Monday, November 19, 2007

Pleasant Prairie makes case for mill rate increase

The Pleasant Prairie village government laid out a good case for the property tax increase approved tonight that will raise the village's share of the property taxes on an average home by about $48 next year. The lion's share of the increase will be the Kenosha Unified School District's take ($139) along with a hike in the county levy. The total increase for village residents (before lottery and state tax credits) looks like a little over $200 on the "average home."

The budget analysis can be viewed here.

The village will be adding another police officer and firemedic along with an employee to harmonize the communication between village computers. Another snow plow will be secured. A number of capital projects will be initiated along with road work on 80th Street for which the village will borrow over $2 million. (In future years road work is planned on 85th and 116th streets.)

The good news is that the village is taking steps to fund capital expenditures and more money to set aside for capital improvements will come starting in 2009 when the village's debt service outlay will drop which should free up that money.

Planning and setting aside money for capital improvements is a responsible thing. We all know that things such as squad cars, snow plows, computers and the like have a finite number of serviceable years. In our own homes we plan for these purchases. Businesses wisely "retain earnings" for these future expenses. So it only stands to reason that governmental units should do the same (and invest the earmarked funds to earn interest).

On the flip side, "pay as you go budgeting" is pretty much the same as living paycheck to paycheck. Not necessarily a good idea. So it's good to see the village heading in the right direction.

That said, it would have been more reassuring had village administrator Mike Pollocoff indicated that the village would hold the line against future tax increases. It's understandable that he may be reluctant to be so definitive lest the "loyal opposition" seek to make him eat his words should some calamity occur and property taxes increased. But it still would have been reassuring to have a commitment to do everything possible to hold the line.

One area where they may be some "wiggle room" in the future is the village's reserve fund.
According to trustee Clyde Allen, who has years of finance experience, the reserves should not fall below 15%. Right now it's budgeted at 16%.

The reserve fund serves a couple of purposes. First, it's the village's hedge for catastrophic expenses. More important, it helps to keep the village's bond rating healthy which in turns results in lower interest rates for village borrowing.

Pollocoff also answered a major question when he explained that while theoretically big developments should bring in more tax revenues once they reach fruition the reality is that those benefits will be deferred until the retirement of Tax Incremental Districts used to help lure and support these new developments. This is what happened with the Lakeview Corporate Park where the district was retired early and with a surplus of funds.

Despite the importance of tonight's subject matter, the board meeting was not all that well attended. That's too bad because those who did attend got some good insights into how village finances are run.

No comments: