 Welcome to Sheboygan County Government, working for you. My name's Adam Payne, County Administrator and co-host of this program, along with my fearless partner in crime, Chairman Tom Wagner. We've been bringing this program to you for nearly 20 years now, and today we're going to talk with a very key department head, our finance director, Wendy Scharnen. Welcome, Wendy. Setting the stage a little bit. Sheboygan County has about 19 departments, 850 employees administering over 200 programs and services, and every year the annual budget development is one of the key responsibilities that the board needs to adopt. Of course, the finance director needs to take a key lead in pulling together. Wendy's been with us now for about three years. We're so pleased that she works with us in Sheboygan County. Wendy, please start by just sharing a little bit about yourself. Well, I graduated from Sheboygan North. I received my degree from Lakeland University. Now it's a university. I started my career in Oneida, the tribe of Indians in Wisconsin by Green Bay. I was their financial controller, and then I moved to Brown County, and became their project manager when we were implementing all their financial systems, and then I came here. I know when my parents moved back from, I think it was Washington State to back to Wisconsin because both my parents were born and raised in Sheboygan County. We spent a few months living in Cleveland with my aunt while my parents got settled in Stevens Point, and believe it or not, Wendy and I attended the same grade school for a couple of months. I'm not going to say who's older or younger, but it's very possible she beat me up at the playground at one point or another. Very likely. Talk about a small world. You've been working in government finances now for over 20 years. What's it like working for Sheboygan County, and how does that differ from some of the other experiences you have in government finances? Well, I think the strengths of Sheboygan County would be the leadership and the governing with consensus. I noticed that to be a very outstanding part of Sheboygan County versus some of the places I have been. Also problem-solving. There's a real knack, the county board here is very versed in problem-solving and doing that together. As for me directly, what affects my office, I think that the budget process here is one of the biggest strengths that Sheboygan County has. I appreciate that. Tom is certainly all about collaboration. We both are, and we're both very proud of the team that we work with here in our county board. I think it's second to none when it comes to problem-solving and working in a non-partisan manner. As you said, that annual budget development, the role that your department has, you've surrounded yourself by very good staff, please give our viewers an overview of that budget development process and different individuals committees that have a role in it. The process actually starts in late January, February where the chairman and you, the county administrator, establishing the initiatives and the goals for the upcoming budget cycle. I'll come into that fray about February mid-February and start with the assumptions and the projections on revenue and the projections on costs and how that would support the initiatives that were being set forth. April and May, the county administrator is taking the set initiatives and set up some of the assumptions and having dialogue with the executive committee and also the finance committee, which then would lead us into what is the leadership forum which is happening at the early part of June where the entire county board comes for full dialogue on the set of initiatives, the set assumptions that are there. We also give them an overview of the financial performance of the prior year and just get them all up to speed as far as where we want to head for this next budget cycle. We will kick off the budget just tactically. The department heads will come in and start doing their work in June. The liaison committees come in when the department heads are first taking those budgets to the liaison committee prior to them coming to the finance committee, where then the finance committee is giving the final approval to introduce it into the public hearing with the county board, and then the county board takes their final action in November. Nice overview. Again, it's a very collaborative process. By the time we're done, every board member, every department head has had an opportunity for input, and I think it's one of the reasons when Chairman Wagner has that final county board meeting and it's adopted in early November, it's generally a very short meeting. All the liaison committees have been involved, all the department heads have had a role, and no one can say they didn't have a chance for input, so it really has been pretty effective here. But as I mentioned at that board meeting, from the outside looking in, if that's all you saw with that county board meeting, you wouldn't see all the hundreds and hundreds of hours that had gone in before to get to the point where we are at, and I think that's just critical. It absolutely is critical. And as the viewers listen to this and get a sense of how that budget process works, and again, the numbers are important, but more importantly are the programs and services we provide to the community. But numbers, we're talking about nearly $150 million budget. When you break that down, how do those numbers break out from a standpoint of property tax levy versus other revenue sources? Well, the 2019 adopted total expenditures, and I think there's gonna be a graph up there for you to see, the overall budget, like you said, is $143.9 million for this year. The overall, the highest focus of the expenditures are going to Health and Human Services, and we have 24% of our budget going there. 