Capital Improvement Plan

Transcription

1 Capital Improvement Plan 5/13/2014 Prepared by Capital Improvement Planning Committee Village Board Trustee John Lautz, Chair Village Board Trustee Scott Schumacher Lill Twining James Quinn Herb Aleckson Eric Bauer With the Guidance of Karl Green, La Crosse County UW-Extension Community Resource Educator A Capital Improvement Plan illustrating a method of financial planning by scheduling the cost of these improvements (expenditures) over several years to minimize the use of public funds for debt payments.

2 Introduction The Village of West Salem has experienced substantial growth over the past two decades. Since the 1980 s, West Salem s population has increased by nearly sixty-five percent (65%). West Salem has one of the lowest residential living costs in La Crosse County, and high a value is placed on the West Salem School District s education opportunities resulting in families choosing to buy and build homes in the Village. Chapter 9 of The West Salem Comprehensive Plan (Appendix A) discusses the need for an ongoing financial planning program intended to help implement planning proposals. The program would allow West Salem to plan for capital expenditures and minimize unplanned expenses. Capital improvements or expenditures are those projects that require the spending of public funds for the acquisition of equipment or construction of a needed physical facility. Capital improvement planning is a list of proposed projects according to a schedule of priorities over a given period of time. Capital improvement programming identifies needed public improvements, estimates their costs, discusses means of financing them, and establishes priorities for them over a three to five year programming period. Improvements or acquisitions considered a capital improvement under this Committee s review were condensed to include: Public buildings (i.e., law enforcement centers, recreation facilities, etc.); Public equipment (vehicles and machinery); Park acquisitions and development; Streets; Police protection equipment; and Administration and emergency operations center expansion. This Capital Improvement Plan illustrates a method of financial planning by scheduling the cost of these improvements (expenditures) over a period of several years in order to minimize the use of public funds for debt payments. Each year the capital improvement program should be expanded one year to compensate for the previous year that was completed. This keeps the improvement program current and can be modified to West Salem s changing needs. West Salem does not currently have a Capital Improvement Plan in place. Annually, the Street Committee does plan and update a Five-Year Street Renovation Plan and a Sewer Utility Equipment Replacement Plan is updated as equipment is disposed of or new equipment is acquired. In April of 2013, the Village of West Salem requested the La Crosse County UW-Extension Community Resource Educator s assistance with capital improvement planning. Requested services included: Guiding the Village of West Salem staff in establishing a Capital Improvement Planning Committee; Review with the formed Committee the expected duties and expectations of Committee Membership, to include review of existing infrastructure dependent Page 2 of 21

3 services as organized in bullet-form above, considering per capital service values, future infrastructure demands, and other potentially significant calculations; Create possible funding rate scenarios, listing annual capital improvement estimates, and the cost per resident and/or cost to taxpayers; and Create a written summary and capital improvement plan summary. In July of 2013, the Village Board of Trustees approved six community and trustee appointments to the newly-created Capital Improvement Planning Committee. The Committee was given the duties to identify needed public improvements, estimate costs, financial options, and establish priorities for such improvements for the next three to five years. Improvements and acquisitions to be considered by this Committee included public buildings, park acquisition and development, streets, utility construction, and other community development planning. The new Committee was asked to review the existing infrastructure dependent services, consider per capita service values, future infrastructure demands, and review public buildings and future needs of the Village. It was anticipated the ad hoc committee could complete its work within nine months to a year, and the Committee would then disband. Page 3 of 21

4 Background Data The Village has seen significant growth since the 1980 s. Although this would appear as all net revenue to the Village, this does not factor into account the additional service demands that growth places on municipalities. In addition, state-imposed levy limits and drops in shared revenue have created significant budgeting challenges that become more difficult considering the Village s reluctance to issue long-term debt. Graph 1 illustrates the overall drop in State of Wisconsin Shared Revenue payments that the Village of West Salem received between 2008 and 2013: Graph 1 West Salem State Shared Revenue Payment ( ) State Shared Revenue payment $480, $460, $464, $463, $440, $439, $439, $420, $400, $380, $392, $392, $360, $340, This drop from $464, in 2008 to $392, in 2013 represents a 15.5% drop from the Village s largest intergovernmental revenue from a single source. Graph 2 (on the following page) represents the Village of West Salem s revenue sources. General levy funded property taxes represent the largest source of revenue for the Village of West Salem, an amount of $1,176, in the 2014 budget. Page 4 of 21

