Complex highway funding isn’t keeping pace with costs
Think your household budget took a hit a few years ago when oil and gas prices spiked? Try running what amounts to a business where about a half of your expenses were tied to oil prices. Factor in increasing utility costs and labor increases and you have a recipe for a budget nightmare.
That’s the situation Lincoln County Highway Commissioner Randy Scholz and the members of the County Highway Committee have been juggling.
“It’s been real bad for the last four years,” Scholz said.
Scholz said the problems with the highway department can be traced to two issues.
“The first issue is that with the current funding levels, we cannot maintain our roads. We are not able to pave them on a 20-25 year cycle. We need to pave about 12 miles a year and we’re averaging about three or four miles, depending on state and federal funding,” he said.
“The second issue is about funding the Highway Department. The way the Highway Department works is we bill out to either the county, state or to the townships. Everything we bill out, that’s what we need to run the Highway Department. So we have a highway fund that does that. The past couple years we haven’t been within budget, we’ve been over budget because we’ve had bad winters. So we’ve been able to maintain our operation costs. But last year we stayed within budget but because of our operational costs, we lost about $500,000 in our highway fund.”
Staying within budget, while often desirable for other county departments, actually hurts the highway department, he said.
“When we stay within budget, we aren’t able to fund our highway department. We’re not able to cover our overall costs, our depreciation costs, buildings and grounds, heat, electricity and everything it takes to run this department. We lost $500,000 off our fund balance,” Scholz said.
And the highway department runs on a complicated accounting system. The highway fund basically pays for the operations of the highway department.
“We have a roads fund, which is the county, which we bill to do the operations for the roads. We also bill the state and townships for work we do for them. The highway fund has to bill those three main funding sources in order to cover all our costs,” Scholz said. “When we stayed within budget, we didn’t make enough revenue to cover those costs. So our fund balance took a $500,000 hit, our fund balance was reduced by that amount. Obviously, if you keep reducing that, you don’t have any money in this department to run it and you have to go to the general fund and get money. And that’s not the way it’s supposed to work. We’re supposed to run an as independent department.”
Scholz said if the department had the additional $750,000 it needs to maintain the roads properly on the 20-25 year cycle, it would cover its operations costs and avoid tapping its fund balance too.
Early retirement has been offered to workers in the department, with two people taking advantage of that. This would result in about $140,000 in savings in salary and fringes. Since some equipment isn’t needed with reduced staffing, it would be sold, which would generate some funds while reducing costs further. In addition, the department in recent years has opted to lease rather than buy some vehicles and has adapted to using some trucks year round rather than seasonal.
While these savings have allowed the department to increase the work on roads, it isn’t to the level that is recommended and despite appearances; some roads are showing signs of wear. Weight limits have been reduced on some of these roads to stretch out as long as possible having to reconstruct them. But sooner or later chip sealing and minor repairs won’t be enough and the more expensive process of rebuilding the roads will have to be done. At that point the options are return the road to a gravel state or dig up the asphalt, redo the base and lay a new layer of asphalt down.
“What we’re looking to do is reduce our staff because we want to reduce our operation costs because we can’t cover our fund balance,” Scholz said. “So if we reduce our employees and the equipment we have, that shrinks what we need to cover our expenses so we don’t take a big hit on our fund balance. That obviously takes time to work out.
“It is very weird if you think about the way our operation works,” Scholz added. “If we are over budget there are obviously issues there but if we are under budget we have a hard time covering our costs.”
He said for 2009, the department was actually a little under budget and is on track to be even more under budget for the current budget year, which runs concurrently with the calendar year. Schulz said the committee will know at the end of the 2010 if the cuts made so far were enough to make a dent in shortfall.
To raise the full $750,000 needed to maintain the roads at the 20-25 year cycle, a referendum to exceed the revenue cap by 31 cents would be needed. This would raise the taxes on a $100,000 home by $31 a year. The medium value of a home in Lincoln County is estimated at $139,000, which would see a $43.09 increase in its taxes.
A wheel tax, which is one of the more common ways counties and municipalities in Wisconsin raise funds for highway work, would apply to 26,907 vehicles in Lincoln County. Vehicles such as buses, motorcycles, mopeds, electric vehicles, trucks weighing more than 8,000 pounds as well as those registered for farm use, antique vehicles, and several other types are exempt under state statute. If a wheel tax is implemented, it would have to add $27.87 to the cost of registration to raise the needed $750,000.
A third option is to find the money in the county’s general fund to increase the highway department’s funding. Scholz said this is unlikely in that all departments are making cuts to their own budgets so the county can operate with reduced revenue it is receiving in taxes, fees and other sources.
Next week: What the department is doing to stretch its dollars and the longevity of the roads at the same time.