Walworth County Government Today: Budget study reveals discouraging news about property values
The Walworth County Board held a public hearing on the county's proposed 2016 budget on the evening of Oct. 29. The hearing, which is required by state law, has evolved over the years. When I first started here, the meeting was called to order and the floor was immediately opened up for public comment. Today the hearing begins with a 30-minute overview of the spending plan.
There was nothing wrong with the old way of conducting the hearing, from a legal perspective, but I prefer the current format. For starters, the presentation tends to pre-empt a number of questions that were often asked by citizens who just wanted basic information about the budget, like how much taxes would be increasing. I also have seen it prompt questions when those in attendance want to learn more about a particular topic that has been presented. In addition to educating the public, the presentation provides a refresher for supervisors. They have been immersed in the budget details for the past eight weeks and the presentation allows them to step back and take one last look at the big picture.
This year Jessica Conley, the county's comptroller, narrated an excellent PowerPoint presentation. Even though I prepared the first draft of the budget, I learned a few things from some of the research conducted by our finance department on two important topics.
• Assessed value. I have been writing about this topic for some time. Assessed equalized value is the value of all taxable property in the county. I have expressed concern in the past that property values have been slow to recover in our county. At the time of the 2008 banking crisis, the county's equalized value stood at $15.6 billion. Today that figure is $13.4 billion. That much I knew, but Jessica mined the data further and the results did not make me feel any better. The amount by which our equalized value increased from 2014 to 2015, a mere 0.71 percent, was the 16th smallest increase among the 72 Wisconsin counties. Twenty-one counties have recovered fully from the great recession, in terms of equalized value. Only two counties have had a slower recovery than ours.
Equalized value does not impact the amount of taxes government collects; spending determines that. Equalized values are relevant in at least two ways, however. First, it is a proxy for home prices and economic activity in the county. Equalized value increases because of new construction and the appreciation of existing real estate. Since 2008, $2.2 billion has been erased from the balance sheets of county home and business owners. Paying property taxes is never fun, but it is a little more palatable when taxpayers see the value of their property increase. This has not been the case here in recent years, which is one reason why the county has been trying to hold the line on taxes. From 2010 to 2015 (the levy supporting the 2016 budget), our tax levy has increased by just 1.24 percent, far below the increase in the consumer price index during that time. Secondly, equalized value determines who pays taxes and this is becoming an issue in the county. The movement in equalized value has varied considerably among the towns and municipalities in Walworth County. All of this can be confusing for taxpayers. Our 2014 tax levy, used to support the 2015 budget, rose less than one-half of 1 percent. Despite this fact, I received calls from taxpayers wondering why the county portion of their bill had increased by 5 percent or more. Increases that these taxpayers experienced were primarily due to equalized value. In many cases the “fair market value” of their homes increased, or even stayed the same since 2009. Because other property values dropped, these taxpayers were paying a larger share of the levy. The assessed value of your home is determined by your local assessor and equalized by the Wisconsin Department of Revenue.
• Debt service. I have been an advocate of paying off debt as quickly as possible. There are a number of good reasons to avoid debt, but I had forgotten how much our prepayments of bonds actually have saved. Some of the bonds that we sold to fund past projects, like building a new nursing home and school, had a prepayment or “call” option; that is, after a certain period of time, we are allowed to repay our bondholders principal and accrued interest and retire the debt. We have been doing this at every available opportunity. By “burning” these mortgages early, Jessica reported that we have saved $700,000 over the past seven years. Bonds sold to finance construction of Lakeland School in 2007 are scheduled to mature in 2027, but we have options that will permit us to call them as early as 2017 and 2018. Paying off that debt early would save an additional $2.4 million in interest.
If you're interested in learning how your tax money will be spent next year, I would encourage you to check out Jessica's presentation on the county's website at www.co.walworth.wi.us. It is presented in plain English so you don't have to be an accountant to understand it.
If you have any concerns, feel free to call me, or better yet, contact your county board supervisor. Supervisors still have the ability to modify the plan through amendments. The final budget is scheduled for adoption on the evening of Tuesday, Nov. 10. That meeting begins at 6 p.m.
Dave Bretl is the Walworth County administrator. Contact him at 262-741-4357 or visit www.co.walworth.wi.us.