Last Updated: September 28, 2011
The Cottage Grove Merger Study Committee had an enthusiastic tone after hearing Baker Tilly’s fiscal forecast for a merged Cottage Grove.
Representatives from the financial consultant were at the Committee’s September 26 meeting at the Village Hall giving a sneak peak at the partially completed “Phase 1” report that lays out the potential tax impact a consolidation might have.
“I haven’t been this excited about the possibility of a merger until now,” said Merger Study Committee member and Village Trustee Micah Zielke, referring to what he and other Committee members saw as a favorable report concerning the potential tax implications of a merger.
Baker Tilly came to the meeting prior to the report’s completion to gather feedback that would help pull together the remaining pieces. “The point of tonight is to have a discussion that will allow us to finish Phase 1,” said Baker Tilly Manager Kate Crowley, who presented the report to the Committee. The finalized Phase 1 report will be based on projected tax levy spanning five years from 2012 to 2016. Final report results will be delivered to the Committee on October 5.
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Using 2011 Town and Village budget numbers, Crowley said Baker Tilly calculated what was described as an “effective levy” coming up with $182,810 as the amount that would need to be found in the budget to ensure that the Town’s taxes would not increase. The “effective levy”—which includes all taxes and other fees paid by Village and Town residents—was used, said Crowley to get an “apples to apples” comparison of the Town and Village.
She immediately pointed to one area where the $182,810 could be cut more than half. “Those of you who know the village budget are probably thinking $182,000…well I’ve got an idea to get rid of $100,000 of that right away.’” Crowley was referring to a fire hydrant rental fee that the Village currently pays $100,000 for using general fund dollars acquired as part of the tax levy. The only thing is that this is still an expense that needs to be paid. To make this happen, Crowley said the $100,000 for the hydrants could be removed from the general fund (funded by Village taxpayer dollars) and collected as a direct bill to water users. So the Village residents who use the water would pay that out of their water bill rather than out of the tax bill, avoiding an increase to Town taxpayers “That makes sense,” said Zielke responding to Crowley’s explanation. “I like the shift. The Town is unimpacted and the village residents are paying the same.”
This funding shift would cut $100,000 from the effective levy, leaving $82,810 in cuts yet to be found in order to see a zero increase in Town taxes. Closing that gap on the remaining $82,810 didn’t seem to concern the Committee or Crowley as they used much of the discussion time left to brainstorm different places to bridge the remaining gap.
“This isn’t that big,” said Committee member and Town Supervisor Mike DuPlayee, believing that trimming $82,810 was a realistic task considering the estimated combined budget to pick from was considerably larger at nearly $4.2 million. Even if no cost savings were realized beyond the hydrant fee change and the $82,810 disparity remained, it was estimated that Town taxes would increase just 9 cents for every $1,000 dollars of equalized value and the Village taxes would decrease 15 cents for every $1,000 in equalized value. So in the Town’s case, a $250,000 home would see an annual property tax increase of about $22.
Much of the discussion following Crowley’s presentation revolved around seeking ways to cut the remaining $82,810. Looking at areas of general administration, facilities, public safety, public works and programs like storm water management were all discussed as potential areas for cost cuts.
Discussion of existing Town buildings conjured some ideas. Town Clerk-Treasurer Deb Winters suggestion to move the Cottage Grove Police Department from its building where it currently leases to the Town Hall was received favorably by the Committee. There was some discussion of the possible need for remodeling costs to the Town Hall before the police department took up residence.
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Committee member and Town Chairman Kris Hampton said a merge would eliminate the Town’s treasurer and clerk positions, which would free up funds from those salaries. “Although we may keep a person on adding to your village staff. At what rate I’m not sure.” Village Administrator Matt Giese said that differences in the Town’s and Village’s employee salaries would also be something to consider when thinking about how an integration of administrative and public works staffs might be best coordinated.
Following up on comments from Zielke on how to find savings within a combined public works department, Hampton said he didn’t know if a staffing decrease was realistic here because the newly consolidated Village would be picking up 68 miles of Town road that is currently being maintained with four Town public works personnel.
Hearing the many ideas brought out in the meeting by Committee members and the Baker Tilly representatives, Zielke said closing the remaining $82,810 gap seemed very achievable, adding that a tax increase to the Town was the one area they saw early on that could be a merger referendum killer.
“The number one issue that stopped Verona was this tax. We don’t have that,” said Zielke referring to the long fought merger attempt by the city and town of Verona that ended in a failed 2008 referendum. What killed the merger was an estimate that a Town of Verona resident owning a $250,000 home would have seen a $317 property tax increase after the merger.
Comparatively, the tax gap between the two Cottage Groves is much narrower than the Veronas, due largely to the sharing of police, fire and rescue services. “You share so many services already,” said Baker Tilly Partner Vicki Hellenbrand. “You are already a good example of how a community should work together.”Results of Phase 1 will be used by the Committee to determine whether it is feasible to move forward with research to see if a merger would be right for Cottage Grove. Those results will be publically presented at Cottage Grove’s Joint Town-Village Board meeting on October 6 and the Merger Committee meeting on October 10. If it is decided to move forward, phases 2 and 3 would reveal a more detailed analysis showing how a merger would work and residents would be impacted.