5 Graph 2 West Salem 2013 Revenue Sources 0% 4% 4% 32% 54% Taxes Special Assessments Intergovernmental Revenue Licenses & Permits Fines, Forfeits & Penalties Public Charges for Services Other Revenue Miscellaneous Revenues Other Financing Sources Levy Limits imposed by the State of Wisconsin have restricted the amount the general levy can be raised without going to a Village-wide referendum. Levy limits for 2014 are as follows: 0% or the percentage change in equalized value due to net new construction. This amount between 2013 & 2014 has not been released by the Wisconsin Department of Revenue at the time of writing this report, but the 2012 to 2013 change was 1.48% (Table 1 represents the past ten years of the percentage change in net new construction. This equates to a state imposed levy limit of $17,414 increase between 2012 & 2013, a net change of 0.717%. Table 1 Year Net New Construction % % % % % % Levy Limits have been in place since 2010, and have essentially kept spending stagnant. payments are excluded from net new construction calculations. Debt Page 5 of 21

6 Committee Funding Priorities Since July of 2013, the Capital Improvement Planning Committee has met approximately twice a month. At the first meeting, the Committee noted there has been no long-term department planning, there are many storage and facility maintenance issues, and several safety concerns in each public building. The Committee reviewed current Village assets noting many assets have outlived their useful lives. Discussions revolved around infrastructure needs, physical size and staffing issues, and present levels of service. The Police Chief, Recreation Director, Public Works Director, and Administrator were each asked to complete a department survey regarding the potential needs related to space, technology upgrades, customer demands, and potential upcoming infrastructure improvements. The four department heads were also asked to prioritize each of the listed projects. Lack of space and technology concerns were found to be common issues for all departments. The Capital Improvement Planning Committee reviewed and compiled various funding priorities for capital improvements. Through this exercise, the Committee created a list of funding priorities it used to rank projects needs. The following is the Committee s funding projects ranked by priority: 1. Safety concerns 2. Meet existing space demands/expanding or adding facilities 3. Maintenance of General Levy Infrastructure 4. Equipment/Machinery 5. Maintenance of utility funded infrastructure 6. New Infrastructures 7. Additional Staffing It was also agreed by this Committee that projects involving collaboration and coordination with other governmental and non-governmental entities should be considered as an umbrella priority to help lessen potential costs associated with the project. Examples discussed for recommendation were coordination with La Crosse County and possibly Monroe County for dispatch center in West Salem; collaboration with La Crosse County for an emergency operations center; cooperation with the West Salem Fire Protection District for equipment and facility replacement and upgrades; and collaboration and consolidation with area municipalities of law enforcement services. From this exercise, the Capital Improvement Planning Committee ranked the various projects listed in the Department Head survey. Table 2 (on the following page) illustrates the projects suggested by the four Department Heads, and the funding priority the Committee gave each project following discussion on the Village needs. Page 6 of 21

