University of Wisconsin - Extension

MADISON, Wis. — A new University of Wisconsin study takes an objective look at the fiscal condition of Wisconsin communities through the lenses of local officials. Wisconsin municipalities have now operated under two years of levy limits and counties have had tax rate growth limits for over a decade. Despite this restrictions, Wisconsin remains in the top quartile of states when property taxes are measured on either a per capita or per $1,000 of personal income basis.

A web-based survey of fiscal health was administered to Wisconsin cities and villages during the spring of 2007 to learn the fiscal condition of communities and the extent to which perceptions have changed compared to 2004. A total of 200 communities responded to the survey. Of those responding, 49 percent reported that their current revenue base is inadequate and more than 64 percent responded that their fiscal condition in five years will be inadequate.

The fiscal health and well-being of local governments is important. Residents feel public services most directly at the local level, whether that is police protection, fire prevention, road quality, water quality, or library services. While fiscal health may not be the ultimate measure of success for local governments, a fiscally unhealthy local government will not be able to provide the level and quality of public services that are required for a high quality of life, sound local economy and an effectively functioning government.

Understanding the fiscal health of individual local governments is important to local officials, taxpayers, businesses, potential investors and other concerned parties with a stake in the services and finances of the community. For instance, the fiscal health of a local government directly affects its cost of borrowing money for capital projects. In addition to local economic conditions, fiscal management and capacity are key indicators examined by bond rating agencies.

The fiscal health survey is the work of Craig Maher of the University of Wisconsin-Oshkosh Department of Public Affairs and Steven C. Deller, UW-Extension community development economist with the UW-Madison Department of Agricultural and Applied Economics.

Some of the strategies most actively pursued in response to fiscal stress include delaying capital expenditures, targeted budget cuts and delaying routine maintenance expenditures. Strategies least likely to be pursued include reducing hours of public facilities, eliminating services and pursuing regional cooperation agreements. The same survey was administered in 2004 and while statistical comparisons are not permissible due to differences in responding communities, a few points are noteworthy. Compared to 2004, communities are slightly more optimistic today about their current financial condition (46 percent had adequate revenues in 2007 compared to 51 percent in 2004). Conversely, communities have dimmer prospects looking out the next five years today compared to 2004 (64 percent foresee having inadequate revenues in 2007 compared to 54 percent in 2004).

The full report is available online at

http://www.aae.wisc.edu/pubs/sps/pdf/stpap511.pdf

###

http://www.uwex.edu/ces/news

File: Community Development, Local Government