Mequon's tax rate flat, but Council using reserves to balance budget
Struggling TIF district can't pay its debt service
Mequon — Mequon residents will not see any increase in the city's tax rate in 2014, marking the fifth consecutive year it has been kept at the same level.
Following a public hearing, the Common Council on Tuesday approved an ordinance adopting the budget, as recommended by the Appropriations Committee, which sets expenditures at about $18.6 million, a 1.2 percent increase from 2013.
The budget sets the tax rate at $3.04 per $1,000 of assessed value, which remains unchanged since 2010. The total tax levy of about $19.6 million represents a slight increase of 0.14 percent from the 2013 tax levy.
District 7 Alderman Andrew Nerbun praised city staff for their efforts to hold the line on taxes, but also cautioned against the continued practice of utilizing fund balance in order to do so.
Nerbun commented that while internal transfers of excess reserve funds can work well as a short-term measure to balance the budget, the city should make an effort to wean itself off of the practice in the near future, to avoid bringing its reserve funds below the city's recommended level of 10 percent of the entire general fund and forcing the city to turn elsewhere to bridge the gap.
The budget proposes using about $285,000 of general fund reserves in 2014, City Administrator Lee Szymborski said, which includes a payment to the city's Tax Incremental Financing District No. 3, which did not generate any increment in order to cover its debt service this year.
"That's a mechanism we can only do so many times," Szymborski agreed, noting that it is being recommended for the second year in a row. It is likely that the TIF will continue to struggle for at least another two years, he added, making it necessary for the city to find a more permanent way to address the issue.
Building reserve over years
Mayor Dan Abendroth and District 8 Alderwoman Pam Adams also pointed out that the city has done a good job of building up the fund balance in recent years.
"If I remember right, our reserve was almost under 10 percent maybe four or five years ago," Adams said. "Even when keeping our tax rates totally the same, we've built that reserve up to over 19 percent."
The use of fund balance in 2014 still maintains more than $2.8 million in fund reserves, or about 18.9 percent of the total general fund, according to Szymborski's memo on the budget. Adams added that the council also will be having a policy discussion about possibly keeping the city's reserve funds closer to the existing level of 19 percent, and determining how to do so while balancing taxpayer dollars with the city's needs.
Officials approached the 2014 budget with a few goals in mind, including maintaining low property taxes, in addition to maintaining high quality public safety services and city infrastructure, roads and public works, and focusing on economic development.
Staff to get pay raise
Other highlights of the budget noted in Szymborski's memo include a modest salary increase for city employees, the accommodation of additional debt service for road project borrowing, an anticipated 40 percent decrease in interest income, and an expected increase in building permit fees and other development-related revenue.
For more on the 2014 budget, visit http://www.ci.mequon.wi.us and select "2014 Budget" from the menu on the left side of the page.
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