 Welcome to Sheboygan County Government. Working for you, my name's Adam Payne, county administrator and co-host of this program with Chairman Mike Van der Steen. And as you know, every month we try to focus on a different department, 22 departments throughout Sheboygan County. And we've got a new guest in the hot seat today, Terry Hansen, our new finance director. Welcome Terry. Thank you, Adam. Certainly should not be new to you though if you've been following county or city government because Terry was the finance director for the city of Sheboygan and we're fortunate now to have him on board here in Sheboygan County. Terry, please give a little background on yourself. And when did you first start as finance director here for Sheboygan? Well, I started in June as finance director for the county and prior to that as you mentioned I was a finance director for the city of Sheboygan as well and held that post for about two years. And before that I was not in the state of Wisconsin but in Minnesota and worked for a municipality there, city of about 10,000 and was a finance director for eight years there. Prior to that I also worked for the state of Minnesota so have had quite the extensive career in government and am happy to be at the county. How about educational background? I have a bachelor's degree in accounting, minor in data processing so that kind of leads me into some technological issues as well at times. And then I also have a CPA license in Minnesota as well too so a little bit of a background in accounting there as well. And you said it's been since June of this year? Yes, it's gone quickly. It's gone quickly. Yet on the other hand it feels like you've been here for some time because it's been a very smooth transition and I know that you've definitely hit the ground running. Yes, it's been a very smooth transition and I thank you and also all the other department heads for making that transition as smooth and especially to the accounting department, the staff there has just been fantastic. Initial impressions, did you feel as though it was a real big change from city of Sheboygan government to county government? There are some differences a lot of the issues that the county and the city deal with are different in some regards. The city deals with more local of course direct things that they can control and the county administers a lot of things that are directed by the state so there's that difference. But as far as the overall feel and stuff like that there wasn't that big of a change. I was able to adapt to the numbers quickly and stuff like that but the organization at the county has just been wonderful. Fantastic. Well let's get into it a little bit. Roles and responsibilities of a finance department? Well the finance department for the county is responsible for all financial activity in the county and ranging from budgeting, financial statements, internal and external reporting purchasing accounts payable accounts receivable and then also the financial analysis and financial reports that are required and then also assisting with all financial policies and procedures for the departments and then doing some forecasting and also administering some internal controls. And you do all of this yourself? All by myself. No actually with the staff we have about a staff of 10 total so the department is small for the amount of responsibility that we have but everybody pulls more than their weight and is ready to help out in any way they can. And I know you've got some excellent staff and I think of Mary Wegman your deputy finance director. She has stepped up a couple of times during a transition and I think she's been with the county. I know I'm going to get this wrong but it's been at least 15 20 years if not more. She's just rock solid really does a nice job. She has been very key in making that transition as smooth as possible. I know I've been in her office many times and I've called her into my office asking various questions and she's always been very handy and has always had the answer so I've been very appreciative of her and thank her for her commitment to the county. So as I think most of our viewers are probably aware we're in the heart or the midst of the budget process right now. It's the most important policy document that chairman van der steen and the county board ultimately vote on $144 million budget 22 departments nearly a thousand employees as you said a lot going on and we've been working very closely together over the course of the last few months developing this please give our viewers a flavor for how the budget process works. What's it all about? Well it starts off with the leadership form and in that leadership form the supervisors and administration work together to come up with some key targets and get on the same page as far as the budget message for the year and after that we start off with a budget kickoff where we include all the department heads and get them their budget instruction booklets and kind of get all of the departments on the same page as well too and any key staff members of their of each of the departments and then from there the departments have to put together their budget and work pretty much within their own department and then with the assistance of the finance department and our liaisons that we have for each department and then they come back and meet with the county administrator and myself to in the month of July and the beginning of August and discuss all of those issues with their budgets and make sure that they're coming in line with their tax levy targets and after that meeting they come go back to their respective liaison committee meet with them have their liaison committee make any changes to the budget if deemed necessary and then move that on to the finance committee the finance committee then holds a joint meeting with the liaison committee and themselves and then goes over the budget and then approves that once all those budgets have been approved by the finance committee we move forward and have the public hearing for the public to come in and have their input and then to have a little bit more discussion on the budget and then at the beginning of November we have the budget formally approved by the board. Excellent concise overview as you are now getting your fingerprints on the county budget process and as you mentioned earlier you had the pleasure of developing budgets not only for the city of Sheboygan but elsewhere. What's your impression? How is it different than other budget processes you've been a part of? Well this is one of the