 Welcome to Sheboygan County working for you. I'm the host today, Mike van der Steen, County Board Chairman, and with me today is our administrative coordinator and our usual co-host for the program, Adam Payne. Adam, welcome to the program today. Thanks for having me, Mike. Some of you may have heard that there's been a move afoot for Sheboygan County leadership to consider a half a percent sales tax. Is a good prudent move to improve our financial picture in the future and help us the county to meet many of the demands that they're facing right now. And Adam, to his credit, has been taking this information on the road, making many public appearances, and putting some information together for our county supervisors to consider. And today we're gonna find out a little bit more about what Adam's been talking about, look at some of this information, and hopefully give everybody a more comfortable feeling with the situation that we're in right now. Adam, could you just tell our viewers a little bit about our county's fiscal track record and what it's been in the last decade? In a word, excellent. We have a track record that I know you and I and the county board are very proud of, particularly of late, the last three years we've provided property tax relief for the only county of 72 in the state that have reduced our property tax levy three consecutive years. And now we're going on nine straight years of reducing the property tax rate. So overall, I think it's a track record we can be very proud of, though as you know, as little as 11, 12 years ago, we were experiencing 15% increases in property taxes, in fact, two in a row. But since then, with the leadership of the executive committee and the finance committee, we've put together a budget process that really has our organization working as a team, the county board collaboratively establishes a goal. We established targets for all the departments. And particularly if you look at the last five, six years, our track record has been excellent. Thank you. Could you tell us a little bit more about what the county has actually done in different project areas to keep property tax in check? The budget process was a key, key improvement for us. Prior to the last 10, 12 years, we didn't really have a budget instructions. The county board didn't collaboratively establish a goal. We weren't all pulling in the same direction. So our budget process was certainly one of the key reasons for our success. But the other reason is, frankly, we've just been striving to become more efficient, more effective, we've been streamlining. And as you know, a number of departments have been consolidated. We consolidated register and probate with the clerk of courts, the Comprehensive Healthcare Center, which was a real emotional change, but an important change that the county board made was consolidated with Rocky Knoe, Rocky Knoe Healthcare Center. Payroll has been consolidated with information systems, printing with information systems. We privatized Sunny Ridge in 2007, which again, a very difficult, challenging decision, but one that has led to a property tax relief. UW Extension was consolidated with UW Sheboygan out here on the Sheboygan campus. Property listing was consolidated with our treasurer's office. Land and water is now co-located with our planning department and our Aging and Disability Resource Center, which was running space in Sheboygan, is now out in what used to be the Ag Building in Sheboygan Falls. So we can point to example after example where we have either co-located, consolidated, streamlined, or frankly, just reduced some of the programs and services that we provide. Many people aren't aware of it, but our payroll today in 2010 is less than it was in 2002. Less today than it was in 2002, and in fact, our staffing at that time was a little over 1,300, and now it's about 950. So we've done a lot in the last decade. Those are some great accomplishments and a lot of them are due to bringing an individual like yourself in, somebody who's a top-notch person that's worked with all the department heads and given us one person that oversees the entire budget. But what are some of the biggest challenges that you've faced in trying to accomplish this job? Well, thank you for the kind feedback and compliment, Mike. As you know, it's a team approach, and that's what I really take pride in is we have a county board and an organization that more often than not is pulling together and trying to make good things happen. And when I think of a few of the more challenging obstacles we've had in the last decade, I mentioned consolidating the Comprehensive Health Care Center with Rocky Knoll. We had three nursing homes at one point, as you know, and we were the only county in the state that owned and operated three nursing homes. So when the decision was made by the county board to consolidate comprehensive with Rocky Knoll, put a $10 million addition on it at Rocky Knoll, that was emotionally charged. A lot of residents and family members were concerned, but when it was all said and done, they got a state-of-the-art facility and now people look back and say, what a great decision. I would transition right that to privatizing Sunny Ridge. Sunny Ridge, as you certainly know, due to your leadership, there was discussion for a number of years about privatizing it and taking that cost off the back of property tax payers and very emotionally