22% are for what we call All Other, but All Other is your register of deeds. It is the treasurer, it is the county clerk. It's your support units of IT, the finance department, human resources. Also has your building services and planning, conservation, those types of areas. The third largest area that we're concentrating the expenditures are in the public safety area, where 18% of this $143.9 million is allocated. We also have the transportation, and again, we have 19.6 million going to the transportation efforts. We have Rocky Newell, which is our healthcare nursing home, which is taking 9% of the expenditures. We have capital projects, and that will always vary depending on what type of projects we have. We're coming off of a fairly large capital project effort when we were building that transportation complex, and then the debt service. The debt service would make up the remaining amount of this budget that we have for 2019. And a lot of information there, and we do have more information on our county website, but one of the simplest ways I like to describe where our dollars are going are the big four, highway, health and human services, Rocky Newell, and law enforcement. Those are really the largest four departments. So if the sheriff's department can't reduce programs or services, because obviously needs in the community may be escalating, health and human services, addressing mental health, mental illness, people suffering from drug or alcohol abuse, certainly we see more demands there. They're not generally able to reduce the taxes or revenue that's associated with that. Our highway department, critically important. Now that transportation is receiving sales tax revenue, that's actually reduced the need for property taxes to support that department. And then of course, our healthcare center, Rocky Newell, those are the big four. All the other departments make up maybe another third close to half, but those four make up the balance of our budget. And as people think about this time of year, those tax bills come pretty soon. Right around the holidays, which I've never cared for, that's a state requirement that tax bills go out in December. And of course that's not a time when people wanna be paying off property taxes, they wanna be buying Christmas presents or doing things for their loved ones. But one of the things that I'm often asked, Wendy, is well, what's the difference between the property tax levy and the property tax rate? Could you give our viewers a little feel for what's the difference between the two? The property tax levy is the dollars that we're needing from property tax collections to support the operations of the county. So we have a budget of 49, what was it, 143.9. But the revenue source of property taxes is what the property tax levy is. Now the property tax rate is then bringing in equalized value, how it's gonna be distributed. So the rate is a calculation using equalized value in order to know what to apply into the different municipalities. So the property tax levy, again, is the property taxes that as local citizens we're supporting and contributing toward. And I think the property tax levy in total, wasn't it about 48 million? The 49.4. 49 million of the nearly $150 million budget. 49 million of that is property taxes. And then your tax rate is what you're assessed per thousand of value on your home or property. And we're pleased, and then I'll turn it over to the chairman, but we're pleased to share that the property tax levy as a whole went up a modest 1.8% or thereabouts. That's capturing net new construction while we're allowed to capture by law. The property tax rate actually was reduced. And in fact, if you look at the last 10 years, and Chairman Wagner knows this very well, if you look at the last 10 years of the county's fiscal track record, on average, each year for the last 10 years, property taxes have gone up just under 1%. So we've really been prudent in holding the line, and of course that's a credit to our team, but certainly a credit to the county board. Tom. Thank you, Adam. Thanks for being here, Wendy. Years ago, the Schrodinger County experienced a 5% or more increases in equalized valuation. Recently that hasn't been the case. It's either stayed very flat or even summits has gone down. Where are we this year relative to equalized valuation or where have we been in recent years relative to that? Well, the equalized value when I was first here was maybe 1% or less than 1%. The last two years, we do see some type of recovery back to that 5% average. So it's been a trend upward. Right now, it's the second year that we've stayed right around that 5%. An equalized value, just to again make sure our viewers understand it. What is that? That's the total value of all. Yes, equalized value is something the state puts together. And they're looking at the entire county. They'll look at all the cities, the towns, the villages. They're trying to do an equitable way of evaluation in order for us to distribute the property tax. With that increasing shows that the value of property and buildings, et cetera, are going up in recovering from the