City of Ladysmith proposes steep tax rate hike

The City of Ladysmith has proposed a 2009 municipal budget that calls for a 20.64 percent property tax rate hike.

Under the proposal, the tax rate would increase from $5.91 per $1,000 of assessed value in 2008 to a new level of $7.13 per $1,000 of assessed value the following year.

Under the proposal, the owner of a $100,000 home in Ladysmith will pay $713 in city property taxes next year compared with $591 in city property taxes the previous year.

The spending package will be open to public comment at a budget hearing at city hall, starting at 6:45 p.m. Monday, Nov. 24.

The budget calls for spending to rise 13.79 percent from about $3.99 million in 2008 to $4.54 million in 2009. The tax levy would increase from $920,872 in 2008 to a new level of $1.1 million the following year.

The new Wal-Mart supercenter and other new development has allowed for a larger property tax levy hike. City administrator Al Christianson called it a one-time anomaly despite state limits on what municipal governments can tax.

“This is a one-time anomaly for us. I don’t see any great amount of growth on the horizon for us. Next year, we will probably be back to 2 percent again,” city administrator Al Christianson said.

He noted the City didn’t go as high as it could have with its levy. Under State law, it could have gone to $1,262,000 but is instead proposing a levy of only $1.1 million.

Ladysmith taxes are just one part of a total property tax bill, along with taxes from the Ladysmith-Hawkins School District, Rusk County and the Wisconsin Indianhead Technical College. Christianson noted the city’s auditor informed most municipal tax rates in the state are $10 per $1,000 of assessed value or more, an amount still well above what the City of Ladysmith is proposing in its 2009 budget.

Municipalities are limited by state law to either an annual levy increase of 2 percent or a percent equal to the growth of fair market value due to new construction, according to Christianson.

In its 2009 budget proposal, the city is opting for the higher number — growth of fair market value.

The impact for the city is the ability to raise more in taxes. The impact on property owners is they will pay more in city taxes. It is possible property owners may pay less in taxes under this budget proposal if their property vales decline enough to offset the proposed tax rate hike.

On the revenue side, the 2 percent state cap for the city is $939,287. Net new construction plus the increase in 2008 payable debt service adjusts the allowable levy for next year to $1,262,624. The city’s levy in 2009 is projected to increase by $191,128 including $12,000 approved by referendum for lifeguard wages. State shared revenue is down 0.08 percent from $1,299,053 to a new level of $1,298,042. State transportation aid is up 15.81 percent from $246,200 to $266,901.

Also affecting revenues, fines and forfeitures are expected to decline by 12.83 percent while public charges for services should increase by 6.4 percent. This includes special assessments, refuse sticker sales, fire district participant fees and similar charges.

General government operating costs are expected to decrease by 4.55 percent, while public safety is increasing by 6.05 percent, including $50,000 for vehicle replacement in the fire department. Public works spending is expected to increase by 7.27 percent, which includes repainting the Memorial Bridge, and other capital purchases. Leisure and conservation, which includes library and parks spending is up 3.62 percent. Public services spending is up 18.9 percent, which includes $50,000 toward the purchase of a new packer truck.

Christianson said the city is being forced to pay more in fuel and fuel surcharges, while residents are also demanding additional services like the return of lifeguards to Memorial Park Beach.

City residents voted in a referendum last week to permit the city to exceed state levy limits to fund lifeguards. The $12,000 cost of lifeguard salaries is a special amount added to the city tax levy, and has no impact on the general city levy.

“You are expecting us to provide the same services we have always provided,” Christianson said. “We have tried to trim some services, but the public does not want them trimmed.”

Christinason also noted the city’s budget proposal calls for only $40,000 in street reconstruction and the long term consequences of not keeping up are staggering. He said the city should be rebuilding one mile of its 30 miles in streets annually to keep up with normal wear and tear. He said the city may need to take a serious look at levying special assessments to help pay the cost of street surfacing and storm sewer improvements in the future, both likely to be unpopular proposals if they are made.

Christianson said youth community center spending has been cut in recent years, as has grant funding for city parks because the city cannot come up with matching funds or money for ongoing maintenance of new park improvements.

Other budget cuts include $93,700 in public works projects like engineering, guard rail, parking lots, street cleaning, street maintenance, storm sewer and tree replacement. The city also is able to use emplyee safety training programs offered by its insurance company to avoid incurring these costs itself.

Christinason called the city is operating under a structural deficit, noting city expenditures increase by about 3 percent annually due to inflation. He said that requires the city to spend about $120,000 more annually to keep up with inflation to accomplish the same level of services not including doubled blacktopping costs, higher vehicle fuel costs and increased public expectations such as the city controlling geese and deer.

In an effort to generate revenues or decrease expenditures, the city has considered the sale of property like Thut Park along the Flambeau River and the former Mount Senario College football field/tennis courts-riverfront lot east old the old wastewater treatment facility. The city also studied increasing fees, eliminating services like brush chipping and applying some economic development revenues to the 2008 budget.

Christianson said going with the fair market value levy increase and not the 2 percent levy limit increase allows the city “to preserve as many services as possible for as long as possible.”

“Public works took a hit this year, and public works can’t sustain that because maintenance can’t be put off forever,” Christianson said.

The city is not tapping its fund balance in its 2009 budget proposal.

Finance committee chairman Mike Hraban said fee increases may be small individually, but over time they add up to real money to help with the budget.

“Do we have a perfect budget? Probably not. Do we have a realistic budget to bring to the community, you know I think we do,” Hraban said.

The city hopes to hold quarterly meetings with department heads to review and plan for spending on an ongoing basis.

“We looked at basic services and the needs of the community,” Hraban said. “With all the reports I see I think 2009 and the first part of 2010 are going to be very difficult times.”