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Oak Creek approves first long-range fiscal plan

Document focuses on philosophy rather than numbers

Aug. 28, 2012

Oak Creek - City officials have approved Oak Creek's first three-year financial plan, to be used as a general outline to guide city officials in making budgets.

The plan could be called an indefinite three-year project because it will be updated by city officials annually as the financial atmosphere changes. It provides policy guidelines on the city's fund balance, capital financing, borrowing capacity, debt structure, tax-increment borrowing, land-use and growth, and maintenance of the city's credit rating.

Alderman Tom Michalski, Finance Committee member, said: "I would certainly hope that we'd be reviewing it every year and working to extend it out year after year. Certainly the closest year that we're to is going to be more exact, and we should be reviewing this every year and not every three years."

The city was originally going to create a five-year plan, but the timeline was shortened to three years due to the shifting nature of finance.

"With a three-year plan you have some accuracy," Finance Director Mark Wyss said. "The state has a biannual budget, which helps us look at what will happen. It's a time horizon that will help us make some realistic projections."

The plan is available for view on Oak Creek's website, oakcreekwi.org, by following the links to the Finance Department.

Stating intentions

The plan is more of a spending philosophy than a hard-numbers budget.

The plan states that the city shall seek to maintain its undesignated and unreserved fund balance at a minimum of 15 percent and 25 percent of total general fund revenues plus the amount of state shared revenue from the previous year.

Any annual budget surplus generated in the general fund will be distributed as follows: 30 percent to undesignated general fund balance, 30 percent to the vehicle equipment replacement fund, 30 percent to the debt service fund and 10 percent to the funding of OPEB liability.

Under the ongoing maintenance section, the plan calls for the city to move toward full funding of annual road maintenance up to $1 million per year from the annual utility aid appropriation.

Enterprise funds are to be financed with revenue debt and not general obligation debt. The plan also calls for the city to finance its capital improvement projects with 10-year general obligation notes. Tax-incremental financing districts are the exception, and will be structured based on the projected cash flow of the district.

The city also has determined that it will borrow for TIDs only when a development agreement has been made or when the history of the development clearly indicates that the development will support the debt load.

The plan calls for the city to maintain its credit rating of Aa2 and to balance land growth to assure diversity in the tax base.

A professional message

The plan was approved by the Common Council on Aug. 22.

Wyss said that the plan would change the way the city presents itself financially, adding: "The bottom line is that having a proper financial plan does a number of things. One, it certainly shows the financial community that the city has a plan and is preparing for fiscal realities. Two, it shows the ratings agencies that we're professionally managed and that we're proactive. It also tells people who are going to buy our debt further background information about our community and they will see that we're a well-run, professionally managed community."

Check it out

View the financial plan yourself by going to OakCreekWI.org, clicking on the "Departments" drop-down menu and selecting "Finance Department."

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