State budget woes to affect Shorewood?

4/4/11

Short answer: Probably, yes.

The latest tax bill in the legislature calls for cuts in many areas affecting cities as well as extending the levy limits for two more years. Here's how this might affect Shorewood.

The levy limits call for a maximum 3.9% per year tax increase, but also, no more increase than the "implicit price deflator", a measure of inflation the Dept of Revenue calculates. So, if the levy for 2012 were to be set today, the maximum increase would be about 1.5% due to the implicit price deflator. Or course, the deflator could go up before the end of the year, but don't count on it. There's also a "back door" that allows increases in levy that were available in prior years, but not previously used by a city. Shorewood hasn't raised its levy for three years. So, there is some wiggle room available.

The State provides limited financial support for Shorewood. Mostly this is in the form of police and fire aids for things like training and pensions. These appear to be heading for major cuts or elimination. Much of the money for these comes from surcharges residents pay on homeowners and auto insurance, not taxes. The legislature wants to divert these funds to pay for general fund deficits.

So what happens in Shorewood? Right now, it's hard to tell. Probably it is not good. If the council has to increase payments to police and fire to maintain spending for training and pensions and budget for any inflation, tax increases will be needed. However, the amount of any tax increase possible is limited. So, cuts in programs and services may be needed.

Council reviewed a 10-year financial for Shorewood on 3/28 (see: http://windowsmedia.alphameetings.com/LMCCShorewood/032811shorewood.wmv at 1 hour 48 minutes and 45 seconds). It showed proposed 2% per year tax increases as well as proposed increases in fees such as for storm sewers, just to remain solvent. If the City has to pay for things the State was funding and the City can't raise taxes, other programs and services will have to be cut. Keep reading this blog for more as the year goes by.

Happy Reading!
The Insider