By Keene Winters
Do you feel a chill? You should. That’s what happens when a door has been left open.
Over the past six years, Wausau city staff have been quietly and diligently working behind the scenes on building backdoors to get around the levy limits and raise your taxes. One of those doors is the Wausau Water Works transfer payments to the city’s General Fund.
To be fair, many municipal utilities make payments in lieu of property taxes (aka PILOTs) to their respective local governments. Historically, Wausau’s utilities made one of these voluntary transfer payments at a rate of between 4% and 5% of revenue – a reasonable sum. That meant that a little less than 1-in-20 rate dollars collected by the utilities were forwarded to the city.
But something happened in 2016 – something that was not in the 2016 budget. An extra million dollars got transferred from the utilities to city coffers, effectively tripling the “take” of ratepayer’s monies to between 13% and 15%. The looting had begun. Now more than one in eight rate dollars collected by the utilities were being handed-over to the city treasury.
A municipality should not be taking a double-digit bite out of any business’ income—especially not a non-profit whose sole purpose is to serve the citizens of that community.
Unfortunately, that transfer of cash is set to grow by a lot. The statutory limit on the PILOT is a formula that applies the city’s tax rate against the value of the utilities’ property. After this massive build-out, those values will skyrocket, taking the cap on these type of transfers in Wausau to the moon.
This transformation has been well-hidden from the public view. For instance, a person has to go to page 171 of the 2023 city budget, look at the budget for the water system and understand that the line labeled “Other Financing Uses” is the pass-though amount from utility to the city. Then, he or she needs to go to page 172 and look up the number for the wastewater system and add them together to see what the PILOT is. And, if a person really wants to understand what is going on, he or she has to go look at those numbers in past budgets. It’s a daunting task. And, burying policy changes like this deep in the budget is one way how the staff works around the city council and the public.
Do you think that doesn’t happen? This year, council members we told they needed to authorize borrowing to bail out the Motor Pool Fund or the city would not be able to keep its fleet of vehicles and rolling stock going. What was not highlighted by the staff was that the previous year’s budget authorized the Motor Pool Fund to spend $7,098,584 while only charging back city department $3,975,000. Consequently, the previous year’s council was duped into under-charging department budgets and creating the need for the desired cash infusion in the first place.
How about the recent incident of city staff lobbying the state legislature for a special law allowing Wausau to exceed the Tax Incremental Financing limit without telling the council? You can read about it in this publication. Clearly, there is some confusion on who makes policy at city hall.
What should be done? The council needs to start taking its policy-making role back from the staff. On Thursday, Jan. 5, the Executive Committee is meeting and has relevant items on its agenda to discuss these matters. It should recommend that the Finance Committee immediately take up the creation of an ordinance that limits the transfer payments from the Wausau Water Works to the City of Wausau to no more than 5% of water works actual revenue. Anything more is just gouging to the ratepayers.
The ordinance would accomplish three important things. First, it would send a signal to current and future bond-holders that the city has prioritized the repayment of its utility debt and will not scheming to divert even more water and sewer revenue to the City’s General Fund. Secondly, it would drop the pending water bill rate increase from 65% to somewhere between 50% and 55% — a welcome bit of relief in these inflationary times. Thirdly, it would put the city council back in control of these taxing and spending decisions. There would be a line that the staff could not cross without explicitly seeking council approval. The door would be closed.
Granted, this is likely to require some belt-tightening in 2023. However, it is much better to bring this under control now before the numbers get even larger.
Watch this vote carefully. It will tell you which council members are concerned with good governance and constituents’ well-being and which ones have lost all perspective on their role as elected servants of the people.
Editor’s note: Wausau Pilot & Review gladly publishes commentary from readers, residents and candidates for local offices. The views of readers and columnists are independent of this newspaper and do not necessarily reflect the views of Wausau Pilot & Review. To submit, email [email protected] or mail to 500 N. Third St., Suite 208-8, Wausau, Wis. 54403.
