 Welcome to Sheboygan County Government, working for you. I'm Dan Lemieux, County Board Chairman, co-host of this program with Adam Payne, our Administrative Coordinator, our guest today is Tim Fincher, Finance Director. And we're gonna talk a little bit today about the Governor McCallum's deficit reduction bill that he proposed back in January. The state funding that comes to cities, counties, villages and townships is affected quite a bit by shared revenue and a major portion of the Governor's proposal deals with shared revenue and the elimination of shared revenues. So we're gonna talk a little bit about that today. We're also going to talk a little bit about how it will affect Sheboygan County if that bill is passed. But today, Tim and Adam, we're gonna talk a little bit about first the services that Sheboygan County provides in the last two years, our show has featured the different departments, highway, airport, healthcare centers, health and human services, 23 departments, and we've had most of them on our show over the last two years. But maybe just, Tim, if you could just a little preview or review and tell our viewers just a little bit about the services that we provide. Sure, glad to, Dan. I'm glad to be here again today with you. As you mentioned, we have 23 departments that are composed in this pie chart here. So if you take a look at this, they're kind of lumped together. So there's some categories here that include more than one department. Some of the pieces of the pie are just one department, some are more than one department. But all the things we do are included in this pie here and broke it out into pieces. And you can see the biggest one, the biggest piece is right here, health and human services, represents a budget of over $36 million, our biggest department. General administration would be things like finance, treasure, accounting clerk, et cetera, good size piece. Then the next biggest piece would be healthcare centers. Actually, healthcare centers is second only to health and human services. And that would be our three county nursing homes, Comprehensive, Rocky Nell, and Sunny Ridge. And then the other things that we do in the county are divided into other areas. Public works here would be highway, airport, capital projects, this would be the big ticket items that we borrow money to build around the county, airport improvements, buildings, et cetera. Debt services, a piece, a sizable piece here, over $6 million to pay off money that we've borrowed for our capital projects. Justice and law, 12%, which is substantial. District attorney, sheriff, clerk of courts, et cetera. And then there's a little piece here, environmental, which would be land and water conservation, planning and resources. So a lot of services we provide and kind of grouped into different categories depending on what they do. Tim, we have a budget of over 130 million that includes all the expenditures. How do we get the $130 million to spend? Where does the funding come from? A good question and one that everybody who lives in Cheboying County fully understands when they look at their tax bill because a good share of these dollars, this 131 million that you mentioned, come from tax levy. About $36 million comes from tax levy. So that's what you see on your tax bill every year for the county portion of the taxes. But other than that, the remainder of the budget comes from a variety of sources. There are a lot of state grants that come through to Health and Human Services here. There's some federal dollars and state dollars, substantial state dollars that come to the healthcare centers in the form of Medicaid payments for our nursing home residents. And then in all the other departments that are represented in the rest of the pie here, there are different funding mechanisms. Many of them come from the state or through the state to Cheboying County in the forms of grants or other payments for services. So it's really a mix of things that we charge for, fees for services, healthcare centers, I should note has substantial fees for service that they charge their residents at the healthcare centers. So even though it's a large budget, substantial portion of their budget is paid for by fees that they charge to their residents. The governor's budget deficit proposal deals with a $1 billion plus shortfall in state revenues. So they have a problem with their budget. How does a problem with the state budget in Cheboying County or local governments? Sure, well, local governments, counties are an extension of the state. We're actually a direct arm of state government. So anything that affects the state affects the counties just as in a marriage, if one spouse is having a problem, the other spouse is gonna share in that problem because we are, in a sense, we're married to the state. So the funding that comes from the state as part of this marriage, so to speak, if that's affected in any way or their funding mechanism, which would be taxes, excise taxes, income, sales tax, if that's at risk for any reason, then the dollars that come through the state to the county, they're also at risk. And that's what we're seeing now with a governor's budget proposal. The governor's proposal deals with some specific areas where he intends to find the 1.1 billion dollars. Adam, maybe you could describe a little bit some of the key components of his plan on how they would