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City of Oak Creek weaning itself from reserve fund use

2013 budget proposal now under review

Oct. 17, 2012

With a frozen tax levy, Oak Creek administrators have to get creative to fund city operations without significantly raising taxes.

Under the proposed 2013 municipal budget, which still awaits public comment and Common Council approval, taxes benefiting the city for a home valued at $183,000 are set to rise by $36 to $1,188 yearly.

The city hasn't increased its tax levy in four years. To compensate for that, it has used money in its fund balance to pay for operations during the past three budget years. The 2013 budget as proposed would not use these reserve dollars in that way, although a $200,000 payment to compensate represented police and fire employees for loss of insurance after age 65 will be taken from the reserves.

Managing costs

With expenses such as those for gasoline, asphalt and utilities on the rise, the city has to make up the difference.

"Just like no private business could operate in that environment without making changes, we at the public sector can't survive in that environment without making adjustments," City Administrator Gerald Peterson said.

Nearly three-quarters of Oak Creek's general fund costs relate to compensating employees. The city will be cutting and rearranging its staff to mitigate costs derived from a negotiated 3 percent pay raise to fire and police services.

The city proposes eliminating the parks director position, which will result in a savings of $115,000 annually. Two positions in the street department would be moved to the forestry department and park maintenance department. This move is the result of Oak Creek contracting its garbage services out. The employees will still have to maintain commercial licenses for plowing.

The contracting of garbage services will save Oak Creek $300,000 in needed vehicle maintenance this year. The change in contract would not result in an increased utility fee.

The city also has made changes to its healthcare plan by adding a deductible. This year has seen the first-ever deductible for city employees: $2,000 for a family, $1,500 for employee and a spouse, and $1,000 for a single person. The deductible is slated to increase by $500 in the 2013 budget, with an option for employees to participate in wellness plans to mitigate the increase.

"Some of the changes that came through Madison, while they challenge us, they give us opportunities," Finance Director Mark Wyss said. "For the employees, some of it could be bumpy because it's hard to see where it's headed. We're making decisions now that seem tough but will hopefully give us future benefits."

Alternate financing

The city is looking to maximize the potential of other funding sources as well.

Charges to the tax-incremental financing districts will help offset costs without a dramatic tax increase, and the city will receive some state aid, though less than in the past.

The State Budget Repair Bill of 2011 has restricted how much money cities like Oak Creek receive from the state to an amount based on growth. Oak Creek will see an increase in state funds of 0.9 percent, or $177,745. The increase is a drop in the bucket for the city's $23 million annual budget, but it is more than a city with no growth will receive.

While Oak Creek has its eyes on capital improvement projects such as Drexel Town Square and the development of the lakefront, both projects slated to cost an estimated $47 million combined, taxpayers will not feel the burden. The two capital improvement projects will be paid solely by We Energies due to the energy company's agreement to pay the city $3 million yearly for the installation of two turbines on the project site.

The Committee of the Whole is in the process of reviewing the budget and hopes to publicize the revised version Nov. 12.

Budget Breakdown

20122013change
Overall Budget$24,033,945$23,707,585-1.4%
Tax Levy$18,707,370$19,087,115+.9%
Taxes on median-priced home$1,152$1,188$36
Tax rate per $1,000 of assessed value$6.31$6.51$0.21
General Fund Balance$7,084,152$7,184,319+1.4%

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