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Council discusses financial woes

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Money is going to be an issue for the city of Superior in 2015.

From the landfill deficit to longstanding state-imposed limits on the tax levy, there are no simple or quick solutions to the city’s money troubles.

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The question now is how the city will address its financial woes when the only levy increases the state will allow in the tax levy is to cover the cost of debt.

The council spent three hours discussing the issues surrounding its upcoming budget with city administration.

Solutions hinge on what happens at the landfill — already facing a deficit this year — in the coming year.

Mayor Bruce Hagen said current legislation, which prohibits the city from introducing fees without reducing the levy, is “punitive to Superior alone.”

Superior is among the rare municipalities in the nation that doesn’t have a fee for garbage service currently.

“There isn’t a solution that isn’t going to cost someone something,” Hagen said.

By establishing a fee, continuing to subsidize the landfill or selling the landfill, he said, there will be a cost for each of the city’s alternatives.

Landfill troubles

While the cost of collecting trash in the city has remained relatively stable since 1999, the cost of operating the city-owned landfill has skyrocketed, largely because of the cost of meeting federal and state regulations, which includes a $1.6 million dollar fee the state charges the city for tipping its own trash.

Police Chief Charles LaGesse suggested that city lobbying efforts should focus on that tipping fee. After all, the $1.6 million the city pays to the state would allow the city to forgo creating a fee for trash service.

The fee was implemented years ago by the Wisconsin Legislature as a means of keeping out-of-state trash out of Wisconsin landfills,” said Councilor Dennis Dalbec. “It should have never happened.”

Councilors also discussed the possibility of instituting a pay-as-you-throw system or establishing a monthly fee.

Councilor Bob Finsland cited the inequity of the system that would have seniors with little trash paying the same amount as a family with children might toss into the landfill.

“Everyone seems to think raising taxes is the most equitable way of raising money from the citizenry,” Finsland said.

Budgeting

For more than a decade, the state has had a say in the city budget, namely restricting the revenue the city can raise through property taxes. Since 2011, any increase in the levy has been prohibited unless the increase covers the cost of paying back debt.

That has left the city with little fat to cut from its budget as it continues to provide services, and the anticipated continuation of levy limits, leaves the city facing a $1 million deficit if the city continues subsidizing the landfill operation.

That means further cuts to the city budget that will affect services.

Finance Director and Administrative Officer Jean Vito said that’s going to be a difficult call because it could cause cash flow problems at the landfill if the city doesn’t make the annual $1 million transfer to the landfill; however, it’s going to mean cuts to police, fire and public works if the city does make the transfer.

All three departments have already faced the loss of personnel because of the state’s levy restrictions.

Councilors discussed an option to take the problem to the voters, but even that is not a good solution.

“If we got to a referendum and it was approved that we could increase our levy by $1 million it would catch us on the expenditure restraint side of our budget,” Vito said.

The expenditure restraint program, which provides state funding for communities that keep levy increases low, would only allow the city to increase spending by about 2 to 2½ percent, Vito said.

Getting voters to agree to a tax increase is not likely to happen, leaving the city without a solution, said Councilor Dan Olson.

Credit costs

Superior is already seeing a shift in its credit costs when it comes to capital improvements such as road, sidewalk and park improvements.

The city’s Capital Improvement Program budget is financed three way — through grants and donations, a transfer from the general fund, and borrowing.

For years, the three were about equal portions of the budget to finance long-term projects and improvements.

Vito said that is changing with restrictions on the city’s ability to raise taxes to meet the rising costs of providing city services. Now, borrowing accounts for about 61 percent of the program because the city’s ability to transfer revenue from the general fund has been hampered by restrictions on the levy.

While the city is in the process of developing a policy to maintain its bond rating, and planned borrowing expected to come to the council over the next couple months for the Capital Improvement Program complies with that policy, borrowing is one option councilors have as long as it’s not used for operating expenses.

Vito anticipates a modest increase in the levy next year because of the issuance of bonds expected this year.

One councilor questioned shifting landfill debt to the city’s general fund to help alleviate the stress on the landfill budget and raise a small portion of the money needed to solve financial trouble there.

However, Vito cautioned against that because it would raise the levy by about 6 percent and still wouldn’t solve the problems at the landfill.

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