affect Cheboying County. Well, first every local unit of government, whether it's town, city, village, certainly the county, state level, federal level, every unit of government has to establish a budget. And throughout that budget process, there's discussions about priorities and funding levels. And although the county budget is a calendar year, the state budget is a biennial year, so the last budget they passed at August was 2001 through 2003, just passed at last August. As you recognize, Representative Leipholm and Costell and growthmen voted against that budget. And one of the reasons they did was they felt that trouble was on the horizon, that we didn't have the revenue to fulfill the obligations of that state budget. Well, what happened? They were right, and now what we have is a 1.1 billion dollar problem, a deficit or shortfall in the state budget. And as many of our viewers are aware, there's a lot of discussions to address that. Essentially how this 1.1 billion dollar deficit arrived was not because local units of government or the state suddenly spent more money than what was a budget, it. What happened was any time we go through developing a budget, assumptions are derived, as certainly our finance director knows. We make assumptions or estimate, well, how much revenue are we gonna receive? The state did that, and in the end, they're 1.1 billion dollar short. So that's the problem. What are we trying to do about it? Well, the governor has come out with recommendations or key components, as you mentioned, and one of the key components that he's suggesting is eliminating shared revenue. The 1.1 billion dollar deficit in shared revenue locally, that's also 1.1 billion dollars. So at this point, the governor is suggesting to eliminate shared revenue for all local units of government. He suggested it occur over a three-year period. He also has suggested that a cap, an additional cap, be put on local units of government so they can increase their levy each year any more than the CPI, consumer price index. And he's also making some substantial cuts at the state level as well as the university system. So right now, they're looking to reduce expenditures to make up that difference. And as they reduce those expenditures specifically for Sheboygan County, what would the implications be? Well, the implications are very significant as they are for all local units of government. As we looked at his proposal at first, it looked as though shared revenue would be eliminated over a three-year period. Well, for Sheboygan County, that's not the case. It would be this year. We would lose $3.7 million this year in 2002. And we just, or the county board rather, just passed the budget in November. In addition, putting that CPI levy rate or limit or cap on the county is another challenge for us as we go forward. In short, just for salary and wages alone, we have 1,300 employees. Just for salary and wages alone, if we seek to maintain our present level of wage and benefit increases, that comes up to close to $3 million. Well, if the levy cap went into place at CPI, the most revenue that we could generate would be $1 million. So if you combine the $3.7 million of lost shared revenue this year, if you add in that cap, which would mean we'd have about a $2 million shortfall in salary and wage, and then you put in operations, out capital outlay, things of that nature, in short, going into 2003, at this point, we're looking at a $6 million hole based on the governor's present proposal. That's $6 million for 2003, and plus the hit that we would take for 2002. It's the, right, combining 2002, the loss of 3.7 million shared revenue and what we have ahead of us in salary and wage increases, or at least anticipated increases, we're looking at $6 million. Dan, there's been a lot of discussion about the governor's proposal, and the governor's run commercials, and he's given his state of the state earlier this week, and two months ago, or six weeks ago, to be exact, he took a rather strong position about local units of government, and called us big spenders, and also shared how he was leading by example with the cuts that he was making at the state level. One of the things he mentioned is that 60% of all the taxes, all the state revenue that's collected, goes back to local units of government. My question is that true? Is that in fact what's happening, or could you clarify what that piece of the puzzle is? Well, the governor talked about the 60%, and yes, he did call me and my fellow local elected officials, the big spenders. When he looked at his budget, he did say that 60% went to local government, and this is the chart that his office used to come up with that figure, and he shows a big area in red, local government. Local government is 60% of their budget, and then he went on to show its individuals, its to our state operations, university system, and corrections as the rest of the pie, bringing up to 100%. And implying that if there was going to be cuts if there was a billion dollar shortfall, the big piece of the pie was its local governments, and that's where the cuts needed to be. But I think if we look farther at that chart, and split out education, K through 12 education, we'll find that the people that he was calling the big spenders are 15% of the budget. We have 45% of the budget for schools, K through 12, not the university system, that's