La Crosse County Administrator Steve O’Malley presented his 16th budget to members of the La Crosse County Board on Monday evening, and in many ways it fit in with spending plans he’s offered in previous years.
The bottom line under the 500-plus-page 2019 budget is that the total spending of just over $156 million is down almost 3.6 percent, while the total tax levy is up by almost 1.8 percent, rising from $34.3 million to just under $35 million.
With the county’s total assessed property value rising 1.73 percent because of new construction, the tax rate will drop from $3.75 per $1,000 in equalized property value to $3.68, a drop of 1.9 percent.
“Most taxpayers will see very little change in their county property taxes next year,” O’Malley said. “It’s a very conservative budget that we’re bringing in for 2019.”
The biggest change in the county budget is O’Malley’s proposal for paying for road projects. For the first time Monday, he presented board members with a five-year plan to reach the $5 million per year set as a target to catch up on a backlog of road work while eliminating long-term debt as the means to pay for it.
Getting that $5 million per year and cutting long-term borrowing are essentially the goals the county is shooting for in this fall’s advisory referendum on transportation funding.
What should La Crosse County do to pay for its growing list of transportation projects?
The referendum asks voters, first, whether they support the county spending $5 million per year to address a list of identified road projects that totals $101 million. Then voters whether they support three methods of reaching that $5 million: a premier area resort area tax of 0.5 percent to be charged at businesses designated as tourism related; a vehicle registration fee (“wheel tax”) of $56 per car and light truck; and an increase of about 15 percent in county property tax.
Now, under state levy limits, the county couldn’t increase its property taxes by 15 percent for general fund spending. But there is no limit on levies for debt service, so the county could borrow $5 million every year, pay it off that same year, incur minimal interest costs and get around the state’s levy limits. That’s the idea behind the final transportation funding question on the ballot.
The plan proposed by O’Malley is similar to that, but instead of paying the debt off every year, the county would take three years to repay it, and the county would gradually work its way up to the $5 million mark over five years.
Under this plan, 10-year notes for road work would be done after 2020, and O’Malley said it has to be that way.
The county is getting to the point where the $2.7 million it borrows every year is less than the annual payment on money it already borrowed.
It helps a lot that the interest costs are a lot less for a three-year loan than a 10-year loan. On a $1 million loan, interest for three years is $43,000 compared with $141,000 for 10, O’Malley said.
O’Malley’s plan, which has no effect on the tax bill property owners will get in December, calls for a 10-year loan of $1.45 million and a three-year loan of $1 million in 2019. With another $200,000 from either new levy or reserves, that gives the highway department about $2.65 million in county funding to work with next year. That total is about average for recent years.
Repayment of those loans wouldn’t start until 2020, and that added debt service would increase property taxes by about 1 percent. For 2020, O’Malley projected a 3.6 percent increase in the levy, but he also predicts a drop in the tax rate from $3.68 to $3.66.
In 2020, the county could cut 10-year borrowing to $1 million and increase three-year borrowing to $2 million, adding $200,000 from new levy or reserves to bring the total capital road funding to $3.2 million that year. This would be the last year of 10-year notes under O’Malley’s plan.
In 2021, three-year borrowing would increase to $3 million, with $700,000 in new levy or reserves for $3.7 million for roads. The next two years would see the three-year borrowing increase by $1 million each year, bringing it to $5 million per year in 2023.
The impact of the higher short-term borrowing levels will be partially offset because the early issues of previous long-term debt will be coming off the books.
O’Malley emphasized that county board members will revisit the borrowing level each year, so if other funding sources outside of property taxes become available the loans could be trimmed. For example, the referendum results might help get the premier resort area tax get state approval or indicate people have strong support for a county wheel tax.
And while it wouldn’t get the county to the targeted $5 million per year on its own, Gov. Scott Walker recently proposed increasing the state’s general transportation aids to 30 percent of local project costs — it’s now at 17 percent.
But it’s unclear whether Walker can get the state Legislature to approve that plan or whether he will even be governor next year.
For O’Malley, getting out of the long-term debt spiral is too important to not start addressing it now. “I believe it would be irresponsible for us to wait to see the results of the referendum or the results of the election,” he said.
There was no debate about O’Malley’s road funding proposal at Monday’s meeting, but county board members will have a chance to address it in committee meetings and full board meetings before the budget gets final approval Nov. 13.