Great Recession, actually, I think. And also some more new construction being entered into the picture too between the combination of both of those. A number of counties put on a dark store referendum. We did not. You want to talk about that a little bit and how it affects equalized value and property taxes? Well, the dark store loophole is when a department, let's say Walgreens, their valuation is really being done from the perspective of it being a vacant or a closed store or hence dark versus being a very viable running operation so that that's a very big discrepancy on that valuation of that property. In doing so, it's going to, of course, decrease that department or that company's property tax that they need to participate in. However, it's just a shift. So the property tax is only shifting towards everybody else with that valuation being decreased. Right. And we said the county government is an arm of state government, so we're dependent on them without a doubt. And so how does the state impact our county budget and operations, do you think? Well, we receive state aides and state grants for health and human services, child services, transportation. The state also has mandated services that the county needs to provide. And in some instances, the state is providing funding for that, but in some instances, it's not. Or they'll start a new program and then slowly fade away in the support but also make the county continue with that particular service. The best example being the services at the court systems right now. So the impacts the state will have directly to us are mostly in the mandated areas. And I want to interject like in your time. This is probably one of the most challenging and frustrating areas of providing county services. One level of government requires you to do something and the other level of government then, the county has to administer those programs and services, but the level of government that's requiring you to do so isn't providing sufficient revenue to implement. So what happens? Well, we rely on property taxes to make up the difference. And what's really frustrating there is let's give an example. Let's say that the state requires to provide a certain health and human service to the neediest of the needy. Makes sense, the community supports it, it's the right thing to do, but they only provide you with a certain dollar amount which isn't sufficient to cover that. So the county has to pick up the difference with property taxes, yet that same level of government now has one size fits all property caps in place associated with net new construction. Sounds good, but if people suffering from mental illness is on the rise or people suffering from drug abuse is on the rise or the court system and the judicial system and dealing with victims, if all of that's on the rise and the state requires you to provide the service but doesn't provide you with sufficient revenue to do so, it puts a tremendous burden on local property taxpayers. And as I said, if we can only raise it so much, really there's the rub. How do we do more to help people suffering from opioid addiction or other really, really serious issues in our community that have to be resolved if local boards, local government doesn't have the flexibility, the authority to address it. So it's challenging and fortunately again, we've got a good team in place and we do the best to establish priorities, but I've been in this job now for 20 years, Chairman Wagner's been around longer that and local government and we often hear state government talk about the importance of supporting local control but there's example after example that just isn't the case. Through my work with the Wisconsin County's Association, I don't think there's any question and one of the frustrations that's supported broadly by county board leadership throughout the state of Wisconsin is frustration with unfunded mandates. And it isn't that we disagree sometimes with what the state is looking for us to do. Sometimes we're in complete agreement many times. It's just the fact that you need the revenue source to make it work or you're cutting from someplace else and it makes it difficult at times. No question about it. We also face from the state imposed property tax limits. You wanna talk about that and how that affects us? Well, one of the most challenging things that we face is the cost of the wages, especially the healthcare that's associated with the benefits and of course inflation. So currently the state has what's called net new construction. There are two ways that the county can actually raise the levy. One is this net new construction which is looking at the county and what new construction there is. But then also there's demolitions. So then they'll take that net effect and provide a percentage that they provide us that. That's the most that we can increase our property levy by. This past 2019 budget cycle was 1.62% was the allowable net new construction increase. But there's also a second way that we do increase property taxes and that's through the debt service levy. Now, truthfully, there's such a high limit on that that we really considered unlimited. So the debt service, those are the two elements in which the property taxes can increase. But operations is held tight to that net new construction. But I know you and Adam and the county board as a whole is very conscious of our debt from the standpoint of even though we have a much larger area like you talked about where we