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THE CITY REBORN FROM THE ASHES OF AMERICA'S MOST DISASTROUS FOREST FIRE
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County Board Chair Criticized for Budget Information Request

Issue Date: September 14, 2016

County Board Chair Mark Anderson came in for some heavy criticism from Supervisor Don Pazynski at the start of the Finance Committee meeting on Monday, Sept. 12. During time for public comment, Pazynski chastised Anderson for his handling of the administator's budget policy and subsequent report at the August County Board meeting, and for the contents and timing of a letter Anderson had addressed to Administrator Shawn Henessee on Thursday, Sept. 8.

Action at the meeting included a recommendation that the county's half a percent sales tax be continued indefinitely, and that will come up for a vote at the monthly County Board meeting on Tuesday, Sept. 20. Anderson has expressed opposition to taking that action, which he said ties the hands of future county boards and goes against the decision made by County Board when the sales tax was adopted in 2001.

Anderson also has been adamant that the county borrowing to finance capital expenditures including the annual highway maintenance projects has to stop. The county's long term debt currently totals nearly $40 million, with more borrowing still to come.

County Board Chair Anderson is an ex officio member of all committees, but is not a voting member. He was on hand for the Finance Committee's Sept. 12 meeting, and had been there for the Aug. 15 meeting as well. In August also there had been a somewhat harsh exchange of opinions.

In the Sept. 8 letter, Anderson formally asked Henessee to prepare some specific information for the County Board meeting on Tuesday, Sept. 20.

"Historically, Marinette County budgeted for road reconstruction, facility repairs, and upgrades beyond general maintenance," Anderson wrote. "Revenue for these expenditures came from the operations tax levy. It appears in the 2011 budget year, the operating levy funds began to reduce to the point that now all funding for these line items are 100 percent debt service dollars."

Anderson said his question is, "...using Marinette County's historical budgeting practice of funding these items, what is the dollar amount needed to meet these needs without additional borrowing? For historical reference I would suggest you use the 2011 budget year expenditures and revenues as a depiction of past practice,"

He continued, "I would also like a detailed report, expenditures and revenues, showing budget trends of departments for each year beginning in 2011 through 2015. Include in the report, some perspective as to the expenditure/revenue fluctuations."

Anderson asked to have the information available for discussion at the Sept. 20 County Board meeting and documents included with the release of the agenda packet. The agenda is generally distributed on the Thursday prior to the board meeting, which would be on Thursday, Sept. 15.

In his public comment statements to the Finance Committee, Pazynski objected to giving Henessee just five working days to assemble the requested information, but mainly objected to Anderson acting independently, without going through the committee structure.

Henessee became County Administrator in May of 2015 and was not involved with budgeting for the years in the requested reports, nor was he responsible for most of the borrowing that has put the county nearly $40 million in debt in the last several years without financing any really major projects.

In a prepared statement, Pazynski declared, "I am becoming increasingly concerned about what I perceive to be a growing trend whereby individual actions are usurping our committee structure of county government. A supervisor's authority is collective, not individual."

He quoted Wisconsin Counties Association statements that, "In accordance with our committee structure, individual county board supervisors have no management or leadership role outside of committees and commissions. Their authority is collective, as a member of the board."

Pazynski said specific activities that conflicted with this policy are, "Number one, the manner in which a past county board action was rescinded at our last county board meeting. The administrator's report was the result of his observations combined with prior committee input. The subsequent board agenda item and resulting motion to rescind was not the result of committee input."

At its August meeting the board had rescinded approval of the administrator's July budget message, which paved the way for them to act in September on a new budget message and report Henessee had prepared in response to a directive in July and sent out via e-mail to board members less than an hour before the meeting was to begin and supervisors did not have a chance to review it. He told the board at the time that he had not really understood until Friday afternoon just what Anderson wanted, and had spent the weekend working on it.

Anderson has repeatedly said he wants to know exactly what the structural deficit is, and what it would take to get the county budget back to the point where operations and maintenance, except for unusually large projects, are again paid for without borrowing, which was done until 2010.

The new plan from Henessee provides for eliminating all debt by 2029 while maintaining the Marinette County road system and the Highway Department. However, it includes extending the sales tax indefinitely and using $10 million of the $19 million debt retirement fund that was established with funds from the sale of the former Pine View Mental health Center and Bay Area Medical Center. It appears input will be sought from bond counsel on what effect, if any, that would have on the county's credit rating. The plan also calls for a $100,000 reduction each year in the allocation for snowplowing of county roads.

That set of financial recommendations and Anderson's requests had come to the board without going through the Finance Committee.

Finance Committee members present for the Sept. 12 meeting in addition to Pazynski were supervisors Don Phillips, Janice Porfilio and Chair Vilas Schroeder, who had been Anderson's immediate predecessor as County Board chair. Supervisors Kathy Just was absent.

Continuing with his statement, Pazynski declared, "A second issue is Mr. Anderson's correspondence dated Sept. 8, addressed to Administrator Henessee. Again we have individual action bypassing committee input. To continue such activity invites disfunction and chaos. Imagine if you will 30 individual supervisors going in 30 different tangents - micromanagement in its worst form!"

