November 18, 2004

Dear Mayor, Common Council Members, and Citizens of Oak Creek:

Good evening.  Before we get into the details of the City’s proposed 2005 budget, I’d like to take a minute to thank the Mayor, Council, Department Managers, and staff, especially the Finance Manager, for their efforts in putting this budget together. Preparing the annual budget for a community takes the cooperation and dedication of everyone involved-and this budget is a reflection of everyone’s combined effort. I believe it is the hope of everyone involved in this process that this 2005 budget, as presented, responds to the needs of the City and the concerns of taxpayers.

It’s difficult to convey the information in any budget, without providing an array of figures. However, due to their importance, certain numbers must be stated.

Quality Services. As presented tonight, the 2005 budget focuses on providing quality services to the citizens of Oak Creek; without compromising the level of those services.

ERP. It also maintains the City’s eligibility for the State of Wisconsin’s Expenditure Restraint Program (ERP) payment. The ERP was established to reward communities for not increasing their operating budgets in excess of inflation and/or the cost of services based on new growth in the community. For the City of Oak Creek, this means that the 2005 total operating expenses can’t exceed 4.3% (2.3% for inflation and 2% for new growth) over the 2004 operating budget, in order to qualify for the program.  Even though the State has decreased ERP funding in the past several years, the ERP payment is a significant revenue source for the city that needs to be maintained as long as possible.

Therefore, in order to maximize the City’s participation in the ERP, expenditures in the 2005 budget as submitted are $19,265,187, an increase of 4.28%, or $792,194 over the 2004 budgeted expenses of $18,472,993.  

Assessed Valuation. Due to the City’s recent revaluation, the total assessed value of all property in Oak Creek, in 2004 is $2,449,930,570, according to Wisconsin Department of Revenue figures. The assessment ratio is 99.97%, of fair market (equalized) value, which means that the equalized value and assessed value of property in the city are almost equal. Last year, the equalized valuation was $2,142,128,700. In 2004 it’s $2,469,572,500, which is a difference of $327,443,800, or an increase of 15.3%.

For purposes of this budget, each penny of tax rate equals $244,993.

Undesignated Reserves. The 2005 budgeted expenditures exceed anticipated revenues by $1,717,848.  It is estimated that the City will have $6.9 million in undesignated reserves at the end of 2004, which represents 36.2% of the General Fund operating budget. The 2005 budget incorporates the use of fund balance to bridge the gap between revenues and expenditures, as was done in 2004, while still maintaining a fund balance of $5,074,523, or 26.3% of the operating budget. This figure complies with the city’s policy to maintain a 20-30% fund balance. It is important to note that in 2004, although the use of undesignated funds was budgeted at approximately $1.2 million, it is anticipated that only $750,000 will be used.  

Total Budget. The total 2005 budget, as presented, is $35,246,849, in comparison to the 2004 budget of $33,798,544.

Tax Levy.  The 2005 tax levy, as presented, is $17,110,716 (with TIF), which represents a 2.8% increase from the 2004 levy of $16,640,951.

Tax Rate. In 2005, the City’s tax rate per $1,000 of assessed valuation, based on the proposed budget will be $6.98, compared to the 2004 tax rate of $8.82/$1,000, or a reduction of $1.84/$1,000.

Although the recently completed revaluation increased the assessments of properties in the City, it hasn’t necessarily increased tax amounts. Depending on the value of the property, some tax bills have decreased, some remained stable, while others have increased. Overall, if the assessed value of a property increased by 25% or less, tax bills remained stable. If the assessed value increased over 25%, the tax bill increased. The average increase in residential assessment, due to the revaluation, was approximately 25%.

To compare the City’s 2004 tax rate to the 2005 proposed tax rate of residential properties, an average home assessed last year at $120,000 in value will be used. Last year (2004), the City’s tax bill for this house was $1,058.  This year (2005), due to the revaluation, the property assessment increased to an assessed value of $150,000 with a tax bill of $1,047, for a net decrease of $11.

