On the back of property values, Village of Mount Horeb budget looks strong

It’s been a rough year on nearly every front. But the Village of Mount Horeb’s budget, which will soon go before the full board for a vote, seems to have made it through 2020 mostly unscathed. In fact, local taxes are expected to remain flat, or possibly even decrease slightly, although the recently approved Dane County Budget still needs to be factored into projections before those numbers are revealed. 

“It seems like with the budget process, we get going really well every year … and then we get something thrown at us, like, oh, a pandemic,” said village administrator Nic Owen last week. “Though, with the pandemic I felt like our departments really came together. They helped each other when needed. When there were requests, there was a realistic understanding that we have no idea what 2021 is going to bring.”

“Fortunately for us, this year is good,” Owen continued. “A lot of our income is based on property taxes, and property values have remained pretty stable, so we’re pretty well off from that end.”

“Overall, the mill rate, the levy, is going to stay pretty flat,” he added. “We had some good value growth. Debt went down a lot. So we’re pretty fortunate.”

Owen was speaking to the village board just moments before it voted to set the virtual 2021 budget presentation and public hearing, which will also include information about the 2021-2025 Capital Improvement Plan, for Wednesday, November 18 at 6 p.m.

The proposed budget includes a 2 percent wage increase for most local government employees. It also accounts for healthcare costs that will again rise significantly, this time by 8 percent. 

Assuming a two percent annual assesed value increase, the local mill rate is expected to stay relatively flat through 2025, according to Owen’s calculations.

While most aspects of the budget are nearing completion, the village was still waiting this week for updated numbers from Dane County before bringing the most up-to-date version of the proposal to the board next week. (On Monday of this week, the Dane County Board approved The operating budget totals $615 million operating budget and an  $80.7 million capital budget.)

As things stand right now, the Mount Horeb General Fund, which includes the operating budget for most village departments, includes 1.76 percent more in expenditures than in 2020. It also includes 2.29 percent more in levy allocation. Utility payment-in-lieu-of-taxes (PILOT) payments are up $9,000 or 2 percent. State transportation aid payments are up $33,700, or 7 percent. Total intergovernmental revenue, not including transportation aid, is flat. 

The total general levy is $5,377,011, including the debt levy. The total levy amount will be added to the Tax Increment Financing (TID) increment to determine the total final levy. Not including TID increment calculations, the general levy is set to decrease by 1.84 percent. This represents a decrease of $64 on a $250,000 home for the village portion of a citizen’s tax bill.

The village’s licenses and permit revenues are projected to be flat for 2021. The fire budget increased by $27,593 or 5.48 percent. The only additional position budgeted for the village in 2021 is hiring a new patrol officer to replace an officer promoted to the Lieutenant position that was created in the 2020 budget. Owen said promoting from within the department is good for morale. 

“We are budgeting to draw down fund reserves by approximately $97,700, which will leave the general fund unassigned and unrestricted reserve balance at $1,152,182, or 22.62 percent, of expenditures,” Owen wrote in a budget memo. “This amount falls within the approved fund balance policy range of 20 percent – 25 percent. Budgeted reserves for 2022 - 2023 show reserves remaining above 20 percent falling just under in 2024-2025. We are not concerned about this as historically departments are conservative and we come in under expenditures each year.”

Mount Horeb, like all municipalities in the State of Wisconsin, is required to borrow no more than 5 percent of its equalized assessed value within the community, but the limit applies only to general obligation debt. The estimated 2021 equalized value is $846,606,453, which means that the village can legally borrow $42,330,327. The village will be at 56.25 percent of its debt limit in 2021, down from 58.46 percent in 2020. According to Owen, the debt limit will further decrease each year, to 41.07 percent of its debt limit in 2025. Total general debt payments in 2021 are $2,924,278. 

In addition to the general budget, there are also several key capital expenditures that have been recommended by the village’s Finance and Personnel Committee. They include $35,000 for Payroll/Accounts Payable Software;  $10,000 for Municipal Building Maintenance; $31,000 for a new CSO Vehicle; $5,500 for Equipment for a 2020 Squad: $6,000 for AED Replacements; $39,000 for a Body/Squad Camera System; $7,000 for Police Building Improvements: $690,000 for Street Reconstruction Projects; $125,000 for Crack filling and Seal Coating; $200,000 to Replace a 2001 Case Loader and Plow;  $80,000 for a JD 2350 Tractor and Rotary Mower: $85,000 to Replace a 2012 GMC 3500 Dump Truck; $8,100 for Emerald Ash Borer Treatment: $6,000 for the Veterans Memorial Security Camera and Lighting System: $20,000 for Community Center Renovations: $135,000 for Aquatic Center Improvements and $4,650 for Library Renovations. 

Total non-utility capital projects in 2021 are set at $1,487,250. Budgeted revenues include $55,000 for the sale of village equipment, $1,500,000 in debt (2021 & 2022 street projects), and a levy of $270,000. The 2021 Capital Projects Levy is flat with 2020. 

In his message to the village board last week, Owen said 2020 “has been unlike any year any of us have experienced.”

“In the face of this adversity, our village employees have come together to protect each other as well as our citizens while continuing to provide the quality services they expect,” he wrote. “With COVID we were not sure what to expect for our 2021 budget and the department heads all took this into account when developing their budget requests and submitted conservative, realistic requests.”

The budget development process began back in June with department heads meeting with their respective committees to review funding priorities for the upcoming year. Department heads then met with Owen and the village’s finance director to discuss their budget recommendations. They later met with the Finance & Personnel Committee to review their initial budget requests and capital improvement plans. The Finance & Personnel Committee met throughout the month of October “to formulate a budget that protects the long-term interests of all Village taxpayers by keeping tax rates low, maintaining our high-quality service levels, maintaining healthy fund balances, accomplishing Village set goals, and managing our general obligation debt over the next five years,” according to Owen.

“By looking at the long-term financial effects of today’s budgeting decisions, board members are able to analyze whether their budget decisions align with the vision and goals of the village,” Owen said. “Members of the Finance & Personnel Committee and the village board accomplish this objective through the use of various budget-related methodologies that show revenues and expenditures five years into the future. By analyzing needs over the next five years and comparing them with realistic revenue expectations, we are able to determine if the decisions we make in 2021 are sustainable.”

While Owen said in a seperate interview with the Mail that 2021 “doesn’t look too bad,” he admitted there are many unknown factors just beyond the horizon. 

“[Last year] we still had some growth and since Wisconsin municipalities are so heavily dependent on property taxes, and the value for properties were established on January 1 2020 everything is pretty steady,” he said. “State aid for the most part is remaining steady as well so I don’t think 2021 will be bad.”

“If this continues into 2021 and beyond I could see things getting trickier for the 2022 budget,” he cautioned. “[But] for now I think we will be okay.”

“I just want to thank [trustees] Beth [Hill] and Ryan [Czyzewski] for being on the finance committee,” stated trustee Cathy Scott at the meeting last week. “It was a pleasure working with staff and the committee to come up with this budget.”

“It makes our jobs easier,” added village president Randy Littel. 

Public comments on the budget are welcome at the public hearing and anyone with questions or comments are encouraged to contact the Village Administrator prior to the public hearing. You can reach the Village Administrator at 437-9409 or nic.owen@mounthorebwi.info.