could go to borrowing, you have to be careful with that because that's how you can get yourself into a lot of big pickle if you borrow too much. And that was one of the reasons why I know we did the half percent sales tax instead of going to borrow for these things, pay for it with incoming revenue in the long term that's really gonna make Shibuya County, I believe, in a much better spot. Yes, and the guidance from the finance committee is also to keep that debt service moving downward. Correct. Last question for you, what are we anticipating? We talked a little bit about that, the county tax levy and the property tax rate for this year. This graph is showing the adopted property tax levy that we have, which is that 49.4 million. Last year, we were at 48.5 million, so there's an increase of approximately 890,000. Net new construction last year was 1.72, so again, this year was 1.62, so we actually were allowed to increase by less into 2019, yet our health insurance is, of course, with everybody experiencing health insurance actually was a significant increase of close to, was it 18% or it would have been 18, but it came to 15%, yes. So the equalized value for us though has been seeing a trend upwards, so we for 2019 was at 4.74, which we were coming off 5% last year. So we covered a lot of ground, we talked a little bit about the budget development process, we've talked a little bit about unfunded mandates and state caps that are in place, the difference between the property tax levy, the property tax rate, equalized value, and now I wanna transition a little bit into some of the creative things the county has done to hold the line and to establish priorities. Wendy and Tom certainly are well aware, we've done a lot to streamline, consolidate, gain efficiencies, but probably the most recent example of leadership and some heavy lifting that the county board did was implementing the half percent sales tax. We weren't the first to do it, in fact we were one of the last counties to do it and our county board took pride in that, but because of the needs for transportation in this community and because of the fact that if you delay maintaining your roads and bridges, it only gets more expensive, you're just kicking that can down the road. The county board knew it wasn't right and the county board acted and implemented the half percent sales tax. Wendy, please share a little bit about why that half percent sales tax was so important, not only to maintaining our transportation system, but also how it helped with our overall budget development. Well, like you said, the adoption of the resolution for the sales tax was that all policies are to be used for the reconstruction of road repairs. From that, we were able then to take those projects out of our five year capital plan, which is what we were borrowing for. So now we're not borrowing at all for any of our highway work. During that piece of the resolution and ordinances that went in place also was the allocation of a million dollars to be direct property tax relief. And we're doing that by reducing the debt service, which is reducing everybody's property taxes on a continuous basis. Now we creatively, as you said, have taken a portion of what we're calling a revenue sharing program with the municipalities, because we knew that the county itself, there were other roads that needed to be maintained. So we wanted to make sure that county overall was receiving influxes of sales tax revenues in order to handle the road repairs that are needed. So the townships and the villages and the cities are also receiving funds from the county for that. I was catching up on the newspapers this past week over the holidays, and I don't know, Tom, if you saw this, but there was a letter to the editor, and it was very short and sweet, but it was about the county implementing the half percent sales tax, and where is the property tax relief? We must have been deceived here on not seeing property taxes go down. And when I read that, I thought, well, obviously, that individual is the right to express their opinion, but they're also obviously not informed because due to that half percent sales tax, as Wendy just shared, we've reduced how much we're borrowing, we'll be reducing debt services associated with that borrowing for transportation projects. We're directly applying some of those dollars to provide direct property tax relief, and we're sharing it with municipalities so they don't have to raise taxes as much to cover their transportation needs. So it's done a lot of good work, and for me, it was a reminder that we need to continue to inform the community that they may not see a big decrease on their tax bill, but the fact is it's definitely making a difference. Infrastructure improvements. We also have, in addition to our annual budget development, a five-year capital plan. And this, again, reflects the thoughtful approach that the county board takes to determining what our priorities are, where we're gonna make investments. Wendy, please give some examples of some of the infrastructure improvements that the five-year capital plan includes. Well, we have some work being done at the marsh with a multi-purpose building and a storage facility out at the marsh. One of the larger capital items will be the replacement of the financial systems for the county, which will bring us, our systems are from 1999, so that's bringing us really some good technology that is as much needed. We have fire alarm systems and air