Waukesha City Administrator Ed Henschel calls it the city's "$240 million conundrum," a financial challenge in the years ahead that is tied to key projects.
It's a situation that could get worse if the city doesn't carefully and continually review its revenues, expenditures and long-term capital financing, he told members of the finance committee last week, a message he was expected to also deliver to the common council this week.
The city has capital project needs in the coming years that exceed $240 million, Henschel explained in his presentation. The projects include $128 million for street repairs, $70 million for storm sewers, $20 million for a new City Hall, $14 million for the South Street parking structure and $12 million for vehicle expenditures. The total doesn't include an estimated $250 million in water and sewer upgrades.
According to Henschel, the problem is that there is little room in the city's revenue structure to manage such debt and spending. The city already has the highest per capita tax levy ($51.5 million, or about $727.60 per capita) among similar-sized municipalities by a wide margin.
"The city's per capita spending is a warning sign that indicates that revenues and expenses need to be carefully reviewed," Henschel said.
Essentially, to deal with the problem, the city's annual borrowing needs to be more level to avoid annual spikes in debt payments that translate into annual spikes in tax levies, Henschel said.
"Our borrowing history has been anything but level," Henschel said. "With a very high per capita tax levy, low non-tax revenues and large capital needs facing the city, the current path of business is not sustainable."
Henschel offered a few solutions, and what won't work, but said his proposals are "probably just scratching the surface." He listed a goal to reduce the operating budget by $2 million beginning in 2016.
Further staff reductions aren't the answer, Henschel suggested. "Most departments had their staffs reduced and remaining employees are working at excessive stress levels," he said.
He said the city could save about $20,000 annually if it eliminated election primaries (optional under state law), $150,000 if it eliminated tax support for the cemetery, and about $1 million if it joined the Waukesha County Dispatch Center.
The county dispatch alternative "is the big ticket item — and is the most controversial," he said, nonetheless noting that local taxpayers are currently paying for both city and county dispatchers.
Finding ways to increase revenue is also a priority.
Increasing taxes isn't the ideal solution either, but the city has other ways of increasing revenue while it watches its spending more closely.
Henschel said if the city increases its municipal court fines by 25 percent, it could generate $250,000 a year. Henschel said the city's current court fines and forfeitures in some instances are 5,400 percent lower than neighboring municipalities and similar-sized cities.
The city is also already increasing court costs by $10 that should generate up to $40,000 this year for the city in new revenue. Parking fees have also increased from $2 to $3 in the city this year and is projected to generate about $100,000 in new revenue this year.
By the city joining the joint health clinic on the Waukesha County Courthouse grounds, which hasn't been implemented yet, the city is expected to generate about $180,000.
Henschel said solving the "$240 million conundrum" is not a short-term fix and could take more than 25 years to solve.