most documented budget processes I've been a part of like I mentioned there's a budget instruction book that's given out to the departments and I view that as a very important document for them they can use that as reliance and guidance throughout the whole process lays everything out for them. One of the other key shifts that I've noticed is that there's a focus on the tax levy and making a target for the tax levy in the past most of the budgets that I've always been a part of have been focusing on the expenditures and one of the frustrations of doing it the way it's always been done in that realm is that you lose sight of the revenue side as well too so this side has had the departments focus on revenues as well as expenditures knowing that they can't spend what we don't have so they look at ways to enhance their revenues so I think that's a very positive approach to budgeting. And as you know it's a very collaborative approach here. Statutorily as county administrator I have a role in the budget process. The liaison committees have a role certainly the department heads and key staff were involved in pulling it together the county board ultimately approves it. You went through the and give a nice quick summary of the process to drill down a little bit more into the role of the county administrator and the liaison committees how do they help shape this how does that work? Okay after the department has a preliminary budget and is ready to submit it to the administrator and there's administrative meeting with the county administrator myself to really drill down into the detail of the budgets almost a pretty much a line by line review of everything that they're doing comparing it with five year average trends at what's going to be happening in the future and where the department's going and making sure that that budget that is going to be presented is all leading up towards those items either staying in line with the trend if they are where they need to be or if there's going to be changes that those changes were laying the ground works for those. And after that thorough review there's a lot of times things have to the departments have to come back and follow up on a few questions or make some adjustments and then they present those changes to the liaison committee which then the liaison committee and those supervisors on that committee can dig into that same level of detail and make sure that they get their fingerprints on that departmental budget as well too so they work kind of hand in hand and so far the process that I've seen has worked very well. And I can tell you as county administrator I feel the weight of the pressure of preparing a budget but I certainly need to have an outstanding finance director and you have been outstanding. The three months that you've been here it's remarkable how quickly you've picked up on things and the good ideas you've already presented along the way for cost savings have been greatly appreciated so I appreciate the good work you've done Terry and I know Chairman Van der Steen does as well. In fact there's just a point of information the last decade we've had a process and every year we refine it but the county board establishes that goal Chairman Van der Steen, Mike has an important leadership role in developing that goal and then as staff it's our job to deliver and position the county board for success. Each and every year the last ten years the county board has been positioned for success and we intend to accomplish that again this year as well and it's really a tribute to the overall team work and everyone working together and pulling in the same direction toward a common goal. Nice overview I'll turn it over to Mike. Thank you Adam. In the last decade sheboygan's seen their equalized property values rise from about 5.3 million to 9.8 million dollars recently though we received our equalized values and they went down a little bit could you tell us how much they went down and what impact this has on the actual budget and the taxes that our taxpayers pay Yep the total equalized value has dropped about 255 million dollars down to about 8.6 billion dollars in total equalized value and that's a 2.8 percent drop in total equalized value so if a homeowner in their property goes down by that same percentage of 2.86 that the whole equalized value has gone down the amount of property tax that the homeowner would pay would be exactly the same if the county did not raise or change their tax levy however if their property value did not decrease by that percentage or if it actually appreciated in value then even if the county held the tax levy the total amount of taxes levied on all the taxpayers if they held that the same even though everything stayed the same they would end up paying more in property taxes so it's a shift of the property tax burden going from properties that are losing value to properties that are gaining value also as a county held a certain levy limits by the state government could you explain those levy limits and what impact they'd have on the 2011 budget? Yes there's two types of levy limits there's one that's a rate limit that limits the actual rate that we can charge the taxpayers that one in the past has been a non-concern even when counties have raised it so the state has come back with a total tax levy that total dollar amount of increase that you can raise your levy and that is limited to 3% or the total net new construction in your equalized value so considering that our value went down we're going to be looking at a 3% total tax levy increase and with the direction that the county administrator and the county board has provided we're going to be beneath that 3% threshold so that will not be a concern for the budget process. Could you tell us a little bit about the tax levy rate and how it has changed in say the last 10 years or so? The property tax rate right now is at $4.96 per thousand in assessed value and that is actually the lowest that it has been in the last 20 plus years there has been a trend since I believe 2003 where that rate has consistently gone down over the last 7, 8 years so the rate has been dropping in the last few years and that has been a great thing for the taxpayers. Terry from your perspective as finance director what do you see as some of the biggest challenges to control that tax levy rate and hold it down in this budget and future budgets? The biggest challenges are of course the wage and benefit packages when you have items going up by 2% to 3% ranging for wages and then you have the health insurance cost being contingent