separate, but K through 12, local governments made up of cities, counties, villages, and towns would be 15% of their budget, and then the rest of the pie would be the same as before, but by breaking out the local governments that he called the big spenders were only 15% of the budget, not 15% of the problem. So 60%, again, when people hear that 60% of all state revenues going back to local units of government actually have that 60%, only 15% is towns, cities, villages, and counties. Correct, and some of the key components to the governor's plan, as I remember them, were that several areas of his budget were untouchable. They were off the table. He was gonna protect those. One area was the elderly, programs for the elderly and the disabled. Another area that he was protecting and was not going to cut would be the school system. So 45% of his budget was immediately taken off the table and he was not going to touch them, yet he included that 45% in where he was claiming the problem was. So what about the governor's point that he's leading by example and that he's made cuts across the board in state operations? What piece of the pie is that? Well, the governor talked about asking local governments to reduce their budgets by approximately 4%. That he was reducing state government by 11%. Well, if you look at the details of his plan, the 11% that he is cutting is 11% of state operations, excuse me, of state operations, which is the blue area, which is only 7% of his total budget. So he's reducing 7% of his budget by 11%, which if you look at that cut for the whole budget, it comes to I've heard different figures. We came up with less than 1%, I've heard a little less than 2%, but it's much less than the 11% that he's talking about. So he's referring to just a small piece of his pie, where when he refers to county government, if I could have that first pie chart back, not the first one. When he looks at county government, he's looking at our total budget. He's looking at all of our budget. He's not just looking at our operations, he's looking at our healthcare centers, which has a lot of pass through monies by both private and Medicaid recipients. He's looking at our health and human services again, which has a lot of pass through money, federal funds, state funds for individuals. He's looking at us cutting 4% of our total budget, not just our operations. So there's a big difference on what he's asking us to do and what he's doing in his own budget. Six weeks ago, when he referred to local units of government as the big spenders and be prepared to hear from local units of government that this is unfair and that may not be the case, you've now clarified to our viewers where the spending is, what are the facts? What piece of the pie or how much is shared revenue contributing to the deficit? Have we been the big spender? Well, shared revenue over the last eight years, I believe it is, has been flat. The monies that we get from the state have remained the same since 95, 96 budget period. This chart will show you where state spending has gone over that same period of time. We look in 95, 96, which is the beginning of this chart and beginning of the window that they took these numbers from. At that time, state government budget was $15 billion, 15 plus, billion dollars. At the same time, shared revenues to counties was down here. It's almost off the chart. It's less than, I'm not even sure what that represents, but let's say one billion or less. That was in 95, 96. As the years went by and their budget increased, it went up to 23 billion, 23, 22 billion in that area. And now what has happened to shared revenue for counties? It's the same place. It hasn't changed at all. So if spending is a problem in his budget, and if that's causing a problem, the spending has increased at the state level and not at the county level, because we're flat. It has not increased. So there's no way that, and to solve the problem, you want to eliminate that. Instead of looking at the rest of his budget, to solve a $1 billion budget that the state has, deficit, they want to put the whole burden right on the counties and local governments. I don't think our viewers can see this chart very well, but it's telling. Again, as you said, since 1995, shared revenue has been flat. There have not been any increases. In fact, the latest increase was in this biennial budget, and that's been eliminated. So since 1995, there has been no increase to shared revenue as our viewers may be able to see or saw earlier. There have been other increases. Tim, if shared revenue is in the problem, where is the problem? Where are we seeing the increases in spending? Well, the big spenders are not at the county level. That's for sure. There is a chart here that shows that. Thanks, Tim. If you look across here, what they have across the bottom is different categories of funding. This would be, all these would be state budget expenditures by category. School Aids is the first one here. And if you look at the two that jump out at you, it's pretty obvious where the dollars are going. School Aids and Corrections, these two. And these bars here represent an average annual percent change over the last 10 years. So for instance, for School Aids, they have an average annual increase per year of 9% in the dollars, the state dollars, that are devoted to School Aids. Corrections is even higher. It's more like 