By Keene Winters
In the beginning, borrowed money is fun. You get to buy the things of your dreams. The downside is that you have to pay the money back.
Last Tuesday, the coal-mine canary of insolvency visited Wausau. The city government had to ask one of its lenders to defer receiving payment for a loan because its cash reserves were too low — a clear harbinger of where we are headed.
Since the last election, city debt has been off to the races. Wausau started 2016 with a manageable $56.4 million in outstanding debt. New leadership was seated in April, and we zoomed-up to $75.1 million in debt before the year was done. By the end of 2017 it was $84.0 million and on its way to $92.4 million – assuming the city stays within its 2018 debt services budget. (See document, embedded below.)
At this rate, we can expect outstanding city debt to pass $125 million by the end of the 2016-2020 mayoral term.
For the record, mayors are not the only people who influence policy. There are other people who hold the reins in this mad dash to spend money too. There is Alderperson Lisa Rasmussen, Chair of the Finance Committee, staffed by Finance Director MaryAnne Groat, and Alderperson Tom Neal, Chair of the Economic Development Committee, staffed by Community Development Director Christian Schock. They are the authors of these deals.
Most of the money is pouring into economic development zones know as Tax Incremental Districts or TIDs. The idea of these zones is that city, county and school district tax dollars are supposed to seed new economic development that, in turn, generate lots of new taxes to pay back the borowing in short order and then go on to provide lots of new revenue for city services, county services and schools. The problem in Wausau is that almost no thought is given to the return on investment by current policy-makers.
The city is advancing an alarming number of projects that do not pay the taxpayers back.
First, there are the economic development projects where the city over-spends. Think of the Quantum Ventures project or the Wausau Chemical move. These are instances where the city has given out so much money with respect to the size of the project that there is no hope for getting it all back in a reasonable time period from taxes on the new buildings themselves.
Next, the city is using economic development money for infrastructure projects unrelated to any new development. Think of Thomas Street, Birds on the Stewart Avenue median or the coming multi-million dollar skywalk from the McCormick Parking Ramp to the Dudley Building. None of these projects generate new tax revenue for anything.
So, in one four-year sprint, city officials are going to borrow an extra $70 million with no formalized system for evaluating projects, developers or returns on investment. It’s almost like “payback” is a dirty word at city hall.
Wausau TIDs will have to stay open for decades to cash flow. Meanwhile, the rest of us who live outside of these economic development zones will be stuck funding the increased costs of schools, the city and the county on our own. That means even higher taxes.
It is hard to overstate the magnitude of the problem being created. In just four years, we are going from a city that regularly held a modest $50 million in debt to being one of the most debt-ridden municipalities in Wisconsin with liabilities approaching $125 million! It’s a huge change in policy with very little public discussion. It is really hard to see how this ends well.
I have taken the unusual step of including city officials names in this opinion editorial for a reason. It is my hope that the architects of current city policy will offer up a 600 – 800 word written defense of their actions, especially the Quantum Ventures deal and the continued use of TID economic development dollars for the Thomas Street road project.
Editor’s Note: This is the fourth in a series of opinion editorials by Keene Winters on what he sees as the endemic failures in decision-making at city hall. Winters served as an alderman in Wausau from 2012-2016. Opposing viewpoints are welcome; email guest editorial submissions and letters to the editor at email@example.com.Hypertext 3