Cash capital fund helps Sussex budget
Village of Sussex — Unlike some other Lake Country communities, elected officials and staff at the Village of Sussex are not facing the pressure of trying to squeeze the cost of providing local government services into tax levy increases that are limited by state law.
The state law requires that, with some exceptions, municipal tax levy increases must be based on the new economic growth of a community rather than on the rising costs of providing services to constituents such as the increased cost of highway construction, higher prices for vehicles and the fuel to run them, or rising health care insurance premiums for employees.
Sussex village officials are able to avoid some of these pressures because the proposed tax levy of about 5.6 million is $300,000 below the maximum levy limit state law would allow the village.
One of the primary reasons the village can maintain a levy so far below the allowable maximum, according to village officials, is because of the existence of what is called the "cash capital reserve fund," which according to Village Administrator Jeremy Smith, is technically know as a depreciation fund.
The fund accounts for $1.5 million in the village's total cash reserves of $2.6 million.
Each year, village budgeteers determine the dollar amount of the depreciation value of assets. A portion of that amount of money is set aside for equipment or capital purchases in that budget year, and what is left is set aside for the cash capital reserve fund.
For example, in 2014, the depreciation value on $20 million in village assets was estimated at about $600,000, about $460,000 of which was set aside in the cash capital reserve fund.
Smith said that is an usually high amount for a year because there are no major equipment purchases — such as a snow plow — in the 2014 budget.
The capital cash reserve fund is one of the reasons that discussions between staff and elected officials during budget workshops are often more collegial than combative according to Village Trustees Tim Dietrich and Pat Tetzlaff.
"It comes down to two things: trust and the cash capital reserve fund," explained Tetzlaff.
"We trust our staff. Everyone from the department heads on down take the budget very very seriously. There are no individual agendas, and having the capital cash reserve fund is a big help because it gives us a cushion when we need it," she added.
"The cash capital reserve fund makes budgeting so much easier," explained Dietrich. "It helps eliminate the surprises that can come up in a budget year and the sharp up and down spikes in the tax rate. You don't have that 'Oh my God, we have to buy an ambulance this year, where are we going to get the money?'"
"It puts us on more of a pay as you go basis and helps cut down on the borrowing and interest payments," he added.
Is it tempting for elected officials to reduce the amount of money set aside for the reserve fund and instead reduce the size of the levy and lower property tax rates? )The levy is the total amount of tax revenues the municipality collects. The tax rate is the amount individual tax payers pay toward the levy.)
"They could play the political game if they wanted," observed Smith. "But it will cost them more later in interest costs and sharp spikes in tax rates and levies because of those interest payments."
"Most taxpayers probably don't realize that some of their tax money is being saved rather than spent right away," added Dietrich.
"It is just not worth trying to cut the amount of money you are trying to save when you look at what a relatively small difference it makes on each tax bill compared to the amount of money you are saving in the future," Dietrich concluded.
For the average homeowner whose property has an assessed valuation of about $280,000, the 2014 village tax bill will be about $1,405.95, an increase of about $13.41 above what the homeowners paid in 2013.
The proposed budget for all village funds is about $15 million. About $8 million of that money goes to fund day to day operations with about $5.6 million raised from real estate tax levies. The levy requires a rate of about $5.03 per $100,000 assessed valuation.
In addition to the general revenue fund, the budget also includes about $4.6 million for the village's sewer, water and storm water utilities and about $1.8 million for annual debt payments.
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