Dane County Executive Kathleen Falk bills herself as a fiscal conservative who keeps property taxes low while maximizing services. But some members of the County Board say Falk is living beyond her means, borrowing money to pay for basic needs - and sending the county dangerously into debt.
"She's using the capital budget to do maintenance," says Supv. Dave Wiganowsky. "The capital budget is supposed to be for big stuff."
The county typically borrows money in its capital budget to pay for new buildings, roads or parkland. And it traditionally only borrows money for projects that cost more than $50,000. But Wiganowsky and others say Falk often bundles small projects together and sticks them in the capital budget, instead of paying for them outright using property tax dollars.
In her $21 million capital budget for 2008, for example, Falk borrowed $20,000 to refinish the floors in the county jail, $41,000 for new windows in a youth shelter and $81,000 for generic "facility maintenance projects."
"There's lots of fixing of buildings and things like that that should have come out of our operating budget," says Supv. Dave Ripp.
Wiganowsky says that the county eventually must pay back the money it borrows, with interest. "It's like buying groceries on your credit card," he complains.
Falk counters that using the capital budget for small projects makes sense because the county has a Triple A bond rating, which keeps its interest rates low. If the county did not borrow the money, including the $20,000 for new floors in the City-County Building, it would have to take funding away from programs. "We'd have $20,000 less in human services," she warns.
But Falk's critics note that Dane County's capital budget has increased substantially since she took office 11 years ago. Her first capital budget, in 1998, was $9.3 million. In 2008, it was $21 million. Last week, Falk proposed a $42 million capital budget for 2009, which includes $15 million for flood prevention initiatives and purchases of wetlands.
Falk says her previous budgets included funding for a new Badger Prairie nursing home and a Dane County airport expansion, and this year, she included funding to upgrade the county's 911 service.
"These are all popular projects," she says. "Which one do you think we should not have spent money on? The nursing home?"
Ripp agrees the projects are necessary, but worries the county is taking more money from its operating budget every year to pay its debt. In 1998, the county paid about $8 million in debt service. In 2008, it paid nearly $15 million.
"If you're paying back the money and paying interest, that's money you can't spend on other things," he says. "It comes back to bite you in the end."
The city of Madison is also facing huge debt payments as a consequence of large capital budgets in past years. In 2008, the city's capital budget was a record $92.7 million. For 2009, Mayor Dave Cieslewicz has proposed a capital budget of more than $76 million.
Right now, the city pays about $21 million a year toward its $213 million total debt. If the city borrows as planned for 2009, says comptroller Dean Brasser, that payment will jump to $26 million. By 2010, it will hit $34 million, and by 2015, the city could be paying as much as $52 million a year toward its debt.
The city's debt payment is the fastest-growing line item in its operating budget, says Brasser.
Under state law, a municipality can't borrow more than 5% of its equalized value. The city is well below that, at 1%, and could borrow a lot more. "But the question is, how do we pay it back?" says Brasser.
Ald. Satya Rhodes-Conway, who sits on the city's finance committee, the Board of Estimates, says the city council is well aware of the looming debt burden.
"I think we are all concerned with the size of the capital budget," she says. But she argues the money in general is well spent. "I don't think borrowing on the face of it is bad - if it's borrowing for things that need to be done."
The city has used its capital budget to pay for things like new fire stations, says Rhodes-Conway. "A fire station is hard to argue with."
Still, at a recent Board of Estimates meeting, Rhodes-Conway tried to remove more than $3 million for new roads from Cieslewicz's proposed capital budget. "We're making decisions to spend a lot of money and be on the hook for a while for a lot more," she says. "I wanted us to really look at, does this make sense?"
Rhodes-Conway wanted the committee to consider the full cost of the new roads, including paying for maintenance and snow plowing. And she noted that eventually the new roads will have to be replaced. "Ten years or 20 years down the line, are we borrowing more money to reconstruct that road?" she asks.
But her amendment did not pass. In all, the Board of Estimates only cut about $25,000 from the city's capital budget. She admits, "We certainly did not make much of a difference."
Falk insists Dane County is on solid financial ground in terms of its borrowing. Like the city, the county is well below the legal limit for borrowing. And a recent financial analysis, by FitchRatings, lauded the county for having low debt levels (owing about $230 million total) and for being fiscally well managed.
Falk notes Dane County is one of only two counties in the state that have a Triple A bond rating. "Our rate of borrowing is viewed as a specific reason we earn high marks," she says, adding that such a high bond rating "is not easy to get."
Wiganowsky disagrees. Government, he says, can always get a good bond rating. "Well, sure we're going to have it," he says. "It's not hard to hold the rating when all you have to do is tax someone to get money."
In the past 11 years, says Falk, no one on the County Board has ever tried to reduce borrowing by amending her budgets. "Supv. Wiganowsky has had many opportunities to try to change it if he didn't like it, and he hasn't," she says. "There have been no such disputes. The capital budget is almost unanimously supported by County Board supervisors of every political philosophy."
Falk's office adds that three conservative supervisors recently proposed adding $6.5 million to the capital budget to buy radios for emergency first responders. The radios are usually bought by local communities. Proposing the amendment, says Falk spokesman Josh Wescott, is an "example of their actions not matching their words."
Ripp says he's voted against individual budget amendments, but it's difficult to vote against the entire budget: "There's always something in every budget you have a problem with. There's a lot in them that's good. So what do you do?"
But Ripp is concerned about the increase in borrowing. "Every year, we pay a little more," he says. "We borrow for more things than we should."
