The city of Onalaska permanently laid-off five employees early this week as part of a plan to cut $500,000 in spending.
The positions lost were in the police, parks and finance departments, in addition to two other jobs that were spread across several departments. Additionally, one full-time position in the fire department was made part-time.
“These are considered to be permanent reductions,” city of Onalaska Administrator Eric Rindfleisch said. “As I told the council, the city is already a lean organization so this number of position reductions will lead to noticeable service reductions.”
Onalaska, in common with local governments throughout the U.S., has taken a significant revenue hit due to the impact of covid-19 on the economy. But Rindfleisch noted that property tax revenue, which makes up the bulk of the city’s revenue, has remained steady.
“The loss in revenues in 2020 took many forms: the reduction in room taxes collected for tourism expenses, less building permits, and the sudden crashing of interest rates on our investments for example,” he told The La Crosse Independent. “However, the majority of our revenues, like all Wisconsin municipalities, comes from the property tax levy which was mostly not impacted by the pandemic.”
The city delayed filling some positions this year, which has helped to keep it’s budget in relatively good shape for 2020, according to Rindfleisch, but he added that the “real challenge” now facing Onalaska “is how we provide services in 2021 and beyond.”
Small cities have received minimal assistance from the federal government to help them deal with covid-19. Democrats have been pushing for funding for cities and states to be part of a new relief bill, but the chance of an agreement with Republicans being reached before the November elections appears to be waning.
“The city of Onalaska did receive over $300,000 in CARES grant funds in 2020,” Rindfleisch said. “We greatly appreciate the funds and put them to good use installing pandemic-related health, sanitary, and safety measures in City Hall and upgrading our technology so our officials, staff, and the public can participate in our meetings remotely and safely.”
However, the problem with the CARES grants for municipalities, Rindfleisch noted, is that they cannot be used to replace lost revenues, and had to be spent on reimbursing non-budgeted expenses directly related to the pandemic.
“This means to qualify, we had to increase our 2020 spending and then recoup those costs afterwards through the reimbursement process,” the city administrator said. “It also means that those funds could not be used when it came to maintaining the necessary staffing levels to provide current levels of service in the future.”
Onalaska’s common council voted 3-2 last month to give Rindfleisch the authority to make the estimated $500,000 in cutbacks that resulted in this week’s job losses. At that meeting, according to the official minutes, Rindfleisch noted that 75 to 80 percent of the city’s budget is taken up by personnel costs through wages and benefits, meaning that any substantial cutbacks would likely result in job losses.
“It is incredibly painful to even announce this and to have these conversations about this, but I do believe in being honest about our situation,” he told the council. “And unfortunately, like 74 percent of other municipalities in the nation right now, our revenue losses have become unsustainable and we do need to take action going forward in 2021.”
Cities, unlike the federal government, must balance their budgets. They can use cash reserves to close deficits, but doing so risks a downgrade in a city’s credit rating, which could make it more expensive to borrow the money cities need to fund capital projects, like street and sewer repairs.
“Due to state statutes, we must pass a balanced budget,” 2nd District Alderperson Diane Wulf said at the council meeting last month. “We all knew 2021 was going to be a difficult year, and COVID-19 and interest rates has made it even more trying. These are difficult times, and difficult decisions need to be made. I wish we weren’t at this juncture, but we are. Looking toward 2021, painful decisions have to be made, which will really essentially affect every one of us.”
The cutbacks implemented by the city will allow it to meet its state-mandated property tax levy limit. Rindfleisch said he anticipates Onalaska’s total levy will be approximately $11.8 million for the 2021 budget year, reflecting a small decrease of 0.05 in the city’s mill rate (tax rate). A hearing on the city’s 2021 budget has been set for 6 p.m., Nov. 9.
The state has imposed levy limits on municipalities since 2006 to slow the growth of local property taxes. But given that property taxes account for a majority of revenue to municipalities, the law has put constraints on city budgets, and placed even greater emphasis on the need for new development as a way to grow revenue.
By Eric Timmons. Email questions to firstname.lastname@example.org.
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