Fiscal responsibility

To the Editor:

Run county government like a business is a popular talking point, but is it realistic?

When private companies reduce their work force, it is due to the public choosing not to purchase the goods or services that the company supplies. If the company’s business is booming, they expand their work force and facilities to meet the increased demand for their product or service and in all likelihood prices rise, a true supply and demand economic model.

However, government does not create a product, it provides services. In most cases, these are services that cannot be or are deemed by society not to be appropriate for the private sector to provide. As a whole, the need for government services is not controlled by the laws of supply and demand. At best, the need for most government services remains static during economic downturns and in many cases increases.

How long do you think Kohler Co. would stay in business if their profit margin was capped at 3 percent over manufacturing costs and 75 percent of that profit margin had to be used for purposes that did not support Kohler Co.?

This is exactly where Sheboygan County government finds itself. Property taxes are the only major revenue stream available to Sheboygan County, and that revenue stream has been capped by the state of Wisconsin at 3 percent. Even in the best of times, the property tax is an inefficient way of funding county services and programs. The property tax was never meant to provide major support for the public school system, most social programs, or the circuit courts. These services were supposed to be supported by the state of Wisconsin through shared revenue and/or grants. However, because the state of Wisconsin has not met its funding obligations to Sheboygan County, 75 percent of the county’s property tax revenue has to be used to fund state-mandated programs.

At the same time the state of Wisconsin continues to neglect its financial commitment to Sheboygan County, they are also tapping revenue sources that in the past were designed to fund county operations. A classic example of this is the amount of revenue Sheboygan County receives from fines levied for county ordinance violations. The state of Wisconsin has not increased the revenue Sheboygan County receives from these fines since 1988 ($67.50 per citation). However, the state of Wisconsin’s revenue share from these fines has shot up 4,333 percent, increasing from $18.50 per citation in 1988 to $133 in 2010. This is just one of many examples of the state of Wisconsin limiting the county’s ability to fund its programs and services.

Currently, Sheboygan County is employing 962 people. The 2010 payroll, including benefits, is $61.2 million. If at a future point Sheboygan County gave a 2.5 percent raise to county employees, it would cost Sheboygan County approximately $1.6 million. Raising property taxes 3 percent only generates an additional $1.3 million in revenue, leaving Sheboygan County with a deficit of $300,000. Looking at this one example drives home the point of how inadequate Sheboygan County’s revenue stream has become due to the state of Wisconsin’s inability to meet its financial obligations.

In order for Sheboygan County to function with property taxes as its main revenue source, county payroll would have to be reduced to approximately $30 million. At this payroll level, a 2.5 percent raise for county employees would cost approximately $750,000, leaving a balance of $550,000 to finance other reoccurring county needs, excluding the bulk of infrastructure maintenance and larger capital projects.

Achieving a reduction in payroll can be accomplished in two basic ways. First, Sheboygan County’s work force could be decreased from 962 to approximately 472 employees, a reduction of 51 percent. Second, the compensation paid to current employees could be reduced by 51 percent.

Changes of this magnitude will in all likelihood result in the drastic erosion of services. The reduction of services will be caused either by the large reduction of staff or the inability to hire and retain qualified employees due to unfavorable wage comparisons with other counties.

The financial reality facing Sheboygan County is that even in the remote possibility that the state of Wisconsin made significant changes to binding arbitration laws, it would not solve Sheboygan County’s fiscal dilemma. Without the ½ percent sales tax to diversify and increase Sheboygan County’s revenue stream, the only significant cost savings avenue open to the county will remain work-force reductions.

Think of where you work. Could the company that employs you continue to be successful if the work force was halved while the production demand for your company’s goods or services continued at current levels or were increasing?

As unpalatable as the institution of a ½ percent sales tax is, the sales tax in combination with selected staff reductions is the only fiscally responsible path open to Sheboygan County.

William Bruckbauer, director of operations, Sheboygan County Sheriff’s Department