News Item

Address for City Budget 2021


posted on Wednesday, October 14, 2020.

Address for City Budget 2021

Mayor Cory Mason

October 14, 2020

 

Good evening.

President Tate II, members of the Common Council, City Staff, and my fellow Racine residents, thank you for joining me tonight virtually for my annual City Budget Address.

The year 2020 will be remembered as a year full of challenges and hardships. Between COVID-19 and the accompanying economic hardship and uncertainty, declining City revenues, the murder of George Floyd and shooting of Jacob Blake at the hands of police and calls for police reform, winter storms and record high lake levels that decimated our lakefront, and a cyber-attack that crippled city information systems—yes, 2020 has been a difficult year. 

Big picture: 

  • The 2021 budget is balanced;
  • The property tax rate will decline slightly;
  • Our debt will decrease from $94 to $91 million;
  • All city services are maintained, and
  • No employees will lose their job. 

A budget is made up a lot of numbers.  Here is the summary of a proposed budget for 2021:

  • All spending, including the regional water and wastewater utilities, is $233,973,044.
  • The City’s operational budget this year is $84,243,407; less than a 1% increase over last year.
  • Our property tax mill rate will drop slightly from 14.93 to 14.89 per thousand.
  • Our overall debt will decrease from nearly $94 million to $91,405,000.
  • This budget reduces the number of city employees by 24 through attrition.

At the start of this process, it was clear that because of our structural deficit and lost revenue because of coronavirus, we had to find nearly $5 million in savings just to get back to roughly the same level of funding in 2020.

We accomplished this through:

  • Elimination of 24 vacant positions;
  • A hiring freeze through the end of this year;
  • Freezing the salary schedule and limiting raises to 1%;
  • Merging some departments and functions, and
  • Increasing fees in 2021. 

Even in the midst of these challenges, I firmly believe Racine is a community that is resilient enough to face the challenges before us. 

My administration and this budget are focused on reducing disparities and inequities in the community, growing the middle class, and making Racine a more resilient, innovative, and sustainable City.

Let me be clear, our work together to make progress on these goals and to simply present a balanced budget requires us to overcome tremendous barriers that the state and federal government have put in front of communities like ours: We receive less assistance from the federal government to maintain and improve our infrastructure. The Wisconsin Legislature has tied our hands with strict limits on local decision-making and the aid we receive from the state continues to decline. State imposed levy limits and expenditure restraints mean that even though our property valuations increased significantly this year, the City cannot use any of that increase in valuation as revenue to fund City operations. In the face of these realities imposed upon us by other levels of government, our own expenses continue to rise: Salaries and health care costs continue to increase each year for the hardworking City employees who maintain our parks, pick up our trash, maintain our public health, plow our streets, staff our library, and ensure our public safety. 

So our expenses go up, our revenues remain flat, and our aid from the state declines. The State Legislature and Governor must lift the restrictions that are suffocating cities all around Wisconsin.  The fiscal strait jacket that the Legislature has put municipalities in with Act 10 and Act 32 are the cause of our structural deficit.  

Although I wish we could afford to do more, this budget does include a 1 percent increase in wages for our non-represented employees and we allocate $700,000 to disperse into employee HSA accounts to help cover their high deductible health care costs.

At the same time, if we are to address the structural deficit we find ourselves in year after year, we must do more to address the legacy costs we have in benefits that are simply not financially sustainable. With costs of healthcare continuing to climb, the City will be moving from a rule of 75 to a rule of 85 in order to receive lifetime retirement health care benefits, and we will be phasing out the generous, but unsustainable, sick leave payouts over the next 5 years.  Those payouts can range from $20,000 to $40,000 per employee.  As proposed, both of those changes will go in effect on July 1, 2021.

There are a couple of very important observations to make here: first, it is not the fault of our employees and retirees that health care costs go up over time.  Health care costs in this country far outpace the rate of inflation of the rest of the economy.  The City is yet another example of an employer that is faced with keeping up with health care costs.  It is why we need national health coverage or some sort of Medicare for all system that can cover everyone, hold down costs, and improve health outcomes.