7 Table 2 Department Item Capital Improvement Project Name Justification Funding Priority Cost Year Recommend Feasibility Study Recommendation to review by Building and Grounds Insufficient area for Programing Park & Recreation Space Needs - Programming committee needs #2 NA Park & Recreation Space Needs - Storage Storage - Cold storage building at Water tower land Insufficient storage area for equipment # Space Needs - Office Space with meeting Recommend Feasibility Study Recommendation to review by Building and Grounds Park & Recreation rooms committee Insufficient office space #2 NA Play ground equipment (Greene park, $42,000 Park & Recreation Lower Park -Nesh Add) Park Development Public Service, quality of life #6 $42, Rest room facilities & Parking at Park & Recreation Riverview park Riverview Park Restroom & Parking facility Public Service, quality of life #6 $40, Administration Community Meeting rooms Recommend Feasibility Study Recommendation to review by Building and Grounds committee Space for large meetings (30+) #2 NA Administration Storage Room/Space (Voter regs, records, election equipment, reports, data, documents) Recommendation to review by Building and Grounds committee Space at or near capacity #2 NA Administration Building Security System 2014 Budget Item #2 $10, Administration Police Building Issues (Windows, Plumbing, Electrical) Radio System Recommend Maintenance schedule, Current building audit Village Hall Maintenance & Building Feasibility Study (Buildings & Grounds Rec.) Maintenance needs #1 / #2 / #3 NA Public /staff safety + Improve #1 (Public public service Safety) $6, $35,000 - $40, Police Records Room & Misc. Storage Cold Storage building at water tower land Insufficient Storage (95 % Full) #2 Police Office Space Insufficient Storage (100 % Full) #2 variable Police Garage Space Insufficient Storage (100 % Full) #2 variable Police Evidence Storage - Climate Control Insufficient Storage (70 % Full) #2 variable Police Public Works Camera/PD Office Security Streets West Salem Capital Improvement Plan - Project List Remodel Office & Install camera system throughout Village Hall Page 7 of 21 Non DOJ Compliant Staff Safety #1 / #2 $20, Streets are aging/falling into disrepair faster than Village is fixing them #1 / #3 $125, Significant maintenance/street repair ($125,000 add. expenses next 5 years) Recommend Feasibility Study Recommendation to review by Building and Grounds committee #2 NA Public Works Buildings Public Works Equipment See equipment TABLE # Public Works Prefer police storage somewhere else Cold Storage building at water tower land #2 NA

8 As illustrated in Table 2, many department responses illustrated a significant space need. The existing Village Hall building is aging and should undergo an assessment to determine what, if any, feasible improvements would be merited. In addition, existing space restrictions for Departmental equipment is being experienced by the Park & Rec., Police, and the Village Administrator. Public Works allows some storage of Police equipment in Public Works facility but now needs to have the storage capacity back. In addition, proper spacing and pairing between departments should be considered. Currently, the Police and Park & Rec. share a common entry. It is not uncommon to have an irate customer in the Police Department. There is a better building layout than what currently exists. This Committee recommends a Village Hall Maintenance & Building Feasibility Study Committee be formed to review the best intents and uses for the existing Village Hall facility. Building deficiencies such as leaks, electrical upgrades, building maintenance and storage considerations all need to be reviewed before significant spending incurs regarding the Village Hall. Following the Department s review of needs, Department Heads were asked to compile an asset/machinery listing for Committee review. Department Heads presented vehicular/equipment lists for existing Village-owned equipment >$5,000 in value. This list looked different for each department. The Street Department s list includes vehicles (trucks) and tractors. The Police Department s list includes squad car as well as trailers with traffic signage or for command response. In addition, Village office server and burglar alarms serving Village Hall are a part of the Police Department budget. Accordingly, the Village Administrator had building-related issues that need consideration (building maintenance), but these costs would be reviewed during the Village Hall Maintenance & Building Feasibility Study. The Committee s asset/machinery list was separated by the various departments. Departments were asked to provide cost replacement estimates for these items. Additionally, life expectancy was reviewed by each Department and the Committee to determine adequate replacement schedules. Table 3 (on the following page) is the Committee s tabular illustration of Village of West Salem Department-separated machinery/equipment capital outlay schedule (over time). The Departments combined total ranges annually from $322, to $151,881.85, and is projected annually from 2015 through Future cost estimates lose their accuracy over time. In addition, these estimates loss their accuracy as costs invariably will increase. It is for these reasons that the Capital Improvement Planning Committee recommends the Village of West Salem establish a Long-Term Capital Improvement Planning Committee to annually review and refine the Table 3 projection. Page 8 of 21