"Additionally, Mr. Anderson's requested time frame is unrealistic, with only five working days available to meet his demands. His intention to have Mr. Henessee's response distributed to all supervisors as part of the forthcoming agenda once again bypasses committee input - contributing to a disorganized management approach," Pazynski continued.

"For Mr. Henessee to respond to Mr. Anderson's correspondence would be akin to looking backwards - not forward to the future. The short requested time frame does not really provide sufficient data to determine trends."

Pazynski said that an item later on the day's agenda would provide opportunity for further discussion regarding both the topic of individual activities and the subject of debt, "which appears to be the catalyst for such individual activity," and concluded, "To continue such activity also contributes to a false sense of crisis and makes one wonder if ulterior motives are at play."

No response is permitted to public comments and the committee moved on to the regular agenda with a report from Information Technology Director Kevin Solway on new security controls for building access and new cameras for the jail, including cameras by which jail inmates appear remotely in court. Solway said he has been working closely with Jail Administrator Bob Majewski.

In August the Finance Committee had heard the annual audit report, which included recommendations for some changes in handling funds by the County Treasurer and County Coroner. The recommendations were made after the 2013 audit and no changes had been made by the time of the just completed audit report.

"Currently the County Coroner has two notebooks to record collections received for death certificates and cremation permits, and the entries did agree with every deposit made with the county treasurer in 2013," the report stated. Further it was noted that the county treasurer does not provide an invoice to funeral homes when billing for a certificate or permit, and records are not maintained anywhere as the county is kept with the corner individually. The audit report included recommendations to increase control over funds collected for County Coroner service, they begin receipting all amounts collected in a pre-numbered receipt book, and when depositing funds with the county treasurer attach a copy of the receipt issued.

The auditor also recommended that the county consider creating a centralized billing and receipting system by which the coroner would bill for services and on the coroner's invoice it would say to pay the county treasurer directly. Funeral homes would play the County Treasurer directly. This, the audit management letter stated, would strengthen internal controls and allow for recording coroner's transactions in the existing county billing and receipting system.

The report also recommended a change in the way tax overpayment refunds are handled through the Treasurer's office.

Finance Director Pat Kass asked the committee to formally recommend that the coroner and treasurer work with his department for receipting, billing and refunding tax overpayments and present procedures they worked to the Finance Committee for approval at a future meeting.

Supervisor Vilas Schroeder said in most cases the coroner does not even bill the funeral homes, they just know what the bill will be and pay it. "It was a pretty loose system," he said.

Phillips said from the funeral home standpoint, and that of the coroner, he often does not know if there will be a cremation until the funeral home sends him the information.

"Because we've had a little resistance, I'd like the committee to express support," Kass said.

Pazynski then moved to recommend that the County Coroner and Treasurer work with the Finance Department for receipting, billing and refunding tax overpayments and present procedures to the Finance Committee for final approval. There was a second from Porfilio and Schroeder and Phillips also voted in favor.

Discussion then turned to the controversial sales tax issue. The agenda included a copy of the sales tax ordinance that was adopted in 2001 to help finance construction of the Law Enforcement Center. Schroeder said they proposed changing the purpose and sunset provisions.

For each of the last several years the purpose has been changed to add that the sales tax, in addition to being used to reduce the annual property tax levy by paying the annual debt service obligation, "shall additionally be used for funding capital outlay and/or economic development and tourism expenditures."

It also states that "In the absence of repeal at an earlier date, this ordinance will expire and be repealed Dec. 31, 2021."

Pazynski commented the scheduled repeal is four and a half years in future, but making the tax permanent now would help Henessee and Kass with budget projections and future planning.

Henessee told the committee that with the existing debt they will still be paying on bonds until 2026, but the tax will sunset in 2021. If that happens, "there will be a $3.5 to $4 million hit to the budget effective in 2021 or 2022...We need to start planning now."

Henessee said the plan he presented in August pared down borrowing to $12 million between now and 2029, and provides for having all the debt paid by 2029, "but it's a policy decision." He said he is looking at other things to cut in the budget, including employee health insurance expenses, and additional savings could make the picture look even better.

The alternative to a massive property tax hike without the sales tax continued would be an equally large cut in county spending for other things.

"If you look at county finances overall, we're not in a crisis situation," Henessee continued. He said if there were a crisis the county would not have a Double A bond rating. However, he agreed with Anderson's contentions that they need to get away from borrowing for all road reconstruction. "I believe there was a need when we did it," he added. He said his plan doesn't mean there won't be more borrowing in the future.

"We are making a sound business plan," Pazynski said. "There are some who would say shut the door...No more borrowing," Pazynski declared. "I concur completely."

"Enforcement of this plan is going to require vigorous follow through," Henessee commented. He said at budget time they need to tell departments that if they are going to increase one line item in their budget, they need to find another line item to cut.

He repeated his contention that county is not in a budget crisis now, "but if allowed to continue at the rates we did in 2014 we would be heading for financial problems."