The second is that our unfunded retirement benefits are the highest per capita in the state—by a lot. They are nearly $4,000 for every man, woman, and child who lives in the City.  This is not fiscally sustainable.  We are in this position in part because previous administrations did not want to make these hard choices as most other cities did decades ago.  The can was kicked down the proverbial road—and now we are out of road.

To put these changes in context, if nothing were to change, health care costs will consume the entire property tax levy for operations in six to nine years, depending on how aggressively health care costs rise.  Another way to look at it: in 1989, health care costs were less than 5% of our annual budget costs; today they are nearly 25% of our annual costs.

This is why the City Council and I are asking voters to weigh in on these issues this November through the referendum.  If voters were to approve increasing the property tax levy, it would go a long way to sustain these benefits.  Without it, our choices moving forward will be austerity and reductions in services and benefits.

The changes we are proposing here are substantial.  It is a demonstration to voters that we are working to hold down costs as we ask them to consider raising the property tax levy.

I also want to acknowledge for police and fire employees who will begin bargaining soon, I understand and respect that these are issues that must be addressed at the collective bargaining table.

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It was clear in this year’s budget we would have to find a way to maintain services with fewer people.  That has required us to think creatively about ways to do that. This budget:

  • Merges City Development and the City Assessor’s office in one department under the leadership of Bill Bowers.
  • Moves customer service functions that were in public works into the finance and clerk’s office, while reducing staff at the same time. It also makes it easier for the public to have one place to go to for customer service.
  • It moves review of properties that was occurring in three different departments into one division in development. This will improve communication and efficiency for the staff and the public.
  • It reduces our ambulance crews in the fire department from 3 to 2 person crews, but adds another ambulance into service.

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However, a budget is more than just numbers and finding efficiencies; it is a reflection of our priorities and our values.

My 2021 budget continues to prioritize issues I have championed since first seeking this office more than 3 years ago: creating an equitable and inclusive community, ensuring sustainability and mitigating the effects of climate change, and advancing smart city innovations.

 

[Equitable & Inclusive Community]

As I highlighted earlier in the year during my state of the City address, as a City, we must continue our work to respond to the structural inequities that hold too many of our City’s residents back from opportunity and prosperity. Racine’s diversity is one of our community’s greatest assets, yet for the past 3 years, we continue to land on lists proclaiming our county as one of the worst in the nation for African Americans to live. The budget I present to you tonight increasingly focuses on realigning and re-envisioning our programs, services, and resources to meaningfully improve opportunities for our residents of color. 

To be clear, racial inequities and disparities are county-wide challenges that require county-wide solutions.  However, while I’m your Mayor, the City will do everything we can to improve and increase minority homeownership, health outcomes, high school graduation rates, financial resiliency, and quality rental housing. These are the priorities of my administration and, I hope, of our City Council.

Bringing about significant change in these areas requires creativity, partnerships, and realignment of our resources. It forces us to have difficult conversations and make difficult decisions. However, if we care about creating an equitable City for all of our residents, we have a moral imperative to act.  And we have to work with partners in the public and private sector to help pay for it.

While much of this work has begun in 2020, we will see major progress in 2021: 