9 Table 3 Table 3 Projects (Vehicle Replacement) Cost to Replace Future Replacement Cost Life Expectancy JD 4500 Tractor (P&R, Streets, Storm water) $30, years $6, $6, $6, $6, $6, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, Kubota 4 WD Mower (Storm water, Water, Streets, P&R) $20, yearrs $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, Kubota Mower $14, $3, $3, $3, $3, $3, $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, Brush Chipper $31, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, Ford Tandem** $40, $35, $4, $4, $4, $4, $4, $4, $4, $4, $4, $4, $4, $4, $4, $4, $4, Chevy Pickup Blue $40, $18, $18, $4, $4, $4, $4, $4, $4, $4, $4, $4, $4, $4, $4, $4, $4, Ford Tandem Orange $150, $30, $30, $30, $30, $30, $15, $15, $15, $15, $15, $15, $15, $15, $15, $15, $15, Chevy Pickup Red* $5, $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, Case Loader $200, $40, $40, $40, $40, $40, $20, $20, $20, $20, $20, $20, $20, $20, $20, $20, $20, Freightliner Orange $150, $40, $40, $40, $40, $40, $15, $15, $15, $15, $15, $15, $15, $15, $15, $15, $15, Chevy Pickup White $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, Freightliner Yellow $150, $15, $15, $15, $15, $15, $15, $15, $15, $15, $15, $15, $15, $15, $15, $15, $15, Chevy K2500 $40, $4, $4, $4, $4, $4, $4, $4, $4, $4, $4, $4, $4, $4, $4, $4, $4, International $12, $12, $12, $12, $12, $12, $12, $12, $12, $12, $12, $12, $12, $12, $12, $12, Total $209, $178, $164, $164, $164, $99, $99, $99, $99, $99, $99, $99, $99, $99, $99, $98, * Denotes vehicle use will rotate purpose as vehicles are replaced **Will be replaced in 2015, and reserve funding henceforth Projects (Vehicle Replacement) Squad 62: 2009 Chev. Impala w/ computer, emergency lights, radio, video camera, changeover costs** Squad 61: 2011 Ford Crown Vic. w/ computer, emergency lights, radio, cage, video camera, seats, console, radar changeover costs** Cost to Replace $39, $44, Village of West Salem Capital Improvement Plan Public Works Department Police Department Future Replacement Cost Life Expectancy $39, years (100k) $13, $13, $13, $4, $4, $4, $4, $4, $4, $4, $6, $6, $6, $6, $6, $6, $46, years (100k) $22, $22, $9, $9, $9, $9, $9, $10, $10, $10, $10, $10, $13, $13, $13, $13, Squad 63: 2012 Chev. Tahoe w/ computer, emergency lights, radio, video camera, cage, rear seats, trunk vault, console, radar, $46, changeover costs $46, years (100k) $15, $15, $15, $9, $9, $9, $9, $9, $10, $10, $10, $10, $10, $13, $13, $13, Squad 64: 2012 Dodge Charger w/ computer, emergency lights, radio, video camera, cage, rear seats, console, radar, changeover $44, costs $46, years (100k) $11, $11, $11, $11, $9, $9, $9, $9, $9, $10, $10, $10, $10, $10, $13, $13, (2012) All Traffic Solutions Speed Alert Message Board and Trailer $16, $16, years $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, (2013) Emergency Services Command Trailer w/ equip. $22, $22, years $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $2, $2, $2, $2, (2013) Safe Routes Trailer/Range Training Enclosed Trailer $3, $3, years $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ (2013) Village Hall Computer Server $10, $10, years $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $1, $2, $2, (2014) Centurion Scout Portable Burglar Alarm $4, $4, years $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Total $67, $67, $54, $40, $38, $38, $38, $40, $42, $43, $45, $45, $48, $50, $53, $53, Recreation Department Projects Cost to Replace Future Replacement Cost Life Expectancy Playground equipment - Greene Park $42, $42, years $14, $14, $14, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, Playground equipment - Village Park $40, $40, years $13, $13, $13, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, Playground equipment - Lower Park $40, $40, years $0.00 $0.00 $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, Restroom facilities & parking at Riverview Park $35, $40, years $11, $11, $11, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, $2, Public Tennis Courts $18, $85, years $6, $6, $6, $5, $5, $5, $5, $5, $5, $5, $5, $5, $5, $5, $5, $5, Total: $45, $45, $47, $14, $14, $14, $14, $14, $14, $14, $14, $14, $14, $14, $14, $14, Grand Total (All Department's combined) $322, $291, $266, $219, $217, $151, $151, $153, $155, $157, $158, $158, $161, $164, $167, $166, Page 9 of 21

