You probably have heard by now.
The state's PSC panel approved Janesville's unprecedented 53% water rate increase. That's right. Not a 2%, 3% or a 5% increase. 53%. That's a five followed by a three. Fifty-three. After approving the massive increase, officials on the PSC praised Janesville for "taking its medicine" to pay cash for water mains and said other Wisconsin communities should follow their lead. Again, this is a state-run panel praising a city for raising fee rates astronomically, not lowering them, as a result of decades of efficiencies and growth plans. If you believe that.
To look into the history of the city administration's rate hike request, we have to go back to 2016 when I predicted that due to the city's downtown TIF District among other factors, the city will begin putting the squeeze on Janesville homeowners. I wrote in 2016, "With commercial assessed values declining and future assessed growth quarantined in TIF’s – the people left holding the bag and a much larger share of paying for general fund operations are the residential property owners." Some folks might say that was an easy call, that things go up and higher taxes pay those costs. True I suppose. But keep in mind the city's ARISE design, now into its tenth year, is meant to induce growth and according to the rules, expand the base and lower the rates.
After having our quarterly water bills (water, waste and fire protection) double over the last five years, some city ambassadors would logically expect a rate cut during all of this reported ARISE growth. Right? No, instead they're now saying if we don't raise taxes and fees, we will face greater debt. Something isn't working, but that is the premise behind their water rate increase. They also warned us that if Janesville is unwilling to accept those increased tax obligations, our local economy could death spiral. Their words. Not mine. So let's move on to 2017.
In 2017, the city manager, Mark Freitag, created a "peer city fee and tax matching machine." No, I'm not joking. Freitag created a job position at city hall for someone to comb through fees in other Wisconsin cities and flag any Janesville fees that may be falling below the amounts charged in peer cities. In effect, flagged fees aren't a response to an expected budget shortfall or cost metrics but are sent to the city council for increases. Apparently, some city officials will raise taxes and fees for no other reason than a deep-seated resentment felt that residents might be getting off cheap. This tax and fee hiking ritual is done every year.
And so it was. After several years of water rate hikes, the city still had room to match peer city water rates. All they needed was a reason.
In 2018, Freitag, driven by consultants and rubber stamped by our failed city council, put in a request to the PSC for a 53% water rate increase to pay for replacement water mains. The state only recently OKed the city's request. It should be noted that the Janesville Gazette reports the approval as a "state order." That is not correct. The city is raising water bills by choice. Nothing prevents the city from cancelling the rate hike.
Supposedly, and I didn't research this, the city was already spending $3.5M on water mains budgeted annually and paid for with borrowed money. What this water rate increase does is allow the city to cut General Fund budgeted revenue draw (borrowing) momentarily, "Look ma, we cut $3.5M from our city budget!" and replace it with $3.5M cash in water bill collections. There's the shell game. Shell games are a matter of timing and intent.
According to Math, the 53% hike in the Janesville water rate will confiscate $80.5M from residents over the next 23 years. According to their Logic, this is needed because without it the city claimed its capital reserve was projected to finish $11.3M in the red by 2043. What a deal!
But the shell game is needed because underlining the city's budget mismanagement and failed growth policies is a perfect storm coming of major property tax increases on Janesville's residential taxpayers that is as historic as the 53% water rate increase.
My early findings showed that in order to keep the appearance of their growth plans as budget neutral as possible to show it's working, the city would have to cut about $7M from its annual budget. An impossible task given the wild spending mentality of the Freitag administration. But this $3.5M water rate increase acts as a back door to artificially cut budgeted draws while making no actual cuts in programs and services.
Yes, the state requires the $3.5M be spent on water mains, an expense however previously paid from General Fund notes. We can argue over who is responsible for water main replacement, but this in effect conveniently shifts a portion of the expected historic property tax increase on water utility customers.
After constant rate and fees increases since the day Freitag was hired, all he needed was a better reason to match peer cities on water rates and he found it in the water mains.
Drink up!!
No comments:
Post a Comment