 Welcome to Sheboygan County Government working for you. My name's Adam Payne, co-host of this program with Chairman Bill Gehring. And today we're very pleased to have our guest, Tim Finch, our finance director with us, to talk a little bit about the 2005 budget process that certainly we've been working on, as well as every department head employee involved with the budget process since June. And Tim's gonna talk a little bit about the roles and responsibilities of the finance department that plays a very important role in county government. So Tim, good to have you with us today. Why don't you start by sharing with our viewers a little bit about your personal background and how long you've been with the county? Sure, I've been with the county five years now and five years on May 1st. And prior to being in Sheboygan County, I actually worked in Kenosha and lived there for 13 years doing similar kind of work. I've really enjoyed the last five years. It's very challenging. The budget process is only one of the challenges that I have in my work day. But it's interesting because there are always different things happening politically and financially and with accounting things. So it's been a lot of fun for the last five years. I've enjoyed it. Oh, good. As many of our viewers may be aware, especially if they've watched this program before we try to highlight and focus different departments. And we have 23 departments in Sheboygan County, all of which work with the finance department because of their key roles and responsibilities. Again, why don't you give our viewers a flavor for the roles and responsibilities of your department? Sure. The finance department is really responsible for overseeing all the financial activities of the county, getting into accounting, auditing, dealing with accounts payable, accounts receivable collections, those types of things. So we have some internal activities that we do within the finance department to support the county. Then we also go out within other departments and monitor and sometimes recommend changes in the way they do things, the accounting flow and the different types of processes they have to make sure that we're complying with generally accepted accounting principles. So pretty much anything that's finance related, we get involved in. Also, a couple of other things we do that are a little different is our new JD-Edward software program that we've had since 2000 requires a lot of hands on involvement from financial people. So our department's been heavily involved and still heavily involved in doing training and in developing new uses for that application. Very powerful program. And we haven't tapped everything we can do with it yet. So that's another major function of our department. Now you've got some excellent staff. And Mary Wegman is our deputy finance director and you have some other staff playing critical roles. How many employees are in the finance department? Currently we have nine people in the finance department. A few years ago we actually had 15, but there have been some changes in the last few years. Some streamlining. We did some things with payroll to consolidate that. And so we're actually down to nine people now. We are looking to add one more. I think we're a little bit light. So we're looking to fill, we have three vacancies and we're looking to fill one of those vacancies with the permission of the county board we're gonna do that. And then at 10, I think we'll be at a good strength. Very good. Well, as a lot of people know, it is that time of the year where municipalities are dealing with the annual budget and it's never a real pleasant process. I don't know if we'd rather make sausage or put that budget together. It takes a lot of work from a lot of different people and frankly it's the most important public policy document that the county board and other local units of government adopt. Why don't you give our viewers a sense of the big picture? What's involved with this process of developing a budget? Sure, and you're absolutely right. Nobody really likes to do the budgets. I enjoy it, but if we didn't do budgets, you probably wouldn't need me. So I enjoy the process, but it is daunting and it's really, it's involved pretty much to a year-round process because early in March and April, the county board chairman and yourself, the finance committee and myself will start thinking about what are some of the goals for the upcoming year? What are the challenges that we're gonna face? What kind of a levy do we think is appropriate to levy for the year? So those kind of things start getting all mixed up together to develop our targets. So that happens as early as March or April. And then in June, that's kind of a milestone event because that's when the budget kickoff takes place. Second or third week in June. And during the kickoff, everyone comes together, the finance committee comes together with yourself, the chairman, to give the departments their instructions. Here are the goals for the upcoming budget year. Here are your targets. Here's what we wanna hit as far as a levy amount for the coming year. And then the mechanical instructions of how to fill out your budget, how to use the computer to do that. How to work with your departments and of course how to get your liaison committee involved, which is critical that they be involved and they are very involved in the process. So that's a critical point