Stagnant state funding could spell trouble for La Crosse's post-COVID budget

Sep. 29--In the wake of the economic wrath the pandemic has brought onto communities, another caveat could be troublesome for the city of La Crosse as it maps out its spending for future years.

A new report from the Wisconsin Policy Forum released Tuesday shows that for the past decade, the amount of money the state hands out to communities to pay back services at state-owned facilities has stayed stagnant, though the costs of those services have climbed.

The city of La Crosse typically receives a big payout for these services, which range from fire and police protection to waste removal, because of its abundant state-owned facilities such as the University of Wisconsin-La Crosse campus and Department of Administration La Crosse State Office Building.

La Crosse receives the fourth-highest reimbursement in the state, behind Madison, Milwaukee and Oshkosh, according to the Wisconsin Policy Forum report.

But the inflation of the costs of these services and the repayment cities are receiving hasn't stayed the same, putting more financial burden on the communities.

In 2019, the report shows that the state reimbursed municipalities about $18.6 million for services linked to state-owned facilities.

It was only 34.7% of what communities were eligible to receive, though, leaving a gap of more than $35 million in total funding for municipalities last year.

In contrast, in 2008, the state reimbursed communities nearly $22 million for these services, which at the time was 81.1% of what they were entitled under the program.

Things changed shortly after that, and that payout was cut in 2009 amid the recession, and has stayed stagnant ever since. Most recently, Gov. Tony Evers and the Wisconsin Legislature voted to continue freezing the funding in the state budget.

But costs for these services have only risen -- by more than 74% in the last decade to be exact, according to the report.

These payments are determined by the Wisconsin Department of Administration, and are part of its Municipal Services Payment Program.

The amount a city, town or village is owed is determined by a formula, and is known as an "entitlement." The formula looks at a variety of things, but a big portion is comparing the property values of state-owned facilities to overall property values.

In 2019, La Crosse's entitlement was valued at about $2.31 million, but it only received $798,921 in reimbursements from the state for its municipal services, or about 34%.

What it means for the La Crosse budget

This ongoing strain on state aid has caused local governments to be more resilient and find ways to cut corners and make it work.

"We're to the point where we're happy when they don't make any massive cuts," said La Crosse Mayor Tim Kabat, calling the findings in the report "much of the same."

"Those state shares of our budget, they become less and less," Kabat said. "In our situation, we've taken a lot of measures to reduce spending and to combine positions, combine departments, to look at ways to provide the level of service that our residents expect, and to do that in creative ways."

"It's forcing us to do that, and in some ways, we're not able to do everything we can," he said. "If we would see actual increases or other sources of funds that we could tap into, our level of service would reflect that."

And now the pandemic has forced that creativity even more.

Earlier this month, the city released its first outline for the 2021 operating budget, the first draft totaling $93.6 million. But to get to that point and overcome a deficit created by COVID-19, the city had to make cuts, reduce health-care insurance costs, and eliminate vacant positions and one-time revenues.

"It has impacts," Kabat said. "We don't have a lot of choices. It's, you either find other funding or revenues to be able to increase the expenses that you're dealing with, or you have to cut expenses. In our situation, we've done a little bit of both."

But how do those budget cuts, line items and large dollar amounts translate for the average taxpayer? In big ways, Kabat said.

"There is, then, the pressure on the property tax levy. If we are getting less funding from the state, and if we have less revenues because of the economic downturn, the only other mechanism is the property tax levy for the most part," he said.

In Wisconsin, cities and municipalities have a limited amount of funding resources, and are not allowed to collect things such as sales or income tax or user fees.

"There's just not a lot of other places we can turn," Kabat said. "The property taxpayers should be concerned about that, and there should be other ways to fund local services instead of always just relying on the property tax."

It speaks to the ways local government and policies have direct impacts on the average person, which can often get lost in major election cycles like the 2020 presidential election, where most people are paying attention to national policies, not realizing local issues are costing them more.

In November, beneath candidates for president, the ballot will also include state and local races, too, such as state senators and representatives, as well as county clerks, treasurers, register of deeds, and more.

And in April 2021, Kabat and the La Crosse Common Council will face re-election among other local races. Kabat already has a challenger for the mayoral seat, and he has yet to announce his re-election for a third term.

Voters should be paying attention, Kabat urged, and holding local officials just as accountable as they do the top-most elected officials.

During the last eight years, Kabat said he and city staff have worked hard to keep property taxes steady, or even reduce them. The proposed 2021 budget actually requested about $300,000 less than past years.

But the state's tight pocket book isn't doing them any favors, and with more funding, Kabat said, the city could have been reducing property taxes even more.

"People are going to ask the questions," about how local officials plan to hold the line on property taxes, Kabat said, in future elections.

"There's never really the corresponding, like, what's the plan for shared revenue, or how are we going to work with the state to increase what the state provides for their other aids and other acknowledgements," he said.

"We have a lot of state property here in La Crosse, a lot of tax exempt property, and the state is supposed to make us whole for that," Kabat said. "And yet that's not happening."

"People might not necessarily think about that, but that's all part of the mix," he said.

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