charged. I still, as you know, one of my two grandmothers isn't real happy with me because we privatized Sunny Ridge, but since doing that, we reduced our property tax levy and subsidy to operate these facilities from over 6 million to less than 2 million. And Sunny Ridge continues to operate and provide a service and the sky has not fallen. So definitely a challenging time. Probably the third thing I would mention, as I briefly expressed before, it's just the budget process. Though we have a good one in place and people always pulling toward and a goal that the county board has established, it still comes with some hand wrangling and some angst because when you have a specific target to achieve, every department's been tightening their belt year after year and trying to do more with less. And that takes some effort and can be a real challenge, but so far so good. Okay, going on, could you characterize the relationship with your boy and county has with the state of Wisconsin? And a word broken. The relationship between the state and county government is a disaster. And the reason I say that is based on two decades of experience. Many of our viewers may not know this, but county government is really the right arm of state government. So you have 72 counties across the state implementing state mandated programs and services. And essentially what's been happening for the last two decades is the state will create a program and they create a lot of good programs, have created a number of very important programs to people. But what they don't do is then make the decision of how to fund it. So they create this program at the state level and don't take responsibility for how to fund the program. Instead what they do is they pass it on to county government and they say, should boy and county board, you deal with it, you figure out how to pay for it. And for the last two decades, that's what the county board's been doing, tightening our belt and frankly putting increasingly more pressure on property taxpayers because the state's not fulfilling its responsibility. That insult to injury, not only does the state pass mandates that we're responsible to implement without funding, without necessary funding, they then point the finger at local government and say your property taxes are too high, which may take some of the focus and responsibility off them, but it certainly is hypocritical to be pointing at county government for raising property taxes when the state hasn't provided necessary funding to implement their state-required programs. The last thing I would comment on with this broken relationship with the state is there are a couple of areas where counties can collect revenue and one is our clerk of courts office. We collect fines and forfeitures for speeding tickets, things of that nature and the state dictates how much we can collect. What's incredible, just unbelievable is that over the last two decades, all this money that we collect, what the counties have been able to hang onto, what Sheboygan County's been able to utilize has remained flat, flat for 20 years, as though wages have gone up, benefits have gone up, costs of business have gone up, yet the state continues to take increasingly more and more and more of the revenue we're collecting. There's has gone up hundreds of percentage points where ours has remained flat and what's resulted, Sheboygan County property tax payers are now shouldering more of that load and you and I and every property tax payer in Sheboygan County is now spending over $700,000 collectively to support a department that's administering state mandated programs and services that we have no control over. Yeah, many of us have heard of both those unfunded and underfunded mandates, but what's the real problem here? When we talk about mandates as local officials, I think sometimes folks' eyes glaze over and well, what's the problem, whether it's the state paying for it or county paying for it, just get it done. But very simplistically, if the state creates a program and requires counties to implement it, that's a mandate, it's something we have to do. And as I mentioned before, the core crux of the problem is one level of government is creating the program, not taking responsibility on how to pay for it, passing the buck to local government and saying here, not only are you required to implement this, but now you need to find a way to pay for it. And more and more of the burden of paying for that is being put right square on the backs of property tax payers. And I resent it and I think it's wrong. That's really true. And could you tell us a little bit more about the trends on the state level for state shared revenues and other state revenues that we receive from the state? State, there's a number of pots that do support county operations and health and human services, for example. They'll create a program and initially may provide sufficient funds, but over time not provided, it continues to go down. Probably one that our viewers have heard raised from time to time is state shared revenue. State shared revenue is funding that is provided to counties to help support these unfunded mandates. In the last 15 years, state shared revenue has gone down 40%, 40%. So once again, the difficult position we're in is we're required to implement programs and services, yet not only does the funding upfront that was provided for that program and service not only