Evansville Budget Corner: City Reaches Levy Limits

In the memo of Jennifer Petruzello and Eric Jepperson, Finance Director, to the Mayor and Evansville Common council on Thursday, she notes that Evansville has reached the limit--the levy limit from the Wisconsin Expenditure Restraint Program. Also, there is the Property Tax Levy Limit that has been reached. Here is the text of the memo:

"The State of Wisconsin Expenditure Restraint Program is a program where municipalities receive revenue from the state for voluntarily controlling the level of their general fund operating expenses. Each year, operating expenses can increase by no more than the cost of living and a portion of the growth in new construction (60% of the growth in net new construction, capped at 2%). Evansville is continuing to grow at a rapid rate, and the 2007 limit will be equal to the cost of living plus the maximum 2% allowed for new growth. Ken Schuck, Section Chief, Local Government Services, State Department of Revenue, has estimated the City's Expenditure Restraint limit will be approximately 5.4%. The proposed budget currently includes a general fund operating expense increase of 5.38%, which is $420.80 below the expenditure restraint limit."

"For the 2007 Budget, the City tax levy will again be held to a Property Tax Levy Limit by the State of Wisconsin. This limit is equal to the ratio of the increase in equalized value from January 1,2005 to January 1, 2006, from new construction divided by the total equalized value as of January 1, 2006. The 2007 Property Tax Levy limit will be 6.11% Therefore, the City may levy no more than $1,953,018 for the purposes of general operations, EMS, Library, Cemetery, Debt Service and Capital projects. The proposed budget includes the maximum levy allowable."

In summary, in the deliberations leading to the final approval to come in weeks ahead, anything that one wishes to be added to the budget will require a cut in something else. This is the ultimate zero sum game. When one has only $420.80 to work with on a budget of $1,953,018, the party has ended.

Some pundits have speculated that down the line, if capital projects do not achieve the collateral benefits that they were designed to achieve, and in addition residential valuation would fall as the housing market cools further and is reflected in flat assessment valuation, the prospects for money available to the city for economic development in future years would be very limited indeed. Stay tuned as this story unfolds. It is unclear from the capital plan for the next five years, which projects are in fact pipe dreams and which is reality.

Click on the audioblogger icon to listen in as Jennifer provides the overview.