Using actual residential properties as examples:

2004 VALUE               2004 TAXES        INCREASE       NEW VALUE         2005 TAXES
$  99,300                       $     876                           16%              $115,200                    $   805
$145,000                      $ 1,279                           23%              $177,900                    $ 1,239
$152,700                      $ 1,347                           33%              $202,400                    $ 1,413
$170,700                      $ 1,505                           23%              $209,900                    $ 1,465
$187,700                      $ 1,655                           22%              $228,100                    $ 1,592
$142,300                      $ 1,255                           65%              $235,000                    $ 1,640
$186,000                      $ 1,640                           34%              $248,400                    $ 1,733

OPERATING BUDGET

Services. As mentioned previously, this budget maintains services. In a few cases, such as recycling, the cost of those services has decreased. In 2004, the cost per household is $2.50/household; in 2005, the same service will cost $2.03/household. The reduction in cost is due to the combined efforts of the mayor, and staff who negotiated a better deal for the city.

In most cases, however, the cost of providing services continues to increase. There are a number of reasons for that. First, union contracts negotiated in good faith, provide employees with increases in wages; second, the costs of goods and services, including gas, oil and electricity, have been increasing at the same time; and third, the number of residents and businesses requiring services has increased as the community continues to grow.

Salary Recommendations. This budget also incorporates salary recommendations for non-represented employees that were made by the Personnel Committee and Administrator, which the Council reviewed, discussed and debated at length recently at budget review sessions.

In some instances salaries were frozen, others were adjusted to reflect wage disparity, while other salaries were increased in order to avoid compression. The process was part of a three step process that included the review of 2004 salaries, the adjustments to salaries in 2005 and finally, preparation for future fiscal considerations that might occur in 2006.

Position Recommendations. There are some position modifications/additions included in this proposed budget, including:

1. The addition of a part-time maintenance custodian (1,000) hours for the Fire Department;
2. The creation of a FT Communications Supervisor in the Police  Department;
3. Modification of the Permanent PT Property Room (Evidence) Tech hours in the Police Department, from 600 to 1,500 hours by eliminating the part-time (1,000 hour) clerk-secretary position;
4. Upgrading the Urban Forester to FT from PT (currently 1500 hours);
5. Funding 3 FT police officers, effective 1/1/05, but only authorizing that 2 positions be filled;
6. The addition of 2 permanent PT Street positions, not to exceed 1,500 hours each to complete projects that currently might not be accomplished when temporary PT employees are not available; and
7. The addition of a permanent PT Library Public Service Aide, not to exceed 1,500 hours.

CAPITAL IMPROVEMENTS PROJECTS

The CIP budget was reviewed by the CIP Committee along with the City Administrator and various department managers. The budget as recommended includes funding for:

• Basic city hall repairs, including carpeting and replacement of garage service doors;
• The replacement of one  Police Department K-9;
• The purchase of certain safety equipment, replacement of some furnishings for Station 2, the replacement of Ambulance 1885 and half of the funding necessary to replace Engine 1862 for the Fire Department (the remainder of the funds needed for the engine will be part of the 2006 CIP);
• The replacement of a mower, lighting for a ball diamond, street trees  and various park improvements for the Parks Department;
• Continued funding for bridge maintenance, storm water projects, sidewalk repairs, street lighting and road reconstruction to maintain the city’s infrastructure;
• Replacing a forklift for Public Works operations;
• Squad car cameras (Squad Digital Video Systems) to protect officers, citizens and the City; and
• Establishment of a fund to address expansion of the Streets Department facility.

CLOSING. As mentioned previously, the 2005 budget as proposed, focuses on providing quality services to the citizens of Oak Creek without compromising the level of those services. In this time of fiscal crisis, for both the State of Wisconsin and Milwaukee County, this budget insures the continued financial stability of the City of Oak Creek, as it continues to grow in 2005 and beyond.

It is my sincere hope that this budget, as presented, has the continued support of the Mayor and the Common Council.

Sincerely,

Barbara S. Blumenfield, Ph.D.

City Administrator