  • As the pandemic has made abundantly clear, we have alarming disparities in health outcomes locally that must be addressed. For too long, Racine has been the largest City in the Midwest without a community health clinic. That will change this year when we officially open the Racine Community Health Center at Julian Thomas Elementary School. The Racine Unified School District has put more than one million dollars into renovations to transform the school’s garden level into an amazing space for this much-needed health center. Our partners at RUSD, Racine County, the United Way of Racine County, Ascension Wisconsin, Gateway Technical College, and others have all come together in an unprecedented collaboration to make this project a reality. I thank the Council approving federal funds to the Center earlier this year. We look forward to opening the Center in early 2021
  • With that said, the space at Julian Thomas was always meant to be temporary. We need a stand-alone home for the Racine Community Health Center. I am proud to announce to you tonight that the 2021 and 2022 capital improvement plan allocates money to plan for and begin to build that health center on the vacant block just north of Julian Thomas, known as the old Homeward Bound site. We also envision building a new Martin Luther King Community Center with that Health Center. In partnership with RUSD’s community school model, this presents an exciting opportunity to re-imagine the Lincoln-King neighborhood as a dynamic place where residents can learn, play, work, and address their health care needs. 
  • A strong City must also have financially strong and resilient residents, and we must do all we can to help residents overcome financial challenges and build wealth for the future.  In partnership with Housing Resources, Inc. and a coalition of more than 14 other community partners, the City will launch the Racine Financial Empowerment Center later this year. The FEC will provide our residents with free, professional, one-on-one financial counseling to improve credit scores, reduce debt, and build savings. Racine’s FEC will be the first in Wisconsin. The FEC will not only help Racine’s address the immediate financial issues they are facing due to the pandemic, but it will help residents become more financially resilient and it will make home ownership an achievable reality.
  • Thanks to a grant from Bloomberg Philanthropies, City staff have brought partners together to expand the YWCA Southeast WI’s free and effective adult high school diploma program.  It is these kinds of partnerships and hard work that will change outcomes for Racine residents well into the future.
  • Over the past year, we have made steady progress in connecting Racine residents to the training necessary to be hired on publicly funded projects. It is not unreasonable for the taxpayers who pay for these projects to expect that some portion of the work actually go to the people who are paying for it.  The 2021 budget continues to fund this partnership so that ultimately we are getting more City residents into family supporting jobs.

This budget also moves us forward in addressing disparities within our own City workforce: 

●       This year the City joined the Government Alliance on Race and Equity (GARE) and just a month ago we began implicit bias training in the police department in partnership with the R.I.T.E. Academy. The 2021 budget includes funding for ongoing implicit bias and racial equity training for all City employees so that we all have an enhanced understanding of the history and impacts of systemic and institutional racism, and normalize the work of achieving equity throughout our workforce. 

●       Additionally, the Human Resources Department, under the leadership of the HR Director and Affirmative Action Officer, has been working with all City departments to develop the City’s Equitable Workforce Plan.  The Plan will transparently share data about each City Department, and will include each Department’s short and long term goals for fostering an inclusive culture where we encourage, hire, and retain a diverse workforce that reflects our City.

●       This budget continues my commitment to raising the minimum wage for part time city employees to $15 an hour by the end of my first full term. This budget does find resources to move the part-time wage from $11.25 an hour to $12.50 per hour. As an employer we should continue to lead by example and make sure we are on a path to paying a living wage, no matter what the job is.

 

[Police Reform]

After George Floyd’s murder at the hands of police in Minneapolis, I accepted the challenge posed to the nation’s mayors by former President Obama. We took immediate actions to engage our residents and make necessary reforms to policing. I created the Mayor’s Task Force on Police Reform which worked diligently throughout the summer to develop recommendations about our use of force policies and how to best ensure resident oversight.  We also engaged hundreds of residents in virtual community conversations and more than 1,000 residents completed an online survey, all aimed at gathering residents’ experiences with the Racine Police Department and residents’ vision for the future of policing in our community. We also created a website dedicated to increasing transparency about policing in Racine - www.racinepolicereform.org - and we’ve already put hundreds of RPD policies online, as well as updates about our community engagement and reform efforts. 

The Task Force’s work and the detailed findings from those community engagement efforts will be laid out for the Council and the community in a comprehensive report, which I expect to be publicly released in early November. The detailed recommendations will be used to inform reforms that we will seek to implement in 2021. 

But we also could not wait another year for reforms to begin, and the 2021 budget includes items that advance this work significantly.  For instance, we must empower the Police and Fire Commission to take a more active role in their duties. They currently have the ability to hear both internal complaints from the department and complaints from the public about officers’ actions – but they need to be resourced to handle these complaints effectively and independently. 