has that gone down, but this broader pot of state shared revenue has been reduced 40%. It's very difficult to run a business and be fiscally responsible if you're required to provide a level of service and the funding doesn't follow through. You know, we've been talking about the half a percent sales tax as a solution for Sheboygan County to consider. Can you tell us a little bit about how many other counties are using the half a percent sales tax and how does this process work as far as setting it up and when it would become effective if they do decide to approve it? Well, as you know, and as I think most board members certainly feel, none of us want to implement a half a percent sales tax. None of us are relishing talking about it. This very program and the fact that we're sitting here talking about introducing a half a percent sales tax, we've been working so hard the last five, 10 years to avoid that. But reality is wishful thinking doesn't pay the bills and what the state did do back in 1986 was they created a mechanism where counties could implement a half a percent sales tax where essentially that has added to the five percent sales tax that exists today. 63 of 72 counties have already implemented this. Like Sheboygan County, they've been trying to gain efficiency, streamlining, consolidating, but at some time between now and 1986, their county boards passed an ordinance stating that we've hit that point where we need to diversify our revenue and take some of the pressure of property taxpayers. So 63 of 72 counties have already implemented a half percent sales tax and by action of the county board, that ordinance has then forwarded onto the Department of Revenue and then quarterly that would begin to take place. So if the county board approves going forward with implementing a half percent sales tax this spring, it would take effect in Sheboygan County October 1st. Okay, now I understand that a good portion of the money that comes in will be paid by tourists who are visiting our area. Could you give us a little idea of how that would work and how much money we could expect from the tourists in the area? According to UW Extension, they anticipate that about 8.9, let's round it off, nine million dollars would be raised annually from a half percent sales tax. About 20% of that the state estimates would come from tourists. So roughly 1.82 million dollars would come from tourists. Believe it or not, and many of our viewers may not know this, Sheboygan County right now is the second fastest county in the state of all 72 with tourism behind Sauk County. Second in the state, which is something to be proud of and means that we have increasingly more people coming here and spending their money and also utilizing our services, our roads, our infrastructure, requiring law enforcement and other services to keep order in the community. So the thought is, if we can capture the tourism portion of this funding, which we do through a half percent sales tax, there again, rather than our parents or grandparents or children paying increasingly more in property taxes to fund and support programs and services, support infrastructure such as roads, critical programs such as law enforcement, let the tourists help pay for some of that. And that's what we're suggesting. That sounds pretty good. Now, what about the concern that consumers in general or tourists might go elsewhere because of our half percent sales tax if it was implemented? This argument used to be raised more, I think, early in the process than we're hearing now, but some people have said, well, Doug Gonnett of Sheboygan County puts his half percent sales tax on the state five percent. I'm gonna shop elsewhere. Well, what would the half percent sales tax mean to a consumer? If you rent a video for two bucks, it's gonna cost you two bucks and a penny. If you buy a big screen TV for 800 bucks, it's gonna cost you $804. So let's say in a situation like that, you feel, hmm, I don't know if I wanna spend that $4 here, I'm gonna drive to another county and save it. As a practical matter, are you gonna drive to another community, another county to save $4? You'll spend more on gas and your time alone. And secondly, where are you gonna go? 63 of 72 counties already have the half percent sales tax in place. So though there are some communities you could go to, I think most people recognize, I'm not gonna drive out of the county to save $4 on a big screen TV. And the other thing that affects this is other states. And how does Wisconsin compare to other states when you take a look at sales tax? That's a great question because, okay, if the tourists aren't going to go to another county, for obvious reasons that we just discussed, will tourists stop coming to Wisconsin, or will folks be more inclined to shop in another community? And I wanna make sure I get this accurate, so I'm looking at my notes. The maximum sales tax for Wisconsin is 5.6%. There's the state 5%, you can add a county half percent, and then some counties have also added a 0.1% if they have a stadium or something like that. So the maximum state sales tax is 5.6%. In contrast, in Michigan it is 6%, in Iowa it is 7%, in Minnesota it is 7.9%, and in Illinois it is 10.3%. So for anyone to suggest that tourists aren't gonna come here because of a half percent sales tax, or gonna shop in one of the other states that we're adjoined to, it's not gonna happen. What's really