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“The decision really was to go back to the basics and say ‘what is it we’re here for?’ And then let’s fund that,” says the county administrator.
Faced with steeply rising health insurance costs, a general fund deficit of $1.8 million this year and state-imposed limits on property tax increases, Wisconsin's Washington County will try a new approach when it comes time to make a budget for fiscal year 2017.
For the first time, the county of about 133,000 people, located northwest of Milwaukee, will attempt to make a “priority based” budget. Priority based budgeting has been around for about eight years now. But Washington County would be among the first local governments in Wisconsin to use the practice to develop a spending plan.
Put simply, priority-based budgeting involves establishing a set of priorities and then aligning budget dollars to match them. This can mean winnowing money from programs that do not line up with those priorities, in order to free up funds for programs that do.
About 100 public sector organizations across the U.S. and Canada use the process, according to Fabian. Most of them are city or county governments.
What’s behind the decision to employ it in Washington County?
“The decision really was to go back to the basics and say ‘what is it we’re here for?’ And then let’s fund that. Let’s be the best we can possibly be at those things,” said Washington County Administrator Joshua Schoemann during a phone interview on Monday. “Some of our lower priorities, maybe we freeze funding, or we cut funding.”
Fabian stressed that priority-based budgeting is not designed to simply hack away at overall spending levels. “The primary purpose is to reallocate what you already have,” he said.
And for local governments facing pressures similar to those at play in Washington County, Fabian believes that neglecting to move funds toward priorities can have undesirable results.
“What you have to realize,” he said by phone on Monday, “is that every program will get squeezed until you’re doing everything at a mediocre level.”
Washington County started down the path toward a priority-based budget earlier this year. Over the summer, the County Board of Supervisors went through what Schoemann likened to a strategic planning process to come up with the priorities.
They include: safe and secure community, economic growth and vitality, effective mobility and reliable infrastructure, and access to basic physical, behavioral and socio-economic needs.
Departments are now in the process of inventorying all of the programs they oversee, Schoemann said. This is an important step toward identifying which of the activities the county government undertakes are most valuable when it comes to achieving the priorities.
Schoemann acknowledged that there have been concerns in departments that are not seen as especially well-aligned with the new priorities. The planning and parks departments, for instance. “It’s forcing all of our departments to look more innovatively at how we can do things differently, so we’re not relying on dollars that may not exist in a year or two,” he said.
As an example of the sort of innovation that might be required going forward, he pointed to a recent move by the planning and parks department to convert a building on parks property to a vacation rental. According to Schoemann, Since rentals began about three months ago the property has produced somewhere in the ballpark of $6,000 in revenue.
Another example he gave was a county health department effort to combine its operations with those in a neighboring county. “That’s going to save us significant dollars,” Schoemann said.
Property taxes are the county’s main source of revenue, according to Schoemann. In 2016 they are slated to provide about $22.5 million of the county’s $38.7 million in general fund revenues.
The general fund pays for basic government services like police and firefighters.
“Our tax collections, in terms of property tax collections, are pretty much flat,” Schoemann said. He pointed to policies implemented during Gov. Scott Walker’s tenure as a key reason for this.
At the same time, rising health insurance costs for public employees in Washington County have posed an increasingly heavy budgetary burden. Compared to 2015, the insurance costs, which include premiums and deductibles, are on track to rise by an estimated 22 percent in the 2016 fiscal year, to approximately $10 million.
After accounting for health plan design changes, the county is taking on $1.3 million, or about 80 percent of the projected increase, while are employees picking up the other 20, according to Washington County’s 2016 budget.
“It’s certainly a thorn in the side,” Schoemann said of the health insurance costs. “It makes our lives a lot more complicated.”
About 80 percent of the county’s share of the insurance costs are paid with property tax revenues that flow into the general fund. The other 20 percent comes primarily from federal and state reimbursements, Schoemann explained. As it stands, he said that health insurance costs for public employees consume around 8 percent of the county’s total spending.
Total county expenditures in 2016 are budgeted at about $82.2 million, according to the budget.
The general fund, meanwhile, is projected to run a deficit of about $995,000.
Something Schoemann said became clear during the County Board’s strategic planning process, was a preference to keep as many existing county employees on staff as possible.
“That’s going to be one of the interesting discussions down the road,” he said. “How do we do that in a world where the last three years now we’ve seen 10, 15, 20 percent increases in [insurance] premiums.
“Without any new revenue for the county we can’t absorb all those costs every year,” he added.
This week, county departments are wrapping up their program inventories, according to Schoemann. After that, he said the finance department will take the lead ascribing a cost to each program. This is expected to take until November or December. Programs will then be measured against the priorities, and scored one to four, based on how they align. This work will be double-checked by a “cross-functional team” and eventually shown to the County Board.
Schoemann said the goal is to have all of this work completed and approved by next April, so the 2017 budget-making process can begin around May or June.
(Top image by Spiterman / Flickr via CC BY ND 2.0)
Bill Lucia is a Reporter for Government Executive’s Route Fifty.