upon that whole industry and sector it's very hard to keep those costs in check in line with the amount of revenue that you can generate so that's always a challenge. There's always the unfunded mandates that come down from the state having to do more things without any additional resources puts a strain on the budget as well and one of the other challenges that has been key especially and we just get recently finished the sheriff's budget is the loss of revenues that we're seeing due to the economic impact they're due to the hard times that everybody's facing especially some of the prisoners when they're allowed to go out and work that work is drying up for them so there's less money that the sheriff's department can collect on this so that drops the total amount of revenue and then that puts more reliance on the tax levy so the decreasing revenues and unfunded mandates and then some of the expenditures that are a little bit harder to control are the biggest factors. You touched on the unfunded mandates which the state will give us. Are there any other things in the state budget that affect the county locally in preparing their budget? Well anytime the state budget is facing cuts all state aids are of a concern. One instance that didn't directly result in a loss of revenue for the county but increased workload was last year's state-shared revenue payment ended up becoming was technically cut and replaced with the ARRA funds the American Recovery and Rehabilitation Act funds and so there's additional reporting requirements on the number of jobs that money saved well technically the county never applied for those funds but were held responsible for all those reporting functions so that is one of the big things and then it's the other thing that we're looking at is just making sure that the unfunded mandates I know that right now it hasn't been too big of a concern of anything being dropped on us but as everybody knows in the past sometimes as the state goes through their budget process it'll hit us in mid-year and it gives us a little bit less time to prepare for those items so I was just being ready for whatever we can is going to be our best. The state recently released some information on their shared revenue payments I know we got a slight cut about how much that's going to affect us We actually anticipated that in our budget and right now based upon our computer aid it's going to be very marginal as far as the cut might be a few thousand dollars at once we find out the computer. Thank you for that news. I'll turn it back over to Adam to finish up. So as you mentioned we've been holding the line on taxes actually nine straight years we've reduced the tax rate three straight years reducing the property tax levy and this year we might be looking at a modest increase depending on your point of view where are we at what is the present status of the budget process. Right now the finance committee has almost reviewed all departments there's one department remaining that will be reviewed on Thursday the 23rd and once that's done it looks like right now we're at about a poise for a 2.91% increase barring any other adjustments to the budget so the initial goal starting out was a 3% there was a target the finance committee approved a target of a 2.69% increase and the departments were working hard and administration was working hard to try to meet that goal not saying that it still won't be met but right now as it stands we're at a point 2.91. And though we'd prefer to see a fourth consecutive year property tax relief I think holding it to less than 3% is certainly no small feed as all of us know we're a part of this process and with the challenges we have every department for the most part has made reductions now and in fact our payroll today as you know Terry and Mike knows is less today than it was in 2002 so we've done a lot of streamlining consolidating. In fact last night the county board bet took up some very important initiatives one was consolidating our planning and land and water conservation department that's going to save about $100,000 a year and the other area they took up was our 5-year plan and though we are tightening our belts and trying to do more with less we also need to be open to new initiatives and there's always more needs in the community and one of them as you know is infrastructure and the need to maintain and improve our infrastructure please give our viewers a brief overview of what happened last night with the highway department and bonding for over overlaying improvement of roads. Last night there was over $4 million of highway projects that were approved which increases the total amount of roads that can be paved by I believe over 28 miles 29 miles if my memory serves me right and that definitely helps out because there's a significant amount of mileage of highways in the county and we need to do at least around 30 miles a year in order to keep up with that. So by adding this additional amount the board approved actually funding $4 million of projects about a year earlier or a year and a half earlier than they normally would have and adding on an additional $2,385,000 on top of that to take advantage of the Build America bonds that are out there right now due to the Build America bonds allows municipalities entities and nonprofits to issue bonds at a taxable rate but to get a refund from the internal revenue service to get a refund for up 35% of the interest payments that they make. So even though it's a taxable bond with rebates that the municipalities can receive we end up coming out ahead better than a tax exempt bond and the county based upon what they did last night ultimately saved over $105,000 of taxpayer money and interest over the life of the bond so even though it's not a huge dollar amount but every single dollar that the county can find to save does benefit the taxpayers. Chairman Van der Steen took a strong leadership role with this and the last year we've been trying to raise awareness in the community that you know to do a mile of overlay the county has 450 miles of county roads to do a mile of overlay of maintenance on that it's about $100,000 to do a mile of pulverizing in overlay where you have to do more to bring that road up to speed it's about $200,000 a mile and to do completely reconstruct that road if you completely let it go and don't maintain it and take care of it it's a million dollars a mile so 100,000 a mile 200,000 a mile or a million a mile doesn't take a rocket scientist to figure out that we should be taking care of our roads and infrastructure so