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by Keene Winters
The City of Wausau borrows and spends a lot of money. Exactly how much is an open question. Millions of dollars in spending on the water and wastewater treatment facilities has gone missing from the budget.
Every city budget has a table titled Summary of Debt Changes. It should show all money borrowed over the past five years and lays-out the requests for borrowing in the coming year. The city’s budget for 2020 contained the following line item on page 120: (see all supporting documentation embedded below)
Water & Sewer Projects $121,000,000
The measure proposed increasing the amount of the city’s indebtedness from $107,484,779 on December 31, 2019, to $223,732,809 by December 31, 2020. Those were shocking numbers, and they may have played a role in voters unseating Mayor Bob Mielke in April of that year.
In the fall of 2020, Mayor Katie Rosenberg brought forward her budget for 2021. In the debt service summary embedded below, on page 122, we get the following line items and footnotes:
- Clean Water Fund – Sewer Facility Upgrade* $5,357,427*
- Safe Drinking Water Fund – Water Facility* $3,792,901*
- *[The] Clean Water and Safe Drinking Water loans are based upon draws through 10/01/2020. These are ongoing projects[, and the] year-end numbers will change.
The table goes on to project that total city indebtedness on December 31, 2020, will only be $108,281,107. At first glance, it looks like a massive reduction in debt.
But, all is not what it seems to be. It will take some digging to find out how much was actually borrowed. On page 14 of the city’s 2020 consolidated annual financial report (CAFR), the following line items can be found:
- 2020 Sewer Clear Water Fund direct borrowing $17,758,360
- 2020 Water Safe Drinking Fund direct borrowing $ 9,115,561
So, in the last three months of the year, borrowing for water and sewer projects roughly tripled from $9 million to nearly $27 million.
Next, we have the mayor’s budget for 2022 and even more debt gets hidden. By this time, 2020 is history, and the number are known. Yet, in the 2022 Summary of Debt Service, on page 122, all the numbers for the new water treatment plant and wastewater treatment plant upgrade are gone. Some $27 million in borrowing that actually happened has simply disappeared. The only thing left behind is a footnote that reads: “Clean Water and Safe Drinking Water loans [have been] omitted because numbers will change due to active draw status.”
That is a curious note to find in a budget. Essentially it says that (1) we have started a couple of multi-million dollar construction projects, (2) we are not going to bother estimating the projects’ final costs (even though they are expected to be completed in August of 2022), and (3) we are going to borrow and spend whatever we think it takes to finish the them. Just trust us.
Who are “we?” It is the city’s top bureaucrats, of course. Why should they be bothered with having to ask for authorization in the city budget? They know best, right?
Unfortunately, this attitude is not just confined to the senior staff. Our elected officials are part of the problem as well. They are all too eager to turn-over tough or complex decisions to the staff. Neither the mayor nor the council questioned the absence of such large, ongoing construction projects from the budget. That is a big miss. The mayor and the finance chair should move expeditiously to ascertain the cost of these projects, make the information public and bring the numbers before the council for proper authorization.
To be sure, there are serious costs for these failures to supervise. Take this latest controversy over PFAS as an example. In 2018, city officials knew there were elevated PFAS levels at the wastewater treatment plant. By 2019, officials understood that the source of the PFAS was city wells. In 2020, the city started construction on a new, supposedly state-of-the-art water treatment plant. However, the facility design did not incorporate any capabilities for addressing PFAS levels. Now, millions of dollars of retrofitting are likely to be needed for a plant that has not even gone online yet. This is exactly the kind of screw-up that should cause the city to hire an independent investigator to find out (1) who knew what, (2) when they knew it and (3) why mistakes were made.
This is just one more example of unaccountable bureaucrats in action. The water plant failure will likely be more costly than the loss of federal funds for failing to following eminent domain laws in acquiring property along Thomas Street. It certainly is as outrageous as staff asking the state legislature to remove the Tax Incremental Financing (TIF) cap on Wausau without asking the city council first. Clearly, we need a chief executive with the training and experience to instill a proper culture of civil service among the city’s senior staff.
Back in 2015, I recommended that Wausau hire an at-will administrator and make the department heads at-will direct reports to that administrator. Since then, none of the past three mayors have shown the ability or the inclination to rein in a dysfunctional bureaucracy. At what point does the community enough is enough?
We have now had seven years of observational data since the last referendum. It is time to re-evaluate and put the question of hiring an administrator on the ballot for this November.
Keene Winters is a Wausau financial advisor who served two terms on the Wausau City Council, from April 2012 to April 2016. He is a frequent contributor whose past columns can be found here.
Photo credit: Life Touch
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