JOHNSON CREEK — As the Village of Johnson Creek prepares its budget for 2020, it is anticipating a tax levy increase of 1.4 percent.
A public hearing on the budget is scheduled for Nov. 25, with the village board of trustees tentatively set to vote on the document that evening, as well.
Johnson Creek Village Administrator Kyle Ellefson said that the tax levy in the published budget notice is $1,405,131, representing an increase of $19,468. He noted that the 1.4-percent bump is less than the rate of new construction in the village in 2019.
“So, on the whole, we are decreasing the overall tax burden across the community,” he said.
Ellefson said the village tax rate is complicated in 2020, due to a full revaluation being completed for a property tax assessment.
“The result of the revaluation was an average increase of property values across all property types, particularly in residential properties, which saw an average increase of 21.31 percent,” Ellefson said. “The challenge this presents when comparing the tax rate year over year is that the revaluation distorts the actual tax collections. On top of the rate distortion, each property was individually revalued, and each has a unique rate of increase.”
He explained that based on the projected tax rate for the village, there is a “breakeven point” of about 12.77 percent, “where if your property increased less than that amount, you will see a tax decrease, and if you were above that rate, you will see a tax increase, even though the village, as a whole, is reducing their tax rate.”
Ellefson said the village was able to take the increased property values and separate them from the new construction values to establish a base tax rate that would allow the village to collect property taxes at the same overall adjusted tax rate.
“We used that as our starting point for our planning,” Ellefson said. “Early on in the process, it seemed like we may need to incorporate a small tax rate increase, breaking a streak of four consecutive years when the tax rate had stayed the same or decreased. But, fortunately, after the village president and board identified budget goals and worked through the process, the proposed budget we are publishing includes a reduction in the tax rate, reducing the rate for the increased property assessments, and an additional tax rate reduction of 0.74 percent from what would have been a flat tax rate.”
Addressing expenses, Ellefson said that because the village generally balances its revenues and expenses, they each total the same amount. He said the village is budgeting for $2,669,934 in revenues and expenses, an increase of $60,498, or 2.3 percent from the 2019 budget.
Garbage and recycling fees initially seemed as though they would seriously impair the 2020 budget, Ellefson said. This turned out not to be the case.
“We struggled for months negotiating a variety of alternatives with our provider (John’s Service),” he said. “After we were not successful in finding common ground on contract terms, were able to identify another solution that allowed the village to realize some significant fee reductions.”
He said that Badgerland Disposal offered a very competitive proposal for garbage and recycling collection, and the board approved a five-year contract with the business.
That approval came at the October Johnson Creek Village Board meeting. Then, after updated projections reduced planned revenues by $3,270, and after reducing the initial garbage and recycling budget numbers by $32,405 to account for Badgerland’s reduced collection rates, the board split the remaining $29,135 between tax levy reductions, capital reserve funds and other enhancements.
Village President John Swisher said that when the village suddenly found itself with thousands of dollars in expenses eliminated from the budget, it was a priority to not simply find new ways to spend those dollars, but to suggest a way it could produce thousands of dollars in tax cuts for village taxpayers. Along with this, village officials are establishing an ongoing reserve for recurring infrastructure improvements, increasing village funding for the public library and providing funds that help the community.
“I think the village board took a serious look at the plan and found that it was a great way to accomplish several goals that ultimately reduce the overall property tax burden, provide consistent funds for infrastructure maintenance and improvement, and offer opportunities to improve the community for everyone,” Swisher said.
According to Ellefson, over the past two to three years, Swisher and the board have focused their efforts on developing a comprehensive strategic plan for capital purchases and projects. He said the plan goes beyond listing purchases and timeframes, incorporating future budget projections and debt service inventories to create a plan that identifies what the village is going to buy or build, when it will do it, and how it will be paid for — with the goal being a minimal impact on taxpayers.
Large projects in the 2020 capital budget include repaving Jefferson Street, constructing a pavilion in Bell Park, buying turnout gear for the fire department and purchasing a replacement vehicle for the utility department.
Ellefson said the village has been able to adhere pretty well to its 2019 budget, with two months left to go in the year.
“Like most years, there are expenses you can’t know about until you are in the middle of the budget year, and 2019 has not been much different,” Ellefson said. “We provide a small buffer within the budget for unplanned expenses, but we also manage the budget dynamically during the year, eliminating lower‐priority expenses if the funds are needed elsewhere. Conversely, when expenses come in lower than budgeted, we selectively identify opportunities to make small improvements throughout the village, such as park improvements, or maintenance of village facilities and public spaces.”
Ellefson said he and other village leaders expect to have unused funds from 2019, but the budget does not bring those unused funds forward to 2020, instead allowing them to lapse.
“When we know the amount of 2019 budget money left unspent, the village board will handle those funds according to our fund balance policy, maintaining a reasonable level of reserves and assigning a future purpose for any funds exceeding the normal reserve level,” he said.
Ellefson said the village should be able to maintain its level of services to the public in 2020.
“Continuing the trend,” he said, “the Village of Johnson Creek will not be reducing or eliminating services due to the 2020 budget, and we are actually providing some increases, such as funding additional police coverage, establishing a road improvement fund and adding funds to enhance the community.”