again a credit to Mike Van der Steen and the county board last night big infusion of resources are going to be put in next year to do as you said over 28, 29 miles we need to be averaging about 30 years so we're real close and this is going to be a challenge for us in years to come right now we're taking advantage of that nice low interest rate but that could turn in a few years and of course we're going to need to try to maintain that level of maintenance every year in addition to roads and that big initiative last night that the board supported what other major capital projects are ahead and one of the other major projects is out at the airport there's a runway that they're going to be improving that is very significant and majority of that is funded through federal tax dollars as well those are the larger projects and then there's the interurban bike trail as well too that's in the capital outlay however a lot of that is also funded through federal tax dollars so that also helps because the county doesn't have to put in a full amount for the project however they do the taxpayers do receive the full benefit so that is a good investment and then there's a multitude of smaller projects that the county is taking on that are not huge significant but they're big maintenance issue items to make sure that things keep running as efficiently as possible and maintaining buildings and making sure we keep up that infrastructure as well as you know Terry the county board established a self-imposed limit of no more than 4 million in bonding a year or 8 million over two years so our debt service is actually going down now which is obviously a good thing for the taxpayer but on the other hand when you have the kind of infrastructure needs we just discussed you know it can be challenging to manage priorities you've got the airport, highway infrastructure, buildings technology, you name it, what's the process how does the board go about determining each year where the priorities are going to be? The capital projects are introduced all the projects requests are submitted to the finance department and the finance department puts all that together and presents it to the finance committee where each of the department submitting can come in and present each of their requests the finance committee then base upon those requests and where the county where they feel the county needs to go ends up making a recommendation after that then it gets sent to the executive committee after it gets introduced to the board and goes to the executive committee once it's in at the executive committee they have their turn to take a look at it and all this time their staff support the county administrators heavily involved in this as well too making sure that it's meeting the goals and objectives of the county and once the executive committee reviews it and approves it then the full board gets to take a look at it and then they can go ahead and improve it or make any changes that are necessary. If I recall Mike I don't know if you recall it was in the vote last night 31 to 1 or something like that it was pretty strong support for it and now we're going to be going out to bond to address these needs what's the current bond rating of Sheboygan county and how are we positioned are we going to get an attractive rate? We should get a very attractive rate right now we're at a double A2 with the second highest rating that the county can get so it's just and very few counties of our size have any higher rating so we're pretty close to the top that we can be at and with that we can raise up getting a better rate than if we were lower rated and we're looking at potentially with the build America bonds having a interest rate of about 2.42% is what we're looking at so that is a very low rate especially considering that we're looking at a 10 year period comparing that with a mortgage it's half that of a mortgage price rate so it's a very competitive and it's a very good time to go out and borrow money if you need it. A nice overview I'm hoping you're going to be here for a long time to come talking about budget development and process and answering questions and as you know if you have any questions don't hesitate to contact my office or Mike van der steen or our finance director Terry Hansen but the last question I'm going to ask you before we end is if the public does want to get engaged and as the three of us know you don't see a lot of people attend committee meetings and county board meetings but you just don't see a lot of participation what's the best way for people to get more engaged find out what's on a committee agenda and provide input to their county board. The county website has all the agendas for all the committees posted and in addition they can always call any of the departments if they have a specific question if it's financial related they can definitely call the finance department and speaking of getting involved there is a public hearing on October 26th at 6pm on the 5th floor in the county boardroom so everybody's invited to come there and have their say and the whole budget for 2011 as you mentioned it is one of the most important documents the county does adopt and it does lay out the blueprints and the plans for the upcoming year so and then the final adoption for the budget is once again on November 2nd. Again that when's the public hearing October? October 26th at 6pm 6pm at the county board chambers which is in the 5th floor of the courthouse but even prior to that I think it's good to contact your county board supervisor and certainly you can call them individually all their names, numbers are identified on the website as Terry said and going to those earlier committee meetings I think is valuable as well because often by the time it gets to the county board floor a lot's gone into it and it's more difficult to make changes than earlier in the process. Again wonderful overview, appreciate you being here and being on board. Thank you. And thank you for joining us today. Next month we're going to have Mike Tobinheim here our administrator at Rocky Knoll Outstanding work being done at our Rocky Knoll nursing home. If you haven't had a chance please get out there and take a look at the facility it's really improved and even more so our administration and the care we're providing continues to be outstanding I think there's a real neat billboard there across from Pizza Hut right now that I think is raising some awareness so I hope that you've enjoyed the presentation today. I hope you join us next month and until then thanks for being here.