Challenges of city finances addressed at October 18 Eggs & Issues

Eau Claire City Finance Director Jay WInzenz illustrates the squeeze between limited revenues and growing demands

"We're making it work for the time being," said Eau Claire City Finance Director Jay Winzenz, "but it's not sustainable." 

Winzenz's comments referred to a tightening squeeze between limited revenues and growing needs for services demanded from municipal governments. As the City of Eau Claire and other local governments complete operating budget deliberations for 2020, Eau Claire's city staff has managed to draft a balanced budget. While it does fund some enhancements like expanded absentee voting hours, promotion of the census, operation of the Haymarket fountains and staff support for affordable housing and neighborhood engagement, there were even more requests of value that were not able to be funded.

At the beginning, revenues the state received from the Wisconsin income tax enacted early in the 20th century went largely to local governments, but over the years the state has gradually kept most of the money, and the percent of city revenues from state aid has declined as that shared revenue has fallen far behind inflation. As a result, reliance on property taxes has increased significantly. However, the city's ability to grow tax revenues has been constrained by ever-tightening state-imposed levy limits, which are now held to the percentage of net new construction each year.

Although Eau Claire has seen significant increases in population, area of the city, miles of streets and acres of parks, the city has had to be creative in the use of its resources to maintain essential services. Between 1996 and 2018, the number of city employees in public safety increase by 33, but in other city functions actually decreased by 7 positions. 

For the City of Eau Claire, the largest source of revenues is the property tax, while the largest share of expenses relate to personnel. 

Winzenz said municipal governments will eventually have to resort to service reductions or deferred maintenance, unless new revenue alternatives emerge or levy limits are relaxed. Much like school districts, cities can also go to the voters in a referendum to increase property tax rates. 

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Next steps in the budget process: Winzenz outlined Eau Claire's planned schedule to enact its 2020 Operating Budget by its November 12 City Council meeting. There will be public hearings on October 21 and November 11, and the City Council will continue to discuss the budget at works sessions. 

More information:
Download PowerPoint Slides (Jay WInzenz, Eau Claire City Finance Director)
Dollars and Sense: Is it time for a new municipal financing framework in Wisconsin? (Wisconsin Policy Forum)
Eau Claire City Budget site with draft budget, presentations (City of Eau Claire)
2020 Draft City Budget (City of Eau Claire)
City tax bill to rise slightly next year (Leader-Telegram)


Posted by:
Scott Rogers, Governmental Affairs & Workforce Director
rogers@eauclairechamber.org