Saukville’s finances ‘solid’ but challenges loom

The Village of Saukville is in a “solid” financial position with ample liquidity, strong enterprise operations and unused tax levy capacity, according to a financial management plan presented to the Village Board last month.

The plan noted, however, that the village is expected to tap its remaining levy capacity and face a deficit by 2028.

Village Administrator Dawn Wagner said the financial management plan produced by Ehler’s Inc. uses an “all-in” model when predicting a $45,266 shortfall in 2028 and a $280,750 shortfall in 2029. Those amounts include all potential, not guaranteed, project costs and equipment expenses during that time period.

“The plan says, ‘Here’s all of our cards on the table and this is the financial impact if we go through with all of them,’” Village President Andy Hebein said. “The reality of all that happening is unlikely. When we do financial planning we look at the worst-case scenario.”

Wagner said, “The village will continue to monitor the levy going forward and address it proactively.”

The plan notes the village is unique among local municipalities for not taxing residents the maximum allowed by state law, even though tax levy growth has been restricted to only the percentage of added value from new construction for 19 years.

The village experienced a 1.6% increase to the tax levy from new construction last year and a 4.7% increase this year, according to the plan. Next year and in 2026, it is estimated to see a 2% increase each year, while in 2027 and 2028 it is estimated to see a 1.5% increase each year.

Construction within the village’s  two tax incremental finance districts, which includes the sprawling Northern Gateway development, is not included in calculating that new growth percentage.

When each of those districts close and their valuation is included in calculating the tax levy, the growth will be counted as a “one-time” increase to the tax levy, Wagner said.

Ehler’s representative Greg Johnson told the board his advice on dealing with the potential 2028 deficit is to monitor the situation and “keep doing what you’re doing.”

He said the village should not expect relief from the state, which has continued to restrict municipal tax levy growth in recent years.

“I think that’s why you are starting to see referendums become more and more common,” he said.

The village’s total levy was $3.7 million this year, resulting in about a $520,000 budget surplus. That surplus grew the village’s unassigned fund balance, basically its savings, to a little more than $2 million.

The village’s fund balance is about 55% of its total expenditures — healthily above its goal of maintaining it at 16.6% to 30% of expenditures, according to the plan.

Having a healthy fund balance improves the village’s credit rating, which is at a respectable AA3, and it can be used to temporarily plug gaps in cash flow.

The plan details several major water utility projects expected to start in the next five years, including a $2.5 million water loop project on the east side in 2026, a $2.5 million project at the iron filter treatment plant and a $1.4 million water main relay and lateral replacement on South Main Street in 2027.

Those projects and several smaller ones will cost $8.8 million,  $8.3 million of which would be through debt.

While the village has several options for timing rate increases to pay for the projects, the option recommended by Ehlers would raise rates by 4.1% next year and 13% in 2026 before a 3% raise in 2028 and a hefty 34% raise in 2029, totaling a nearly 63% raise from current rates in the next five years.

The sewer utility has relatively few major projects necessary in the next five years, with total capital projects estimated to cost $3.3 million. The largest, repairs to the water main relay and lateral on South Main Street in 2027, would cost $1.45  million.

The utility has “strong and increasing reserves” and “strong all-in debt coverage,” according to the plan.

There are no expected rate increases for the sewer utility in the next nine years.

The village levied about $1.2 million, or a tax rate of $1.96 per $1,000 assessed valuation, this year to pay for its general obligation debt of about $11.4 million.

The health of the village’s finances is thanks to village officials and staff weighing all their options with financial experts before making decisions, Wagner said.

“It has been a long standing practice of the Village Board and the management team  to carefully plan and review options before implementing a project or major purchase,” she said.

Wagner noted the “conservative and proactive” financial approach the village takes in making decisions, which includes considering cost saving measures like leasing instead of buying equipment, leveraging intergovernmental agreements, partnering with neighboring communities and restructuring responsibilities instead of back filling village jobs.

Hebein pointed to the consolidation of fire and emergency medical services with the Town and Village of Grafton and the Town of Saukville as an example of the village’s long term financial thinking.