10 Proposed Capital Improvement Projections In order to condense Table 2 & Table 3 capital spending schedules into one table, the following Table 4 was created to illustrate the estimated five year capital improvement schedule: Table 4 Recommended Capital Outlay Schedule Capital Equipment Outlay $322,050 $291,050 $266,673 $219,182 $217,382 Additional Street Improvements $125,000 $125,000 $125,000 $125,000 $125,000 Special Projects $66,000 $50,000* Total $513,050 $466,050 $391,673 $344,182 $342,382 *Village Hall Maintenance and Feasibility Study Although the Capital Outlay Schedule illustrates an increase in total capital outlay by approximately 30% annually, where this is added within the Village budget must be understood and considered. Capital outlays must be recognized as spending necessary to maintain the current level of services not to add services or additional staff. In other words, it is improbable the Village could carve out costs in its existing expenditures to add the necessary capital improvements. Additionally, the capital outlay schedule was created to develop reserve accounts that will allow the Village to maintain a minimal use of debt. The decision for the Village to consider does the Village raise taxes to reduce the amount of debt borrowing necessary, or should the Village wade into the environment of capital debt financing for future infrastructure/capital projects. Funding Proposed Capital Improvement Projections Questions the Village Board must answer in order to move forward on this Capital Improvement Plan include the following: Should the Village adopt the Capital Outlay Schedule? If so, should the Village explore borrowing for long-term capital improvement projects? or Should it remain debt-free and begin accumulating reserve accounts for each Department to maintain the Capital Improvement Schedule? This decision will require a capital referendum to increase taxpayer funding to match the annual costs associated with Table 4 (Currently, State requires a Village referendum if the levy increases higher than the annual percentage increase of Net New Construction 1.4% in 2013 or approximately $17,700 for the 2013 budget). or Should the Village pursue a mix of debt and taxes (referenda) to fund the Table 4 Capital Outlay Schedule? Page 10 of 21

11 What will this cost Village taxpayers? It is difficult to determine the exact financial impact of the proposed capital outlay schedule because the Village cannot control various future revenue and expenditures. General estimates of taxpayer impact can be illustrated by calculating the projected mill rate change and the impact this would create on a certain value home. The Department of Revenue State of Assessment for 2013 shows total assessment values increasing by 2.27% for the Village of West Salem (please note this is not the same as net new construction). The Village of West Salem mill rate for 2014 was $3.73/$1,000 value. Utilizing the recommended Capital Outlay Schedule (Table 4), the following three finance scenarios were developed to illustrate the impact to the Village of West Salem tax rate. Each annual increase in budget maintains the 2014 Levy operating expenditure amount, increasing only by Capital Outlay projects, or new bond payments, as expected under debt-issuance scenarios. Scenario 1 illustrates a no debt approach that would require a referendum asking the voter for an initial 40.42% increase, slowly decreasing the Levy, and annual spending while building cash reserves that would allow the Village to continue a cash-basis approach to capital outlays. Scenario 1: No Debt Revenues 2,426, $2,939, $2,892, $2,891, $2,843, $2,841, Expenses 2,426, $2,939, $2,892, $2,891, $2,843, $2,841, Levy 1,176, $1,689, $1,642, $1,603, $1,556, $1,554, Total Assessed Value $ 315,089, $ 322,241, $ 329,556, $ 337,037, $ 344,688, $ 352,512, Municipal Mill Rate Tax paid per $1,000 value $ 3.73 $ 5.24 $ 4.98 $ 4.76 $ 4.51 $ 4.41 Tax paid on $100,000 Home $ 373 $ 524 $ 498 $ 476 $ 451 $ 441 % Change in tax 40.42% -4.94% -4.55% -5.12% -2.3 Under this scenario, West Salem s municipal tax would increase by an estimated ($524-$373) or 40.24% in 2015, but then drop 4-5% annually through By 2019, the end of the recommended Capital Outlay Schedule, Scenario 1 has the lowest tax impact. This is best illustrated in Graph 3 (Page 13). Scenario 2 (on the following page) illustrates the 100% debt scenario, following the Table 4 Capital Outlay Schedule, issuing debt for all proposed activities. It is noted, State Statutes may prohibit utilizing debt for some purposes. That being said, Scenario 2 has the least tax impact to the taxpayer initially, but by the end of year 2019 will begin impacting taxpayers more than the Scenario 1 (All Levy scenario). Again, this is best illustrated in Graph 3 (Page 13). The Village of West Salem s municipal tax rate (Village only) would increase in the first year by just under, gradually increasing to a 24% increase by Page 11 of 21