at stake here for Sheboygan County if we do implement a half percent sales tax? And that's the gist of the whole discussion. What's at stake? As it stands today, 75% of the property tax levy, the Sheboygan County property tax levy is supporting mandated programs. I mean, isn't that remarkable? If the state was fully funding the programs and services they created, taking more responsibility for it, we wouldn't be subsidizing state mandated programs to the tune of 75% of the property tax levy. And it's gotten to the point now where something's got to give. If we don't diversify our revenue streams, though we've made cuts in the past and will continue to need to streamline and make reductions, we're gonna have to make significant reductions. And when I talk about significant reductions, for example, we're anticipating about a $3.8 million deficit going into the next year. If every county department took their portion of how much tax levy they're relying on to make up that $3.8 million in deficit, the Sheriff's Department would need to cut back almost over a million dollars. The Health and Human Services Department would need to cut over a million dollars. The Highway Department would need to reduce their operations by $300,000, $400,000, and all the other departments would have to make reductions. We're pretty lean right now. Doesn't mean we can't do more. Doesn't mean we won't do more. But to cut over a million dollars at the Sheriff's Department is equivalent to about 17 deputies. To cut over a million dollars at Health and Human Services is will amount to a number of programs for the neediest of the needy that are relying on it more right now with a weak economy than ever before. So there's a lot at stake. The one key example I like to give people is with the Highway Department. The Highway Department, as you know, Mike, we've got 450 miles of road to take care of. And what Greg Schnell, our Highway Commissioner, shared with the County Board recently is in order to maintain those 450 miles of roads, we have to do so many miles of overlay every year. And it's good to average about 30 miles of overlay a year. Right now we're averaging 10 to 15. When we do a mile of overlay on a road, it costs about $100,000 to maintain that road. If we don't do that mile of overlay and we let that road further deteriorate, it's gonna cost twice as much, $200,000, to rebuild the top portion of that road and get it back to the condition it needs to be in. If we don't do that and really let it deteriorate, your whole foundation is destroyed and you have to repair that mile of road at a cost of $1 million. So I would ask any of our viewers who are listening or anyone who certainly understands how important an infrastructure is and how important transportation is for our economic development, what would you rather pay? $100,000 to maintain our roads per mile, $200,000 to essentially rebuild or really do some significant work, or a million dollars to do that work. The answer's obvious, but if we don't diversify our revenue streams and take care of our infrastructure today, we're gonna be passing on one heck of a debt and one heck of a burden to our children and grandchildren. And I just think that's wrong. I agree with you, Adam. But what kind of tools does the County Board have right now to help make them decide on these program reductions that are necessary? They've got a couple of real good tools. The budget process is certainly one and when they establish a goal and establish targets, our department heads and our team have worked very well together to accomplish it. But probably the key goal, a key tool they have is in 2005 and last year in 2009, under your leadership, the County Board for the second time went through a program evaluation and prioritization process. Quite a mouthful. We often refer to it as Pepsi. And what we did in 2005 and 2009 is we looked at every single program and service that we have. We evaluated them. We reviewed, evaluated and ranked them. In 2005, we did it for all mandatory and all discretionary programs and again in 2009, focusing on the discretionary programs. So right now, the County Board has a incredible tool available to them. The heavy lifting's been done. We spent four to six months each time going through this process. And Board members who feel strongly that we need to cut specific programs and services, they have the whole comprehensive list, right, laid out before them in priority order based on what their peers, what they as County Board Supervisors said was most important. So I know there are some Board members right now who obviously are not inclined to support a half percent sales tax. That's their prerogative, but have said, well, we need to cut. You and I both know we've been streamlining. We've been cutting, but what they're saying is we need to make significant cuts. And what we've been responding to is, okay, let's get to work. Let's roll up our sleeves and get to work. The list's before you. Please come forward with what programs and services you wanna cut. As you and I both also know, we're not hearing that kind of leadership. That may change. Now, Adam, in the document that's coming before the County Board from consideration, there's a number of things that have been identified, some things about paying off the debt, about the road repavement, and about some money for economic development. Could you touch on several of those and