11%, over 11% increase. Total state budget, which would take all these things into account and just average them all together, is over six, probably 7%, 7%. Oh, I'm sorry, 5%, right between there, 5%. So are the big spenders, is it shared revenue causing this problem? Here's shared revenue. Shared revenue and other local assistance is here. The rate of increase is less than 1%. So the problem has not been shared revenue. It's been really, if you want to look at where the big increases have come, it's been School Aids and the correctional area. State operations alone, which is the one that the governor is saying that they're gonna cut by 11.5%. That alone, if you look at that, rose by more than 3% on an average annual basis, far more than shared revenue here. So the big spenders are not at the local level. And I just want to say something on the big spender comment. I personally think that that was the governor's biggest mistake because immediately I think he put all local units of government on the defensive and it was really inaccurate. I read a comment in the local newspaper about an official in another county. I can't remember which one who was offended by the comment and made the statement that their county board deliberated for hours on whether or not to buy a snow blower. And I think that really points out at the local level, people are not careless with dollars. So the column big spenders I think was really inappropriate. I think you have to remind our viewers also that these charts that we're using for the most part have come from the state. These are not numbers that we dreamed up. These are numbers and charts that they use to defend the proposal that they have on the table. And we're just using their charts to show the flaws in their proposal. There's been a lot of turmoil, I guess, as the governor said in the state of the state address recently in regard to his proposal. There have been a lot of discussions, a lot of debate, a lot of finger pointing, a lot of complaints from local governments. Maybe some of the complaints might be characterized as scare tactics. We're gonna cut fire police some rule key components of local government or maybe we can cut some other areas. Sheboyin County does not want to be accused of not participating in a solution, not participating in a debate. We did have some suggestions as to how the state could control this deficit problem. We don't need to get into that now. Some of the specifics of how they could control it, but we would like to talk to our viewers a little bit about how we can come up with some solutions. We can come up with some ways to save some money and be more efficient. Maybe, Adam, you could start and just relate a little bit on what steps Sheboyin County has taken so that we can position ourselves to be more efficient and more accountable to the taxpayers. Sure, thank you, Dan. The next slide, please, Tim. Thank you. Sheboyin County will be part of the solution. The executive committee and leadership on the county board has made there real clear and I've been very gratified by the response of our department heads throughout Sheboyin County. I don't know if our viewers are gonna be able to see the next slide very well. There's a lot of information here, but if we can get to the slide, please. In short, what this shows, and I can see that, it's not gonna be very visible to our viewers, but it shows all of the departments we have. We have 23 departments, as the chairman mentioned earlier, and then a number of other areas that are part of the pie. And what we did very shortly after the governor made his proposal six weeks ago, is sent out a letter to all the department heads asking them to come up with thoughtful recommendations. If the governor's proposal goes through as is, what would you suggest be done to make reductions? So we challenged every department to come up with a 3.38% reduction. And I'm very pleased in the response. All the departments, except for one, came through with some specific suggestions and recommendations as to how they could make those cuts. So we are now positioned to respond if the governor's proposal goes through. And again, you can probably go off the slide now. But if you could see the total, as I mentioned earlier, we have $3.7 million of shared revenue at stake. That's what we would lose this year if the governor's proposal goes through. What we've received from department heads are thoughtful suggestions to, in fact, reduce expenditures. Reduce expenditures so we come up to close to $3.7 million in savings. Yes, certainly they're looking at other revenue streams, but the focus has been, and that's been a clear direction from our county board chairman, is to look at reducing expenditures. The other part of the equation in plans and preparation is the county board recently took pro-action on how we're gonna respond. The county board put in a hiring freeze. In fact, three of them. One, on hiring any new employees. That's when a vacancy becomes available that that position is froze. They put a freeze on any capital outlay expenditures. And we've also put a freeze on out-of-state travel. The key one is the hiring freeze. By freezing vacant positions as people retire or move to other positions, that could garner us as much as $1 million of savings. And the longer that's in the place, the more savings that we're going to incur. So that's positioned us