12 Scenario 2: 100% Debt Revenues 2,426, $2,939, $2,892, $2,891, $2,843, $2,841, Bond Rev (Principal borrowed ) 0.00 $513, $466, $391, $344, $342, Expenses 2,426, $2,939, $2,892, $2,891, $2,843, $2,841, Bond Payment 0.00 $35, $67, $94, $117, $141, Levy 1,176, $1,211, $1,279, $1,373, $1,491, $1,632, Debt to Value % % % % % Total Assessed Value $ 315,089, $ 322,241, $ 329,556, $ 337,037, $ 344,688, $ 352,512, Municipal Mill Rate Tax paid per $1,000 value $ 3.73 $ 3.76 $ 3.88 $ 4.07 $ 4.33 $ 4.63 Tax paid on $100,000 Home $ 373 $ 376 $ 388 $ 407 $ 433 $ 463 % Change in tax % 6.17% 7.05% Scenario 3 (below) illustrates a 50% Debt/50% Levy-based scenario; which long-term represents the greatest tax impact of the three scenarios. This is because scenario 3 establishes debt annually, which creates debt payments; but also requires the passing of a referendum to increase the levy enough to raise the 50% non-debt component of the financing plan. Scenario 3: 50% Debt Revenues 2,426, $2,939, $2,892, $2,891, $2,843, $2,841, Bond Rev 0.00 $256, $233, $195, $172, $171, Expenses 2,426, $2,939, $2,892, $2,891, $2,843, $2,841, Bond Payment 0.00 $17, $33, $47, $58, $70, Levy 1,176, $1,450, $1,699, $1,909, $2,092, $2,275, Debt to Value % % % % % % Total Assessed Value $ 315,089, $ 322,241, $ 329,556, $ 337,037, $ 344,688, $ 352,512, Municipal Mill Rate Tax paid per $1,000 value $ 3.73 $ 4.50 $ 5.16 $ 5.66 $ 6.07 $ 6.46 Tax paid on $100,000 Home $ 373 $ 450 $ 516 $ 566 $ 607 $ 646 % Change in tax 20.56% 14.56% 9.82% 7.20% 6.3 As illustrated in Graph 3 on the following page, over the five year capital outlay schedule Scenario 3 s fifty percent (50% ) debt/cash blend reduces total annual payments for principal and interest, but still carries significant levy increases due to the non-debt match coming from the Village taxpayer. Due to the annual levy increase required for the Village match, this increase would need to be passed through a Village-wide referendum. Of the three options presented, Scenario 2 is the only finance option that would not require a Villagewide referendum. Page 12 of 21

