Understanding Washington County's Budget Situation

The County has had to make a lot of adjustments to our budget over the last few years.  I am going to attempt to explain why.

First, let's look at the County's situation from a big-picture perspective:

What we have:

• Reasonably healthy financial reserves (savings account), which are at about $12-$15 million at last check.
• A lot of land and buildings.
• Very low debt.  In fact, of the 72 counties in Wisconsin, we have one of the lowest debt rates when compared to population.
• Low employee count.  At about 850 employees, we have one of the lowest employee to population ratios of any county in Wisconsin.

Where we fall short:

• Annual budget---each year, due to levy limits, we experience about a $2 million increase in our recurring annual expenses while our revenues only increase by about $300,000.  This gives us a renewing $1.7 million dollar structural budget deficit.  Each year, we have to start our budget for the upcoming year by looking at last year's budget and removing about $1.7 million in expenses.  These numbers vary a bit, year to year, but they give us a good approximation of what we are dealing with.

I had one former County Board Supervisor tell me that we should not make any adjustments, but instead just fund those programs we'd like to adjust out of our reserves.  That's what the State of Illinois decided to do about 10 years ago, and it's why they are in fiscal peril now.  Let's look at what would happen if the County took that approach, starting with 2019 (since 2018's budget is already set):

• 2019-If we assume the best case scenario, we have $15 million in reserves.  We fund $1.7 million dollars in programs out of our reserves, reducing our reserves to $13.3 million.
• 2020-Since we did not deal with 2019's budget deficit, we start 2020's budget with a $1.7 million dollar deficit from 2019 (these are recurring annual expenses, after all) and add in the new expense increase of another $1.7 million.  we now have a total of $3.4 million that we need to fund out of our reserves.  Our $13.3 million by the end of 2020 is down to $9.9 million.
• 2021-Since we did not deal with 2019's or 2020's budget deficits, we start 2021's budget with a $3.4 million dollar deficit and add in the expense increase of another $1.7 million.  We now have a total of $5.1 million that we need to fund out of our reserves.  Our $9.9 million by the end of 2021 is down to $4.8 million.
• 2022-Since we did not deal with 2019's, 2020's, or 2021's budget deficits, we start 2020's budget with a $5.1 million dollar deficit and add in the expense increase of another $1.7 million.  We now have a total of $6.8 million that we need to fund out of our reserves.  Our $4.8 million by the end of 2022 is down to a negative $2 million, meaning we now need to borrow $2 million dollars.
• 2023-Since we did not deal with 2019's, 2020's, 2021's, or 2022's budget deficits, we start 2023's budget with a $6.8 million dollar deficit and add in the expense increase of another $1.7 million.  We now have a total of $8.5 million that we need to fund out of our reserves.  Since we have no reserves left, we need to borrow all $8.5 million, in addition to the $2 million we borrowed in 2022.  We have now increased the County debt by $10.5 million.

So in 5 years, we have burned through $15 million in reserve funds and have now borrowed $10.5 million.  If we try to go a sixth year in this approach, our new borrowing increases by $10.2 million to a total of $20.7 million borrowed over 2022-2024.  The problem just keeps getting worse until we deal with it. 

I can easily see how unsustainable this is, and I am sure you can too.  At some point we have to make budget adjustments or our situation just keeps getting worse and worse year by year.  Delaying those adjustments only makes our situation more precarious. 

I ran on a platform of fiscal responsibility, and that means balancing our budget each year.  We balanced our budget in 2017 and 2018, and need to continue making the tough choices we have been making.

During the first few years of levy limits, finding adjustments to make was very easy.  Over the years, the budget adjustments have become less easy each year.  This year, we are now looking at agencies like the Economic Development of Washington County (EDWC), a gold-star partner that has brought nearly 1,500 jobs to Washington County over the last few years.  We don't want to be making adjustments to their budget, because they are such a great partner for us and they have accomplished so much.  Unfortunately, we are at the point where we have to start looking at agencies like the EDWC.  In their case, they are showcasing their professionalism by developing a solution that will ensure that they remain sustainable and viable while completely removing themselves from the County's tax levy.

We have other programs that we need to make similar transitions with.  4-H is one of them.  4-H is an organization that is very personal to me, as my kids have both been in 4H for quite a few years.  As important as 4-H is to me, I understand the need to make adjustments.  I was at our County Administrator's presentation to 4-H, and I know they saw the need to make adjustments.  Like EDWC, 4-H appears to be interested in developing a plan over the next few year to make themselves much more self-sustainable and to present that plan to the County Board in 2 or 3 years.

I know that many of the other programs we are looking at are just as important to others in the community as 4-H is to me.  You may have a particular program that is important to you, and wish that the county would continue to fund it at the current level.  I  don't want to cut any of these programs off cold-turkey, or set any of them up to fail.  I also believe that many, if not most, of the other County Board Supervisors feel the same way.  Hopefully each program will work to find ways in which they can become much more self-sustainable.

