1. 2014 POLK COUNTY OPERATING AND CAPITAL BUDGET DANA FREY, COUNTY ADMINISTRATOR NOVEMBER 12, 2013

2. Outline Economic outlook 2014 budget Tax implications Long-term outlook

3. Economic Outlook

4. Economy continues to be sluggish Source: U.S. Department of Commerce, Bureau of Economic Analysis and Wells Fargo Economics

5. 2.8%? Q3 larger than expected GDP growth But: ◦Gain mostly in structures, exports and vehicles ◦Personal consumption up only 1.5% ◦Nonresidential fixed investments up 1.6% ◦Equipment down 3.7%

6. Slow improvement in unemployment Source: U.S. Department of Commerce, Bureau of Labor Statistics and Wells Fargo Economics

7. Inflation? Actual measures CPI (Sept. 2013/Sept. 2012): 1.2% State and local governments (2013Q3/2012Q3): 0.8% Forecasts: CPI for 2014: 2.1% Diesel cost for 2014: -4.3% Gasoline cost, 2014: -3.3% Natural gas, winter 2013-14: +14% Annualized interest rate, Wisconsin Local Government Investment Pool: 0.09% Forecasts by Wells Fargo Economics and U.S. Energy Information Administration

8. Polk County Economic Outlook

9. Very slow employment growth continues

10. Housing recovery appears robust

11. Retail growth continues

12. Conclusion Slow upward movement in the economy Housing market continues higher No appreciable inflation on the horizon County retail growth is positive 2014 promises to be an unexciting year

13. 2014 Budget

14. Guiding Principles 1.Maintain fiscal discipline and improve budgetary sustainability 2.Improve allocation of funds based on priorities set by the County Board 3.Improve efficiency and effectiveness of expenditures

17. 2014 continues direction set by County Board Tight expenditure controls ◦Total expenditures $6.6 million below 2009 Sustainable budget ◦Resolve past issues without creating future problems ◦Continued response to financial vulnerabilities Board priorities addressed Increased use of performance information

18. RankProgram2014 Initiative 1Administration: Public Financial ManagementInitiative to consolidate financial reporting with GAM and Human Services; increased in-house audit preparation 2County Clerk: Election Administration$1,000 additional funding for election materials 3Administration: General Management and Board Support $7,500 set aside for Board technology improvements including possible agenda management system or hardware upgrades 4Corp Counsel: Child SupportIncreased funding for training and development 5Law Enforcement: Emergency communication & management Initial funding for technology improvement planning in Administration budget including next generation 911 6Veteran ServicesPublic outreach initiative incorporated in the budget 7Corporation CounselFunding for intern to assist with policy and ordinance codification 8District Attorney: Criminal casesAdditional funding for support staff 9Buildings: Building MaintenancePotential for internal loan for energy efficiency projects 10Law Enforcement: Field servicesInternal loan for water patrol Addressing Board Priorities

19. Budget highlights No increase in property taxes Net reduction of 5.8 FTE Ongoing personnel system reform ◦Over $100,000 in savings from new hires at lower rates Fully funded debt service at $4.2 million Structural balance Solid fund balance Transparent process

20. Polk County Debt Service Levy by Year (Dollars in Millions)

21. 2014 Preliminary Budget Total expenditures: $56,357,018 Total revenues: $ 56,638,288 Total 2014 levy: $20,989,554 2013 levy: $20,984,004 Change: -$5,550 or -0.003% Use of fund balance: None (return on internal loans and GAM improvements)

22. 2014 Preliminary Budget Revenues Expenditures General Property Tax20,984,004 Personnel29,345,686 Other Taxes826,220 Operating - 0002,690,946 State Aids9,882,431 Professional Services13,522,754 License & Fees335,935 Supplies & Expenses3,594,596 Fines and Forfeitures234,700 Fixed Charges916,671 Public Charge for Services11,755,973 Debt service4,207,976 Intergovernmental Revenue8,838,186 Grant Contribution656,067 Misc Revenue763,442 Capital Outlay613,104 Other Financing Sources3,071,397 Transfers809,218 Total Income56,638,288 Total Expenditures56,357,018

23. Revenues Total $56,638,288 Sales tax $2,500,000 State aid flat County share of property tax levy reduced

24. Expenditures Total $56,357,018 Debt service stays at $4.2 million Health insurance funded at 6% Additional employee share Small compensation adjustment

25. Where the property tax dollar goes

26. Continued staffing reductions

27. Fund Balances Overall, no net use of fund balance ◦Repayments to asset fund General fund unassigned balance estimated at 25+% Small new loans from asset protection/internal investment fund ◦Possible energy projects to be determined Recommended small increase in retirement liability fund