in June when we do the budget kickoff. From that then, departments go back with their instructions and they start working with their staff to come up with their actual budget for their department. It is a responsibility of a department head to submit that budget to their committee but they have the help of many people to do that. So they'll work with their staff, come up with a tentative budget, present it to their liaison committee. Normally they'll do that, excuse me, I got to step back for one step. Before they go to their committee, they have to get past you and I. And as we both know that that can be a rigorous process because we look at their budget, how they've prepared it, some of the numbers they have in there and we challenge them on different issues. If we don't think there are things that are appropriate, we're gonna ask them to go back and take another look. So they have to get past our review and then we can also help them on ways that they can approach their committee to explain what they're doing, the best way to explain it. So we try to give them some advice too. But between about July 5th and July 30th, that's when they would meet with you and I to show us their preliminary budget. Then they go back to their committee after they've met with us and that's around the middle of July to the end of August. They have, that's the timeframe when they have to do that. At that point they need their own committee's approval for that budget. Then they bring it forward to the finance committee and they would come and present their budget to the finance committee with the committee so the department head would be there and usually members of the committee are there as well. Then after that, we go to publishing a budget notice and the budget notice is a document we put in the newspaper to tell the public here's what the preliminary budget is, here's what's been approved by all the committees, what we're looking at for the next year. Then after we publish the notice, we actually have a public hearing. The budget's presented to the county board and then there's a public hearing and then it goes to final adoption in November. So between October 5th and November 2nd, there's review by the public, by the full county board and then it's finally adopted by the county board. So it's a long process. Very good. From my years on the county board, Cam, it's been 16 now. It seems that every year the budget process gets easier and I think one of the reasons that it has gotten easier is that in 1999, the administrative coordinator and the county board came up with the goals and targets principle to kind of level off the tax rate, not having it go up and down from year to year. But can you talk a little bit more about the actual involvement of the liaison committee with the department head in developing the budget for each department? Sure, be glad to. And I think the process has worked very well because as we'll look at it a little bit, there have been, there were some peaks and valleys and the rate is pretty much steady enough now. So I think the process has worked very well. The liaison committee, which we asked about, each department will have a committee that oversees that individual department and they're critical because they're really the first line of defense in having, putting together a good conservative budget. The department has a responsibility to prepare the budget, but it has to be presented to their committee and has to be approved before it comes to the finance committee and then ultimately the full county board. So they're critical in the process. I think generally, I think they do an excellent job at screening the budgets. It's kind of difficult because they don't know the day-to-day operations of what goes on, what the department head does, but I think they do a great job of the information they have. I think in the last few years, I've noticed that they say tougher is the only word I can think of. They've been a little tougher in general about budgets that come to them, scrutinizing them pretty closely. Okay, we've heard a lot about tax limits. Currently, are there any limits on how much the county can tax? Yes, yeah, back in 1992, the legislature enacted, they froze the tax rates for counties. So, Shboyton County along with every other county was frozen at whatever rate we had in 1992 and affected for the 93 budget. For us specifically, our operating, and there are two components, there's an operating rate limit and there's a debt rate limit related to debt service for some of our bigger projects. But the operating one is really the most critical because that is truly frozen. It was frozen for us at $5.39 per thousand evaluation. So, we can never go above that. And the only reason our levy can go up is because even though the rate's frozen at 539 as equalized value goes up, our levy multiplies the rate times the equalized value. So, we automatically get a bump in levy each year, but not because the rate's allowed to go above that maximum. But we're not at the maximum. We're actually about 19 cents below the maximum for 2005 right now. So, we have a little bit of cushion where we could raise the rate up higher than we have it right now currently. Okay, how has the county tax rate performed in the last year? Is there a chart to show us? I guess I do. The tax rates? Sure, right here. The chart here shows the rate from 1990 through the estimated for 2005. 