Renewing My United Way Committment

Last year (2017) I made a commitment to give 1 month of my County Board Supervisor salary to the United Way. Yesterday, I renewed that commitment for 2018. I stopped in at the County's Human Resources office and completed my pledge card, to have monthly deductions equal to 1 month of my salary, with donations to be split between the Heroine Task Force, Elevate, Family Promise, and NAMI-Washington County. I didn't get elected to hoard money for myself, but to serve the community, and returning a portion of my salary to the community furthers that service.

Important Quasi-Governmental Agency Committee Meeting (Postponed)

On Monday, we will be having an important meeting of the Quasi-Governmental Agency Committee.  This committee was formed by the Executive Committee with the goal of helping several agencies transition off of the County Tax Levy.  On Monday, the EDWC (Economic Development Corporation of Washington County) will be presenting a plan they created to remove themselves from the tax levy.

I have always had a tremendous respect for the EDWC and Christian Tscheschlok.  They have brought 2,222 and more than $146 million in wages jobs to Washington County.  They have always been a consummate partner with the County, and I look forward to seeing the solution they have come up with.  The fact that they arrived at their own solution to this issue, and are presenting it to us, is a sign of their professionalism and commitment to the best interests of our County.

The EDWC receives about $97,000 in support from the County's tax levy.


Update: This afternoon's meeting has been postponed, as a couple of Supervisors have schedule conflicts.

Say NO to Janesville Politicians Representing West Bend

The race to replace Bob Ganon for the 58th Assembly District is heating up.  Local Candidates Tiffany Koehler, Steve Stanek, and Rick Gundrum, all of whom are very good, have already declared.  I have worked with Rick a lot over the last year, and also have come to know Tiffany over the last year.  I met Steve last week and was impressed.  Any of the 3 of them would represent our district well.

The Republican Party will also have a 4th candidate, a parachute candidate (see below if you are not sure what a parachute candidate is)  from Janesville whose name I won't even mention but who bears the initials SZ. 

I don't support parachute candidates, and I won't support this individual at all. 

I encourage everyone to look at the good local candidates, Stanek, Gundrum, and Koehler, before voting for an out-of-towner. I have not yet decided which of them I will vote for, but I will support all of them.


Parachute Candidate---https://en.wikipedia.org/wiki/Parachute_candidate "also known as a “carpetbagger” in the United States, is a pejorative term[1] for an election candidate who does not live in and has little connection to the area he or she is running to represent. The allegation is thus that the candidate is being “parachuted in” for the job..."

Heroin Lawsuit

Last week Tuesday, at our annual budget meeting, we also passed a resolution authorizing the County to sue several pharmaceutical companies for improper marketing.  In deciding to support this, there were some key factors I considered:

• 5 out of 6 heroin addicts started with prescription opioid pain killers.
• More then 98% of all prescribed opioids are not prescribed by pain specialists, but instead by general care doctors (the lawsuit contends that the pharmaceutical companies, through a shadow marketing campaign, convinced general practitioners that opioid were not addictive and were good long-term pain relief solutions).
• Many pharmaceutical companies have paid fines to the government for improper marketing, as well as failures to report cases where opioids were over-prescribed.  The pharmaceutical companies did not in any way protest or challenge the fines, in essence admitting guilt.

I introduced 2 amendments, one which sought to make sure our lawsuit pursued practice reform (make pharmaceutical companies stop mis-marketing opioid drugs) and one that stated our intent to use some of the proceeds towards heroin prevention and treatment efforts.

I know Supervisor Kelling had some concerns about this lawsuit, and I share some of those concerns.  I know he is an avid supporter of efforts to stop the heroin epidemic, and supports the great work that Elevate and the Washington County Heroin Task Force have done.

Anytime there is any type of class action lawsuit, and this lawsuit in my mind would be in the realm of class action law suits, I always have a concern that there might be lawyers who are drumming up work for themselves where there may not be a legitimate claim.  In this case, I feel reasonably secure in believing that the pharmaceutical companies have mis-marketed opioids, and that mis-marketing may be a significant contributor to the current opioid crisis.

I was asked if this lawsuit was like suing the gun manufacturer for make guns.  In my mind, it would be more like suing the gun manufacturer for dishonestly telling gun retailers that someone could get shot in the face with a .22 and be fine (I know that's not a perfect analogy, but you get what I mean).  It's not about making Opioids, it's about deliberately misinforming doctors.

County Property Tax Rate Goes Down Again

Last week Tuesday, the County Board voted unanimously on a budget that reduces the County's portion of the 2018 property tax rates.  The actual rate decrease is about $.08 ($.0875 to be precise) per thousand dollars of home value.  This represents a 3.4% reduction in the tax rate.

This means that a home worth $200,000 will see a tax decrease of about $17.50 from the county for 2018.  That's pretty good considering that the county property tax is only 15% of your property tax bill.  It the West Bend School Board and the City of West Bend follow suit, your property taxes will see a nice decrease.