28. Asset/internal investment fund balance

29. Retirement liability fund Increased from $425,000 to $490,000 ◦Should recover through attrition savings Estimated 2014 payout of about $100,000 Adequate to cover net sick leave payout benefit to employees

30. Revenue/Expenditure Reconciliation, All Funds Jail Assessment Fund (25,000) GAM 210,680 Highway (into assets) 110,000 Lakes Improvement Fund (15,000) Park Dedication Fund (15,000) Court Commissioner (18,469) Retirement fund payout (44,769) Transfer to retirement fund (65,000) Asset fund repayment 143,828 Total 281,270

31. Staffing changes DepartmentChangeComments District AttorneyAdd 0.2 FTEIncreased support staff AdministrationDelete 1.4 FTETransfer to Employee Relations, savings in payroll processing Employee RelationsAdd 1.0 FTETransfer from Administration GAMAdd 3.5 FTEBetter estimates of actual staffing Human ServicesAdd 1.2 FTEState-mandated and funded positions Public HealthDelete 10.1 FTEClosure of home care and other changes TotalDelete 5.8 FTE

32. Property taxes in 2014

33. Polk County’s Value Total loss in value, 2008-2013 of $977 million, or 19.3% ◦Second greatest loss in the State of Wisconsin, behind Adams County Led by residential drop of 21.1% Other property fell less ◦Commercial and industrial down about 1%

34. Equalized Value by Class 2013, Dollars in millions

35. Polk County’s Levy Increase since 2010 48 th out of 72 counties ◦Attributable to debt service ◦54 th since 2011 2013 tax rate ranks 35 th highest ◦Same as 2012 2014 rate will increase slightly despite levy reduction ◦Offset in much of the County by the recent cut in school taxes ◦Most down $11 on $100,000 home (except Unity and Turtle Lake)

37. The levy cap General increase = 0% Increases for: ◦New construction (0.69% in 2013) = $145,668 ◦Increase in pre-2005 debt service = $136,175 ◦Total allowable levy = $21,271,397 Preliminary levy $287,393 below the limit

38. Levy Impact About 1% decrease on existing property ◦Will vary by area, type of property, and relative value change Tax rate (excluding Library Act 150 and Bridge Aid) will increase from 0.00520640 to 0.00528471 On a $100,000 house the 2013 County tax was $520.06 If value falls by average (2% for residential property according to the DOR), 2014 value is $98,000 and tax would be $517.90

39. Revenues 2012 Actual 2013 Budget 2014 Budget 2015 Projection 2016 Projection General Property Tax 20,991,492 20,989,554 20,984,004 21,000,000 Other Taxes 826,120 826,220 826,300 827,000 State Aids 8,624,982 8,773,008 9,882,431 10,000,000 10,100,000 License & Fees 316,035 326,435 335,935 340,000 Fines and Forfeitures 251,100 241,850 234,700 230,000 Public Charge for Services 12,330,451 12,824,133 11,755,973 11,800,000 Intergovernmental Revenue 7,724,883 8,350,248 8,838,186 9,000,000 9,500,000 Misc Revenue 1,014,050 874,505 763,442 775,000 750,000 Other Financing Sources 2,832,434 3,241,863 3,017,397 3,000,000 3,200,000 Total Income 54,911,547 56,447,816 56,638,288 56,971,300 57,747,000 Expenditures Personnel 29,394,035 29,387,191 29,345,686 29,900,000 30,500,000 Operating - 000 2,860,420 2,940,749 2,690,946 2,700,000 Professional Services 12,163,462 13,134,692 13,522,754 13,800,000 13,900,000 Supplies & Expenses 3,765,091 3,710,849 3,594,596 3,700,000 3,800,000 Fixed Charges 963,036 962,583 916,671 920,000 Debt service 4,134,842 4,216,439 4,207,976 3,900,000 4,100,000 Grant Contribution 514,806 718,513 656,067 650,000 Capital Outlay 404,724 1,063,806 613,104 650,000 700,000 Transfers 1,058,663 982,737 809,218 850,000 900,000 Total Expenditures 55,259,079 57,117,559 56,357,018 57,070,000 58,170,000 Net Revenue and Expenditures (347,532) (669,743) 281,270 (98,700) (423,000) Long-term outlook Frozen levy likely unrealistic, but new construction should increase tax base State aid more likely to increase as State economy improves and as levy freeze stays Health insurance revenues; presumes some initial wellness benefits Growth in sales tax collections offset by fall in other revenues Health insurance and some salary adjustments offset by attrition and lower starting wages Start of the gradual decline in debt service 2015 looks to be manageable; attention needs be paid 2016, but that is only a one-year problem as debt service falls to $3.2 million in 2017

40. Thanks to Maggie Wickre and the Admin team Andrea Jerrick and the ER team Department heads and fiscal staff Chair Bergstrom and the Finance Committee Governing committees County Board

41. Questions?