1990 is all the way over on the left. I'll try to hold this as steady as I can. And then currently, you can see that we're looking at a rate of 629 for 2005. And if you look at the last few years over here, this is a period of time that you'd mentioned where the budget, goals, and targets have been established by the county board. And what we've seen is a very gradual, controlled decline in the tax rate. Last year was 640, I think the year before 648, something like that. So we've had a very controlled decline in the tax rate. And you can see in some of the previous years we didn't have that. But in the last few years, I think it's gone very well. And I think the goal has been achieved. Really had stability. Since we put that new plan in. Very much. In the works. Could you also talk to our viewers a little bit about the revenues and expenditures? Sure. Where the tax comes from and where it goes? This is interesting. This is maybe something that's most interesting to the individual taxpayers. Where do we spend our money? And for the, actually I'm gonna go to the expenditures first. For the expenditures for Shboygan County, we've broken them out here into some major categories. The total amount for 2005 preliminary, right now subject to approval of the board is about $144.5 million. So that would be total expenditures for the county in all categories. And then we break them out into functional areas. General government being the top functional area, which include all the administrative services, registered deeds, finance, county board, administrative coordinator, building services, those kind of administrative functions that we do. Public safety is a big category at over $14 million. That would be mainly the sheriff's department. And game warden is also built in, but that's a very small budget. So the sheriff's department, which includes the jail operation, is a very large part of our budget. Public works over almost $14 million would be the highway department in the airport. Also very big, large budget area. Public Health and Human Services with a very large public health department, and combined with veteran services included in there and child support, almost $40 million of our budget goes for those human service type areas. Healthcare centers, that's one that's been in, I discussed much in the last six months or so. They have a very large budget also as well at $32.8 million. What's interesting about this that I'd like to point out for our viewers is if you look at the pie chart, again, as Tim just went through, you can see where the pieces of the pie are going. And the two largest departments are the healthcare centers and health and human services. Those two pieces combined really take up about 50% of our overall budget. And then you can see where it breaks down to highway and the sheriff's department, what have you. But what's interesting I think is when Tim then points to where the revenue is, you'll see some different components of that pie chart and how that breaks out as well. Yep, good point. Public Health and Human Services would be the, I'm not sure what color, there's light blue at the bottom and it's the largest single component of our expenditure budget. And then on the revenue side, a number of different areas, of course tax liabilities included in here, but the number one listed here, not necessarily an order of dollar amount, but is intergovernmental. An intergovernmental revenue would be mainly state and federal grant revenue. State-shared revenue is included in there. And of course, highway transportation needs is included in there as well. But a lot of the grants are associated with the Health and Human Services Department, which Adam, you mentioned, is the largest single budget we have in the county. So there's a lot of state and federal, not quite as much federal, but a lot of state money is included in those budgets. So intergovernmental is a very big piece of our revenue stream. Licenses and permits, it's actually very small, $359,000 for the county. So we do licensing for a number of things through the planning department and some of the other departments, County Clerk, it's very minimal. Finds forfeits and penalties, traffic tickets, ordinance violation fees, also very small, less than 500,000. A big one, public charges for services. And that would be this light blue section down here. Mainly that would be the room and board revenue from the healthcare centers. That's the biggest piece of that. Number of departments charge the public for different things that they do, but that's probably the biggest slice, or a piece of that, slice of the pie. Interest in other revenue, we have interest in our investments, penalties and interest on late tax payments. We collect that. Interdepartmental revenue, 19 million, that's between departments of the county, there are transactions. Departments do business with each other, so they generate interdepartmental revenue and interdepartmental expense. It's an internal thing, but we do show it in the budget process. Property taxes, 43 million, this actually includes a little bit of some other personal property tax. So for our property tax, we're gonna be looking at a little bit under $43 million for 2005. And just a quick point here, if there's anything that I'd like our viewers to take away from looking at this revenue chart, would be, again, property taxes of that $144 million that the county relies on