13 Graph 3 West Salem Capital Improvement Schedule Estimated Annual Impact to $100,000 home All Levy/No Debt (Scenario 1) All Debt No Levy (Scenario 2) 1/2 Levy & 1/2 Debt (Scenario 3) $700 $600 $500 $400 $300 $200 $100 $ It is noted, these scenarios are meant to show approximate tax impacts. In practical terms, the Village would likely establish a one-time five year capital improvement style referendum. Scenario Summaries All three scenarios illustrate the Village of West Salem s annual tax impact for a home with a $100,000 value. Mill rates are applied as a cost per $1,000, so illustrating the impact to a $100,000 house helps show the impact to the taxpayer. As discussed briefly above, Scenario 1 has the largest municipal tax rate impact initially (a $100,000 tax rate for West Salem would change from $373 to $524 in 2015, but then begin dropping to $498 (for a $100,000 home) by 2016, and eventually ending at $441 per $100,000 of value. As indicated earlier, this scenario utilizes no debt, and begins establishing reserve accounts to implement cash-basis project/equipment funding. The Capital Improvements Planning Committee recommends this financing approach to the Village of West Salem to meet its Capital Improvement needs. Scenario 2 approaches the capital improvement schedule with initially the lowest tax impact to the Village taxpayers. However, as illustrated in Graph 3, this financing approach raises the Village s portion of the tax rate to $463/$100,000 assessed value by 2019, approximately a 24% increase from Scenario 3, which illustrates a mix of debt and tax increases quickly raises the municipal mill rate by approximately 2 in the first year (raises the municipal tax rate from $373/$100,000 total assessed value to $450/$100,000 total assessed value). Eventually, this finance scenario creates the greatest Page 13 of 21

14 long-term impact to the Village of West Salem, raising the municipal mill rate from $373/$100,000 total assessed value to around $646/$100,000 total assessed value by 2019 (an approximate 7 increase to the local municipal rate). Please note, each example only shows the tax increase for the municipal (Village of West Salem) tax rate, this does not included tax rate changes incurred by the West Salem School District, La Crosse County, WTC or the State of Wisconsin. Sinking Funds Sinking funds are funds dedicated towards capital outlay projects. Sinking funds are a means of setting aside reserve funds for future capital purchases. In many cases, sinking funds may require specific purposes for reserve funds, thereby requiring several separate accounts. The Village s municipal attorney would be best equipped to help the Village Administrator set up these reserve accounts to begin capital improvement projects on a cash-based approach. A committee of the Village of West Salem should oversee the reserve accounts to fund future infrastructure expenses. Conclusion & Recommendations The Village Board faces a tough decision. Frugal choices in the past have left minimal room to cut from the Village of West Salem s budget. While some may suggest cutting of existing expenditures, it is apparent the Village of West Salem has no room in its budget to cut expenditures. Further cutting will result in reduction of services and programs. However, due to levy limits, rising costs for items out of Village control, and lowering shared revenues, the Village is coming to a position where it needs to decide on utilizing debt to increase capital spending or raise the levy substantially enough to begin developing reserve accounts to fund future capital outlays. This report details a variety of expenditures recommended for the Village of West Salem to meet public demand requirements while responsibly planning for the future of the Village. The main recommendations determined through the work of this Committee, following a nine-month review is as follows: Recommendation 1: Establish a Village Facility Feasibility Study Committee and implement a complete study of the existing condition of the Village Facilities, make recommendations for maintenance and repairs to the existing facilities, and begin planning for new or expanded facilities to meet future space needs. Recommendation 2: Establish a Long Term Planning Committee to review the findings of the Facility Feasibility Study Committee, update the findings of the 2014 Capital Improvement Planning Committee, and implement long term planning for Village Facilities, to include buildings (starting w/ future location of Police, Park & Rec, parks, streets, and equipment. The Long Term Planning Committee could also develop a Utility (Water, Sewer, Storm Water) Long Term Capital Investment Plan for each of the Utilities present in the Village. Depending on the complexity and scope of the findings of the Long Term Planning Committee, that committee may remain an ad hoc committee, or possibly become a standing committee. Recommendation 3: The Finance and Personnel Committee shall provide oversight to any Reserve Funds established. Page 14 of 21