why they're in there? With a half percent sales tax, a lot of the feedback we've received is, well, if you're gonna do this, those who have taken the time to understand it, I think recognize if we're gonna maintain existing programs and services, we need to both diversify our revenue and we need to continue to streamline and cut lesser priority programs to help fund higher priority programs. They said if you're gonna do this, make it clear where this money's gonna go. So we've put four million toward our infrastructure rather than bonding or borrowing four million every year, which the County Board's been doing for some time. Instead, we'll use sales tax revenue. That way people can very clearly track where that money's going. The beauty of that is if we do that for the next 10 years, we'll be debt-free. We could potentially be debt-free and we'll also save over $5 million in interest revenue alone. I don't know how that's not attractive. Some people have suggested, oh, you can't get it done, and my answer to that is I'd sure like to try. I'd sure like to have that kind of goal. Right now we've been bonding for the last eight years for four million dollars a year and I know our debt payments are about 6.2 or 6.4 million. So right now we're paying in the neighborhood of two million dollars plus right now just in interest on our current debt. Exactly, and if we're able to, instead of borrowing, use this half percent sales tax revenue, we will work that down to a point by 2020 we will be debt-free. Doesn't mean we'll be debt-free forever if we have to build a new correctional facility for the sheriff's department or a new highway department or something like that. We may have to bond again. There's good reason to bond for certain projects but to potentially be debt-free when we've seen the state of Wisconsin and national level just continue to pass debt on to future generations. That's a goal that I'm excited about. And we have a great credit rating but we could even have a better one if we were in that position. It could even be better. The other thing that the finance committee authorized and forwarded on to the county board was applying some of those funds specific for economic development. And as you know, if we don't have jobs in this community we don't have taxpayers, we don't have people working in this community. So they set a floor of a minimum of $200,000 of the sales tax revenue would be to help businesses expand, get started, provide a pool of funds that folks can utilize, perhaps very low interest, return and can keep that pool going. And again, they set a floor of $200,000. It could be upwards to half a million or a million. And of course, depending on the economy and how quickly we bounce back the county board will decide how that's utilized. Now you talked about the highway department before and how much money are we looking at to devote to those repaving projects you described? As you know, the highway department's been relying on something called retained earnings for the last seven years. $1 million, essentially a fund balance or savings. So they're in a situation out the highway department that this is gonna go away. They can't tap into these reserves anymore and it needs to be replaced. We've known that for the last seven years and it's time to do something about it. We would be filling that void with these funds and again, trying to keep up with our overlay and other infrastructure needs at the highway department. This is an area that I think is vitally important to economic development and vitally important to our future. We all rely on our transportation system to get to work, to get to school, to attract new businesses. We have an airport that we're putting more of an investment in to attract companies like Morgan Aircraft and others that are gonna create jobs. We need to invest in our infrastructure and if we don't and in fact let it deteriorate, we're only creating a world of hurt for us and we're only passing the buck to future generations to pay for. Well Adam, I wanna thank you for coming in today and speaking with us about this issue. I wanna thank you also for bringing it forward for the County Board to consider. We've got a great financial track record in the past and that's what we wanna do is continue that. We don't wanna end up in a crisis situation down the road. We wanna continue to do good financial prudent planning and just like every homeowner wants to pay his mortgage off, that's what we're asking the County Board to do for the Sheboygan County citizens so we can walk away from that interest payment every month that we're making just like you are at home. Now this particular issue will be coming up for final vote with the County Board in our March meeting. It'll be talked about in our executive committee meeting and they'll make a recommendation back to the Board and there's a lot of information on our website. The Sheboygan County website has a lot of documents that Adam's put together on this plan, a lot of projections for the next 10 years, a lot of things that the citizens may wanna take a look at and view as they give their supervisors some recommendations and express their feelings to them. Now next month we're gonna be bringing in District Attorney Joe DiCecco to talk about his department and Adam will be back in this chair and I'll be next to him next month. But thank you very much for joining us and have a great day.