for operations, 43 million of that is direct property taxes. So when we see decreases in state or federal revenue, that immediately puts more pressure on the local property taxpayer. And that's been one of the challenges that I know you're gonna go into next a little bit that we've had to face with specifically the health care center. As we've seen state and federal dollars decline for our health care centers, that puts more pressure on the local property taxes. And when you have 23 or 22 other departments also relying on those funds, that puts the county board in a real difficult position and they've got tough decisions to make. Yeah, it's a tough issue. No doubt the dark blue section is the property tax section. And you're absolutely right. Anything you do, if you lose state grants, federal grants, any of your charges for your public services, those go away. You've got to increase property tax revenue and we're limited. Bill asked the question, is there a limit? Yes, there's a limit to what we can tax. So we can't let that piece just increase. We have to keep control over that. What are a couple of the most challenging areas that we have in controlling the tax rate? Well, there's some good ones. One of the probably the biggest long-term challenge we have and I know people that work in the budget realize this is wage and benefits because it's a continuing constant progression and normally you have across-the-board increases that by union contract we have to do that and then for the non-bargaining people, you have to pretty much follow suit, not completely, but you have to have increases for them. So wages and benefits are the biggest long-term financial issue that we have to deal with and we have to find some way to get that increase in wage and benefits under what we can increase our levy each year because actually right now the amount of levy we can increase each year is less than what our wage and benefits are going up and that's a long-term, that's a huge issue. But there's some other ones too. State-shared revenue is something that we've dealt with in the last few years, not knowing what's gonna happen. In 2002 we thought it was gonna all go away in the blink of an eye and so we did some very quick financial planning to try to deal with what would we do to solve that problem, it didn't go away but who knows what's gonna happen in the future so that's a little bit of an issue but long-term that's not as big as a wage and benefit issue. IGT is another big one. That's the Intergovernmental Transfer Funding. Federal funds administered through the state for counties with nursing homes. In 2002 we got $8 million in IGT funding. For the 2005 budget, for 2005 budget we're looking at about 3.3 and in future years we're hoping it'll be 2.7. So there's been a huge drop in the funding and that hasn't been made up. The reimbursement rate for Medicaid, Medicare, et cetera, they go up somewhat but they have not compensated for this so that's been a huge issue and will not, I can't see that getting better. So basically when the state catches a cold the county also gets the flu or catches a cold there's a trickle down effect. Absolutely, in this case the federal government, you know also if they get a cold and have a problem we're sneezing to right along with them. It may take a little while to get down to us but we're gonna feel the effects of it too. And when you mentioned the state shared revenue though you're right it didn't go away we did see a reduction, I think a reduction of about 14.7% and the city and other municipalities saw a reduction as well and I think that's one of the reasons why the city of Sheboygan is struggling right now with their budget challenges in part due to the decrease in state shared revenue. That's correct, there was a reduction. Given a nice overview of the budget process where some of our expenditure and revenue comes from could you share a little bit Tim, some of the initiatives that have been real positive from a standpoint of new ideas, new initiatives. We have a five year capital plan as you certainly well know why don't you give our viewers a feel for some of the new positive initiatives that are happening in the community. Sure, be glad to Adam. We've got a number of things on tap in 2005 and our plan is actually as you mentioned over a five year period. So our plan for 2005 to 2009 includes a number of items, airport improvements continue and the airport is a real success story in Sheboygan County, not mainly but partly due to the fact that we get a large reimbursement. Most of the projects are reimbursed at 80%, some are reimbursed at 90%. So the county costs for some of those major improvements is small compared to the value of the improvements. So they continue to do runway expansions at the airport and some hangar improvements expanding the level of service to Sheboygan County there. So that continues in 2005 and actually throughout the five year plan, there are improvements for each year for the airport. The roof replacement project, this is a brand new one starting in 2005. This is gonna go over a number of years to look at doing some maintenance on the roofs throughout the county. This would be a number of buildings throughout the county. So that's in the works. Some heating control upgrades at the courthouse, Taylor House renovation, that's part of the museum, Sheboygan County Museum, and the county owns those buildings. So there