again as to respond to the governor's proposal no matter what comes through. It's very likely, and I'm sure most of our viewers appreciate that the governor's proposal won't come through as is. But we are fully prepared to respond to it if it does. And if it comes, if some type of compromise comes from the legislature, we're again positioned to make the reductions and expenditures to respond to that. I think we also have to acknowledge the fact that even though we don't like the governor's proposal, it has brought a discussion throughout the state as to ways we can economize, ways that we can consolidate. We need to be talking with the city of Shebaugin. We need to be talking with the townships and the villages on ways that the different levels of government in Shebaugin County can work together to bring savings for the taxpayers. That's the bottom line, is bringing efficient government and cost-efficient and good services to the taxpayers of not only Shebaugin County, but all of the state. During this discussion, you mentioned earlier some of the local representatives that voted not necessarily for the governor's present budget, but what has been the reaction of our local legislators to the problem that we're in right now? I've been very impressed with Representative Steve Castell, Representative Joe Leipan, Representative Glenn Grothman, Senator Jim Baumgart. They've all been very receptive to listening, to being active in the community, on holding listening sessions, and gaining a better awareness of what this is gonna mean for Shebaugin County as well as the city of Shebaugin and all the towns and municipalities. So, as certainly the chairman's well aware, with the three of us and others have been meeting with him and checking him with him on a regular basis, sharing information. And I have nothing but compliments for the work and how receptive they've been to listen and learn and help us as we go forward. As we're taping this show, just in the past 24 hours, the joint finance committee has come with a different proposal than the governor's proposal to deal with the deficit. And there's a process that takes place, similar to the budget process that they take place every two years. Last fall, they passed the budget. Maybe, Adam, you could just fill our viewers in a little bit on the process that's going to take place and when we might be able to expect a solution to this problem. Well, Dan, as you mentioned, the joint finance committee, which is made up of assembly members and senate members, has been working now on a compromise or refining the governor's proposal to make it stronger or to improve upon it. And just yesterday, they came up with a package and they forwarded it back to the assembly. And it does make some changes to the shared revenue. It still is seeking to eliminate shared revenue, but as the governor first proposed, have that occur over a three year period and not take all of the hit this first year. But in short, as for the timetable, the assembly now has this package. It's very likely they'll have modifications to it. They'll make amendments. They'll forward that onto the senate. The senate then, I'm sure, has plans or suggestions on how they should best be addressed. They'll make modifications and in all likelihood, a conference committee will be convened. That conference committee will have some of the key leadership from the assembly and the senate together. They're gonna sit around a table as they did with the budget process last year and pound out some compromise, some alternatives, come together, and then that'll go back to both houses, the assembly or senate, for a thumbs up or thumbs down vote. There's no more amendments after that. After that vote, it's referred onto the governor and the governor has, without question, one of the strongest veto pens in the nation. So, again, for people to be of the mindset that, well, what the governor's proposing may not be successful or we'll see something completely different is unlikely because in the end, he has the strongest veto authority and he'll be the final decision maker. I think another thing we can be assured of and throughout our discussions with the local legislators and also some of the people in Madison that we've been talking to is that down the road, maybe not 2002, maybe not as much in 2003, but down the road, there will be some changes to short revenue and there will be some changes on how funding comes to local governments. So I think the discussion, the discussions we're having right now with our department heads, we're not gonna put these proposals on a table two months from now when we have a problem and it doesn't involve us now, we're gonna have to take a long hard look at some of these proposals and see what parts of them we can benefit the taxpayers from in the future. So as painful as this process is, it's not totally going to go away and we have to deal with it. So I appreciate the work of Tim, our finance director, Adam, the administrative coordinator, our department heads, everybody's pulling together and hopefully we can continue to provide the services to Sheboygan County that they've come to expect. As of this time, we have nothing on tap for next month as far as a speaker or a guest. Our phone number is 459-3103, 459-3103. If any of our viewers have any suggestions, give us a call and we'll glad to listen to your request. Thank you.