Mequon — Residents can expect a flat city tax bill next year, as the city tax rate is expected to stay even for the fifth straight year in 2014.
At $3.04 per $1,000 of assessed value, a Mequon resident with a $300,000 home would foot a $912 bill to fund city services in 2014. As City Administrator Lee Szymborski pointed out at budget committee meeting Tuesday, a 2011-12 ranking by the Wisconsin Taxpayers Alliance found Mequon's tax rate to be in the lowest 7 percent statewide.
"It's bragging rights to say that Mequon has one of the lowest tax rates in the six-county area," said Szymborski.
The overall tax levy increases by about $178,000, or .91 percent, to approximately $19.8 million. Though the city could have increased the levy by about $400,000 under state law, the rise only reflects the increase allowed due to new property value in the city and a slight amount of state-allowed debt, and therefore does not affect the tax rate.
"The council has been very frugal and very conscientious about levy limits," said Szymborski. "We've actually had levy head room (in recent years), but we understand what the mandate here has been, and we don't seek to tap that at all."
Town Center troubles
As several members of the committee noted, the proposed 2014 budget diverts money from the city's capital projects fund to pay for outstanding debt related to the Town Center tax incremental financing district, which to date has not generated enough new development to repay its debt. It would be the second consecutive year the city has used the capital fund to support the struggling Town Center district.
Though a development approved in 2013 will bring an estimated $16 million of new property value into the district, city officials estimate a total of $40 million is needed to generate enough new property taxes to make the district solvent.
"I don't think the (district) is going to right itself for at least a couple more years," said Alderman Andrew Nerbun. "How long can we realistically use this approach, as valid as it may be in the short term, knowing that eventually the bills come due?"
Szymborski pointed out that, though the capital fund transfer is a short-term solution, city staff find it preferable to using general operating funds, which would mean residents would be directly subsidizing the Town Center with their tax dollars.
"That would burden the taxpayers," said Szymborski. "We felt that was the least liked solution."
New reserve policy?
Committee members also questioned whether the Common Council should adopt a formal policy outlining a maximum amount of cash reserves.
The amount of cash the city has on hand is an important indicator of the city's financial health and a key factor in determining interest rates when the city borrows. The council currently has a policy requiring a 10 percent reserve level, in comparison to the general operating budget. The city in recent years was below the 10 percent mark after the recession hit, but, after several years of recovery and careful budgeting, has about 20 percent on hand.
City Finance Director Tom Watson said the council needs to consider both its standing with credit rating agencies and residents, who could feel that the city is overtaxing if reserves continue to grow.
"Do we want to focus on making Moody's happy, or the taxpayer?" said Watson. "We need to find that balance."
Alderwoman Pam Adams said she would like to see the reserve policy updated to reflect the city's current level of reserves.
"I think if we're going to change it to 20 percent we should talk about it, take it to committee," said Adams. "We should put it in writing."
The Common Council will hold a public hearing and potentially adopt a 2014 budget at an upcoming November meeting.
BY THE NUMBERS
city tax rate, per $1,000 of assessed property value
number of years the city tax rate has remained flat
estimated increase in property value as a result of WiRED Properties development in the Town Center district
estimated amount of total property value needed to make Town Center district solvent
Your link to the biggest stories in the suburbs delivered Thursday mornings.
Enter your e-mail address above and click "Sign Up Now!" to begin receiving your e-mail newsletter Get the Newsletter!
- Pieper to be honored by Mequon Community Foundation
- Urbashich reflects on 17 years on the Mequon-Thiensville School Board
- News and notes
- Local businesses awakening after long winter
- District faces money woes
- News & Notes: April 9
- Ash borer hits Mequon trees
- Density a hot topic in Mequon subdivision proposal