are gonna be some upgrades to bring the Taylor house back there, some new work there. And the very building we're in that we're filming this today, just saw a $4 million science edition go up and if folks see this program prior to next week, we're having a dedication next week that they might wanna be, they may wanna come down and see the new facility and go through the science edition and new classrooms. I just wanted to make sure I got that plug in here because I know UW's real proud of the work that's been done out here. Yeah, this is a fine campus and the improvements they've made out here, it's been amazing. And I think they're using that new science side as far as I know, they're using it now in schools and sessions, so that's great. And along with that, UW-Sheboygan has in the five year plan a new information technology center. Funding for that will start in 2005 and continue for two more years and part of that's due to the generosity of acuity and donating some money. So some really good things happening here at UW-Sheboygan. Some other computer related items, improvement of the data storage capacity in the IS department, some things that the Sheriff's department needs as far as an indoor pistol range, some elevator improvements, the State Highway 23, they're actually gonna extend four lanes for, I believe it's three more miles westward toward Fond du Lac, so that's gonna be improved. Along with some of the interchanges will be improved there too. And the last project is very interesting, daunting and exciting all at the same time. It's another computer project at Human Services to, and we love computer projects, to completely replace and enhance the systems they have now. They have a number of systems to track everything that they do and this would try to, this system would capture everything, fill in some of the blanks and integrate what they have now with our GD Edwards accounting system. So it would be a major improvement, it would be a lot of work, certainly a fair amount of expense, but in the end, a much better product. So the budget kicked off in June, as you said, it's almost an annual process when you take into account the planning that begins in February of March. The department has been working with their key staff to pull together their individual department budgets, they've met with us, they've met with their liaison committee, they've met with the finance committee, a few of them still are. And you mentioned early on that the public participation is really critical in the development of that budget. Yet, the three of us know full well that we don't see as much participation as we'd like. What opportunities are still there for people to get involved if in fact they wanna have some say on the budget development? Okay, they absolutely have an opportunity, a very good one left. On October 26th, there'll be a public hearing in the courthouse, in the county board chambers, and that'll be anyone from the public will have a certain amount of time to speak to the budget. So they can ask questions, make comments, whatever they wanna do. They have that opportunity, and also on November 2nd, the final budget will be adopted by the county board. There's not a public hearing per se on November 2nd, but someone could attend and listen into the proceedings. So October 26th would be the critical meeting. If the public wants to have input, they need to come to the October 26th meeting. And since it is an annual process, if you miss out this year, next year, the sooner you get involved, really the better. And as Tim described well, the liaison committees, that's where a lot of the discussion happens about priorities and funding levels, and the earlier you're involved with those discussions, perhaps the better. Health and Human Services Department, as many of our viewers know, if they follow that program or receive any services from that department, they have hearings in both Plymouth and Sheboygan, and that's a good opportunity as well to have some input. So we covered a lot of ground. Tim certainly covered a lot of good information. If you have any questions or concerns or suggestions, don't hesitate to contact Tim Finch in our finance department. You can contact the county clerk's office and she'll put you through to any department head that you're interested in speaking to. I certainly would be interested, County Board Chairman or your elected County Board Supervisor, and try to wrap this up in a real positive framework. The last five, six years that I've had the opportunity to work with these two, as Tim laid out, our budget process has been highly successful. In fact, the tax rate in the last six years were positioned for 2005 to have a lower tax rate than we had in 1999. And I think that's a real credit to all the department heads and staff who pull those budgets together. And the bottom line is it's a credit to the County Board because they're the ultimate decision makers. So thank you for joining us today. Next month, our guest will be Mike Collard from the Human Resources Department. He's been working very diligently with the Human Resources Committee, negotiating with our employees and getting some assistance there with health insurance, co-pays and premiums. And he's gonna talk a little bit about the good work that he's done. So until then, on behalf of the County Board, Chairman Bill Gehring and myself, Adam Payne, thank you for joining us today.