Frederica Freyberg:

Even before the State of the State Address on Wednesday calling for tax cuts, the League of Wisconsin Municipalities had other ways to spend a portion of it. The group’s four-point recommendation includes; restoring the $30 million cut made in 2012 to general transportation aids, as well as, restoration of $12 million that was cut from mass transit. They asked the legislature to restore the $48 million cut made in 2012 to shared revenue to cities. They recommend a fully-funded municipal services program, a program they say was shorted by half in the most recent budget. And the league seeks to reclaim $13 million to the recycling grant program. The president of the League of Wisconsin Municipalities is also the Beloit city manager. Larry Arft joins us now. Thanks very much for doing so.

Larry Arft:

Good morning. It’s my pleasure to be here.

Frederica Freyberg:

So what is your message to the governor and the legislature intent of spending the projected surplus on tax cuts?

Larry Arft:

I think we were obviously very impressed with the governor’s State of the State message. Many of us at the municipal level have also seen dramatic signs of economic improvement, a lot of new construction underway particularly in our commercial sectors, and the real estate markets are starting to recover. As the governor noted, that has generated a lot of additional revenue, mostly sales and income taxes, because of that economic growth that wasn’t projected when the budget was completed for this two-year biennium. And obviously, Frederica, as you know, most of that money is generated within municipalities, where most of the shopping centers, businesses are located, and over 70% of the state’s population live. So the league has asked the governor and the legislative leadership to consider restoring some of the cuts that were done with regard to municipal funding back in the ’12-’13 budget cycle. You articulated earlier a list of those. As you can see, the numbers are pretty dramatic. Cities are reliant on state aids and, basically, the local property tax. So we think, number one, a good way to keep property taxes low is to help fund municipalities so that we can provide the service levels that our citizens need and want.

Frederica Freyberg:

So you have asked– Let me just interject a moment. You have asked to restore some of these cuts. What has been the response?

Larry Arft:

So far there has not been a response. We’ve communicated with the governor’s office, as well as legislative leadership. I hope that these issues get some discussion. We view ourselves, at the municipal level in particular, as being the governor’s partners when it comes to economic development. It’s actually local governments, mostly municipalities, but some counties, that focus a lot of their energy on business recruitment and business retention and job creation. And one of the critical elements in a successful economic development program is to have quality cities that have a high quality of life, that have amenities that the quality, young professional workers that most of the businesses today are trying to recruit, that they can recruit and retain those individuals. So having cities that are quality places is a critical part of an economic development strategy. And we’re hoping to continue to communicate that both with the governor’s office and the legislative leadership.

Frederica Freyberg:

In terms of the cuts the cities have already taken, what are some of the tangible effects of those cuts in cities?

Larry Arft:

Well, all of us have had to make significant cutbacks. In the last state biennial budget the amount of shared revenue, transportation aids and other items you mentioned, left a big hole, for example, in the city of Beloit’s budget, which is obviously the one I know best. We ended up eliminated 20 positions from our budget that year, not to mention a lot of other potential expenses, cut way back on infrastructure needs. But we still had to substantially reduce the overall size of our general fund, which of course is general purpose government operations. We eliminated five police officer positions. We eliminated five firefighter positions. There were a bunch of full and part-time positions across our parks operations, public works operations, some of our administrative offices, that were eliminated in order to reduce our expenditure base so we didn’t create a structural deficit in our budget. Obviously, we’d like to restore some of those positions. We got a grant to restore the firefighter positions. That grant runs out in 2015. We desperately need some additional revenue sources if we're going to be able to restore those positions.

Frederica Freyberg:

Would the devil's advocate question be, well, perhaps you were just cutting the fat?

Larry Arft:

No, we were way beyond cutting the fat. The municipalities got a big cut in their shared revenues back in 2004. We had another cut under the prior administration, the last budget that was done, which was the ’10 and ’11 fiscal years. So we were way beyond fat when the last biennium was done, and that’s why we were eliminating police and firefighter positions. If there was any fat left in those municipal budgets, trust me, we would not have been eliminating public safety positions.

Frederica Freyberg:

What are the options for cities? Can you stop doing some of what you do, the recycling or the road repair or the snow plowing?

Larry Arft:

Certainly, the cities pretty much determine their level of service, and you can reduce those. When we did that last biennial budget, you know, we had the position cuts in there. As you might imagine, it wasn’t popular to cut police and fire positions among the employees, the unions, the citizens, the city counselors, the managers, myself included. We were not happy to have to do that. But the alternative, you know, was to close the senior center, to close some of the other recreation facilities, close some of the parks, eliminate recreation programs. And every time we talked about eliminating a program, there was a constituency in the city of Beloit that desperately wanted that program, wanted that facility, to remain in place and remain in operation. And the only way we could do that, to keep all of the services and to keep all the facilities, was to go through and make staffing or personnel reductions.

Frederica Freyberg:

What about the constituencies in your city? Have you heard them say, this is great news, this property tax cut and the income tax cut. We want to go for that instead of having more money from the state come into our city.

Larry Arft:

I haven’t had an opportunity to poll or talk to many of the residents. I think it’s simply common sense that residents and businesses do not want to pay more in taxes than they absolutely have to. Again, the governor is right, to a certain extent, that cutting some of the taxes, the income taxes, particular may help drive economic development in the state. But, again, I think the quality of these local places, the quality of life these municipalities provide their residents, is critical to the economic development mission. And that’s what we’re trying to communicate to the governor’s office. We’ve been working on that for some months. We want to be partners in this economic development, job creation business. That's part of what we do, and we have a lot that we can offer the state. We also need some consideration in the budget process. You can’t simply cut our revenues every year, cap our property taxes at zero growth, expect us to absorb cost increases and still be able to maintain quality services.

Frederica Freyberg:

Just very briefly, we don’t have very many seconds left. How would you describe the state of your city today?

Larry Arft:

Well, our budgets are balanced. The cuts we made in ’12 allowed us to balance the budget. We do use some fund balance, which technically is one-time revenue. We have some of that in there. Our capital spending program has been cut dramatically because of some of the changes that were necessitated because of the economy and the state revenue cuts. So the amount of money we’re spending on infrastructure is a fraction of what we were five or six years ago. Also, again, we have rising cost increases for things like employee healthcare and some of the other commodities. The equipment we purchase is very expensive, it's all highly specialized stuff. And we need to have some understanding and some consideration of the fact that we have these costs and we have to meet them if we’re going to continue, again, to maintain these high-quality places.

Frederica Freyberg:

All right. Beloit city manager, Larry Arft, thanks very much for joining us.

Larry Arft:

Thank you very much.