conditioning controls, your basic building service type of maintenance that's being done. We also have some remodeling at the ADRC, which if you've been to the ADRC, you can tell that it kinda needs a refresh. So we do have dollars allocated towards the ADRC. We have some boiler replacements, not only at the courthouse, but also at Rockinol. And then customs facility is targeted for the airport. It is a part of the first phase of a possible two-phase type project, but in the 2019 budget itself, it's only about the customs facility for the airport. And I'm glad you raised the customs facility. I wanna give a shout out to the folks at the Aviation Heritage Center. We've had some discussions within the last couple of months about a customs facility and welcome center. And just a quick snapshot, the customs facility component of this project is really being driven by or asked for by the COLA company, largest employer in the county, and a global company that is looking for a customs facility right here at home at our airport so they don't have to fly into Racine or Appleton or Green Bay when they're going through customs or fueling up to go abroad. So it's a good thing for our airport. It'll be a benefit to other businesses as well. Again, it's predominantly the COLA company that's seeking that. In addition to the customs facility, which by the way will be staffed by federal customs agents fully funded by the COLA company and the building itself is gonna be built through a grant from the state. So this is not coming out of your property tax levy. In addition to that, the county board's been talking about adding a welcome center. But as Wendy said, we're really gonna slow the bus down on that because we do have the beautiful heritage museum right there, the aviation heritage museum of Wisconsin and they are providing some of those services and wanna continue to improve upon them. So we're glad to work with them, but also glad to see this customs facility established. We hope to get it done by the Ryder Cup, which will be good for supporting our tourist industry as well. So budget process, Wendy, to sum it all up, we developed this budget. These programs and services are here to support this community, whether it's law enforcement, health and human services, transportation maintenance, planning and resources. I mean, you name it, we're here to support our community and we're very proud of it. If people wanna get involved in that budget development process, obviously they can contact their county board supervisor, whether it's chairman Tom Wagner or whoever their specific representative is, but how else might they get involved and have input on the budget development? Well, on our website, we have all the agendas for the liaison committee so they can go directly to these liaison committees during the budget process, which was starting in June, through June, July, August is where you're gonna be able to find on those agendas exactly when they're covering those budgets. Again, they're also able to come to the finance committee all along that process. These agendas are always posted. We also have a public hearing, so the public hearing is held the latter part of October and they are welcome to join the county board and have some dialogue and some questions answered during that process. And we only have a minute left, but I wanna end with where I started. Wendy, you've been here now a little over three years. You've really been a part of helping me make good things happen and I know you take pride in the staff that you have, the team you've built in the 30 seconds or so. Just talk a little bit about your staff. I know you have a deputy finance director. You've hired some people over the last three years. How important are they to the overall budget development and supporting other departments? They're extremely important. We've instituted where each department has, I guess, an accountant's lead or a liaison accountant in which they're now fully engulfed in that activity or that operation. So not only is it part of the budget that they're assigned that, they're assigned that now year round. So they're a big part of making sure that nothing's missed, that they're forecasting correctly that all projections are pretty tight. The finance department is also fairly young. There was quite a bit of turnover since I've been here for three years. So it's a very young, smart, bright team. Very proud of them and they are irreplaceable to me. Well, and that's where we'll end. If you have any questions for Wendy, don't hesitate to contact our finance department. You can look up information on our website. But Wendy, thank you for being here today. Thank you for the heavy lifting you do with our financial systems, the support you provide, the chairman and I, the board as a whole, the department heads. I couldn't be prouder to work with you and I think the staff you have built is superb. So thank you. Thank you, Wendy. And thank you for joining us today. Hope you got a little better feel for our county on budget development process. Hope you perhaps learned something today and hope those tax bills you receive in December won't be too excruciating to open up. But thank you for joining us. Thank you for your support. Next month, Charlene Cobb's gonna be here, a veteran service officer. She's gonna be retiring after 10 years with Sheboygan County. So we're gonna say best wishes to Charlene Cobb. Until then, have a safe and happy holiday season. Thanks for joining us.