Schroeder declared he favors completely eliminating the sales tax sunset provision, as well as permanently allowing proceeds to be used for tourist promotion. He said this is a tourist area and we need people coming in to help support our purposes. He proposed adding to the sales tax purpose, "and shall additionally be used for economic development and tourism."

Pazynski said spending for road improvement is also necessary for economic development and tourism, as people do not like driving on bad roads, and loggers and other manufacturers need to get their products out. He said there will be other unanticipated expenses in the future, for example the cost of the drug program.

Phillips said there is a cost for putting off needed repairs and improvements, as the average price rise is five percent a year.

Members of the committee expressed belief that the massive borrowing that led to the current debt came because too many repairs and maintenance work, including highway reconstruction, had been put off for too many years.

Motion to repeal the sunset provision was unanimously approved, as was a subsequent motion to include economic development, tourism, debt retirement and capital expenditures as acceptable uses for sales tax proceeds.

Pazynski asked Henessee and Kass if the amendments were okay with them, and they were.

Next came discussion of the long range county financial plan and policy, and Kass said they would try to get the information requested to County Board.

"I need guidance from the board on how they want to handle things in the future," Henessee said, adding his concerns included the sales tax, "but it goes beyond that." For example, he said, for the longer term, "if we get all our debt paid off, are we going to dedicate all our sales tax for roads?"

He said he realizes there is some support for stopping all borrowing, but his plan does call for sharply reducing the borrowing now and having all debt paid by 2029.

However, to pay off the debt he would need to use part of the available reserve funds - $10 million - "but I don't want to. That's our savings account."

Pazynski suggested they might not need to. He had heard the Wisconsin legislature was considering eliminating the property tax levy limits. "If they do that, we can tax for expenses, and will not need to borrow," he said.

Henessee said he understood it could also go the other way, that the state legislature is considering making borrowing subject to levy limits also.

Under current state law, counties and municipalities can borrow for long term expenses and levy property taxes to pay off the debt outside of the levy limits. There was no mention of a provision in the state law that allows them to exceed levy limits now if approved by the voters.

"I believe we will need to borrow again," Henessee said, "but we should never borrow (or spend) more than the sales tax brings in."

He repeated that the county had apparently needed to borrow to get them through the bad years, which started with the recession in 2008. "Ours hit five years later," he said. He expressed hope that if the sales tax generates more than the debt payment it can be used to fund other Capital Improvement projects, "but at least we would not be borrowing, we would be paying as we go."

Schroeder said for the long range he would like to see the property tax levy for debt payments never exceed 25 cents per $1,000. "We need to continue the services that people are accustomed to," he declared.

He said the Oconto County property tax levy is 79 cents higher than Marinette County, on top of their debt levy. He did not mention that until they borrowed last year to build their new law enforcement center Oconto County had no long term debt.

Pazynski asked Henessee to provide them with a very simple profit and loss statement when doing the budget for 2017. He said he would like to know how much of a shortfall there is on operations only.

That request, although worded differently, echoed the request Anderson has been making for several months - to determine just how much of a structural deficit exists in county financing.

"Pursuant to the letter, we're working on that," Henessee said.

Pazynski said when supervisors get the budget,"we've got these funds all over the place," and it is hard to discover just how income and outgo compare overall. "I'm sure Mark would agree," he said, referring to Anderson. Pazynski said he would like the requested information at budget time, "not after the fact, and added his constituents have been asking, and the comparison would help him give them some answers.

"I've been talking to Mark and I share the frustration," he said on attempts to discover what structural shortfall exists.

Anderson agreed he has been frustrated. He said he had asked for some historical information,"but I want to get us back to an operating budget standpoint where expenses are covered." He said the board needs to define just what is included in the operating budget.

He has been told by accounting standards, as long as they can borrow the money there is no structural deficit, but they keep going farther in debt.

Pazynski said he wanted the report from a pure and simple operations only standpoint.

Anderson asked if he believed the county's operational levy should fund roads, but before Pazynski could answer Schroeder cut off the discussion and told Anderson he was not a member of the committee.

Schroeder said when you put a new roof on your house that lasts for 20 years, "that's a capital expenditure, not an operating expense."

There as a brief further attempt to continue that discussion, but they moved on to more routine business.

A $108 donation for the TAD (drug court treatment alternatives and diversions) program was accepted.

Transfer of $49,075 from the Health and Human Services fund balance to the Youth Aids program was approved. Henessee explained the transfer was needed due to some recent high cost placement of juveniles. Schroeder commented you can't budget for that, and Henessee agreed. He said for a long time they had no high cost placements, and now all of a sudden they have three high cost placements that will cost over $100,000 a year.

Asked about a $38,000 Wisconsin Public Service bill, Kass said that was for one month, "the air conditioner was running."

The committee agreed to hold a special meeting at 8:15 a.m., prior to the County Board meeting on Tuesday, Sept. 20, and set its next regular meeting for 9 a.m. on Monday, Oct. 17.

The annual budget meetings with department heads is scheduled for all day on Thursday, Sept. 29. Schroeder recalled that those budget discussions used to take two days.


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