to determine how we can best serve them now and in the future,” LADCO said in its statement.

“We’re at a point of saying, let’s just move forward,” Patti Balacek, LADCO board president and member of the EDF board, told the Tribune. “The county staff is amazing to work with and we want to work with them, and I think they will work with us.

“It’s unfortunate that the context has become a ‘LADCO versus the county,’ and misrepresentations. That didn’t need to happen and we really don’t want to continue that, we just want to move forward,” Balacek said.

No action was taken on the budget items Wednesday, as changes to the budget are typically made at a meeting later this month, though Burke suggested increasing LADCO’s fee to $17,550, the sum of all the budgeted membership dues and others indicated they thought the change was too abrupt.

Tim Kabat

Tim Kabat, president of the La Crosse Area Development Corporation.

Other officials requested more information on the issue, including the full operating budgets of all partnering organizations and previous EDF membership dues, which was not included in the budget book.

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