15 Recommendation 4: The Finance and Personnel Committee will have the responsibility to continue to maintain and annually update the Capital Improvement Plan as part of the annual operating plan preparation. Recommendation 5: Implement the Scenario 1 financing plan as voted on and approved by the West Salem Capital Improvement Planning Committee for recommendation to the Village Board. Graph 4 on the following page illustrates the change in total expenditures, and the break out between capital improvements and operating expenses. As illustrated, operating expenditures do not change under this capital outlay schedule. Please note: Appendix B, C, D & E represent the Village of West Salem s revenues and expenditures as expressed in total dollars of the budget, and percent of the total budget. Page 15 of 21

16 Graph 4 West Salem Proposed Capital Improvements Operating Capital Improvements % Capital Imp of Total Exp $2,500, % 37% 35% $2,000, % 32% 3 32% 30% $1,500, % 22% $1,000, % 18% 18% 19% 20% 15% 12% % $500, % Proposed Capital Improvement Spending $ % Page 16 of 21

17 Appendix A Page 17 of 21

18 Appendix B West Salem Revenues in Dollars ( ) Taxes Special Assessments Intergovernmental Revenues Licenses and Permits Fines and Penalties $3,000, Public Charges Intergovernmental Charges Miscellaneous Revenues Other Financing Sources Designated Funds Applied $240, $2,500, $99, $32, $31, $2,000, $1,500, $91, $58, $625, $108, $122, $76, $73, $610, $619, $69, $0.00 $53, $75, $83, $91, $712, $691, $634, $106, $1,038, $776, $126, $548, $1,000, $500, $952, $984, $1,011, $1,124, $1,149, $1,198, $1,201, $1,319, $1,382, $ Page 18 of 21

19 Appendix C West Salem Revenues as budget % ( ) 100% 90% 80% Taxes Special Assessments Intergovernmental Revenues Public Charges Intergovernmental Charges 5% 5% 6% 0% 0% 4% 2% 4% 4% 2% Miscellaneous Other Financing Revenues Sources 0% 5% 0% 2% 4% Licenses and Permits 4% Fines and Penalties Designated Funds Applied 0% 8% 5% 0% 4% 5% 2% 70% 34% % 29% 32% 2 60% 50% 0% 2% 2% 0% 0% 35% 40% 30% 52% 50% 50% % 54% 57% 20% 4 10% 0% Page 19 of 21

20 Appendix D West Salem Expenditures in Dollars ( ) General Government Public Safety Public Works Health & Human Services Culture, Recreation, & Education Conservation & Development Capital Outlay Debt Service Other Financial Uses $3,000, $2,500, $1,099, $2,000, $271, $241, $293, $531, $462, $289, $349, $369, $270, $277, $313, $316, $326, $341, $1,500, $198, $210, $254, $593, $591, $540, $473, $436, $434, $1,000, $482, $498, $509, $500, $575, $582, $628, $765, $747, $735, $779, $820, $817, $0.00 $258, $287, $246, $243, $253, $258, $277, $315, $312, Page 20 of 21

21 Appendix E West Salem Expenditures as a budget % ( ) General Government Public Safety Public Works Health & Human Services Culture, Recreation, & Education Conservation & Development Capital Outlay Debt Service Other Financial Uses % % 90.00% 80.00% 70.00% 15.76% 17.68% 18.22% 1.65% 2.35% 0.92% 10.79% % 12.42% 11.20% 13.24% 1.75% 1.80% % 12.90% 14.15% % 19.06% 0.16% 0.16% 13.32% 14.07% 60.00% 26.26% % 27.15% 27.48% 24.37% % 17.79% 17.89% 50.00% 40.00% 16.04% 30.00% % 30.95% % 33.14% 33.45% 33.68% 20.00% 26.40% 10.00% 14.04% 14.54% % 11.76% 11.64% 9.39% 12.86% 12.89% 0.00% Page 21 of 21