I have moved administration of the PFC out of the RPD and into the City’s HR Department to maintain the Commission’s independence. 

The budget I am presenting to you tonight includes funding for the PFC to be able to conduct independent investigations into complaints against officers the Commission receives from the public. 

We also must acknowledge that the work our police officers do is important, and often dangerous. Just last summer Officer John Hetland was killed in the line of duty keeping fellow residents safe in the midst of an armed robbery.  Just as officers must deal compassionately with residents reeling from trauma and mental health crises, so too must we support the mental health and well-being of our police officers.  Currently the RPD has a contracted mental health specialist available to them as needed for support. This budget makes that position permanent in order to better support the needs of our officers.

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In this budget I also continue my commitment to creating a more environmentally sustainable Racine. We witnessed the effects of climate change as our Lake Michigan coastline endured unprecedented damage due to storms and rising lake levels. Now more than ever we must recognize the necessity to mitigate our carbon emissions while building resilience within our communities. Two years ago, as a City, we pledged to meet the goals of the Paris Climate Accord and I believe the work we are doing makes significant progress towards accomplishing those goals.

We made great strides in 2020 towards our goal of reducing our carbon footprint. In 2019, we were awarded millions of dollars in VW settlement money to purchase 6 new electric buses. Since then we have been awarded even more resources to electrify our bus fleet. I am proud to say that in late 2021, our first 9 electric buses will be available to riders, a change that will markedly improve air quality on the routes where existing diesel buses operate.

In 2020, we partnered with WE Energies on their SolarNow program, which will generate thousands of dollars in revenue by creating the largest solar panel array in the City at Olsen-Prairie Park. We will continue to explore ways to partner with WE Energies to install mutually beneficial solar arrays that reduce our dependence on fossil fuels.

In our capital budget for 2021 we include funding for solar panels for City buildings as well as electric vehicle charging infrastructure at City facilities. City departments are now looking at new electric vehicle options when replacing old and outdated equipment. This not only reduces our carbon footprint, but helps reduce operational costs as we will spend less on electricity and gas in future years.

Finally, the City saw firsthand the effects of climate change this past January when a winter storm ravaged our lakefront. The damage done will cost millions to repair, and we know that storms like this will only become more frequent as the climate changes. As we work with FEMA and other agencies to see what resources can become available for repairs, we know that we have to plan for long term sustainability of the lakefront. That is why in the capital improvement budget, we have included an additional $3 million for the City’s share of lakefront restoration. Those dollars will ensure that the lakefront can be built to a standard that can withstand future weather events.

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Although 2020 threw us some curveballs we have made significant strides in many of our Smart City initiatives.

Earlier this year, in partnership with U.S. Cellular the City of Racine became the first City in Wisconsin on their network with fully implemented 5G service. 

The City also rolled out phase one of our public access WiFi just a month ago. The realities of the pandemic and schools teaching virtually has made clear that access to high speed internet is imperative for everyone. The 2021 capital plan includes additional funding to expand the public WiFi access points. We know the need is great not just in economic corridors but in neighborhoods where kids are learning their school lessons from home.

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Given the fiscal constraints we are under by the state, and our inability to expand our borders, the only way we will grow our tax base is by stabilizing neighborhoods and through what is called net new construction. That means the Department of City Development is critically important to the financial viability of the City. 

In this budget I am proposing a major reorganization and investment to the Department of City Development to better position it to address these pivotal issues. 

First, we are bringing back the position of Assistant Director of City Development. As the amount of interest from private developers increases, we must build internal capacity in the Department to effectively and swiftly respond to these inquiries and shepherd development proposals through the process. If net new construction is our life blood, we must have the skilled staff needed to deliver on projects. We should all be excited that Gold Medal Lofts is complete, and that both the Ajax and Horlick sites are under construction, but in order to get more projects underway, we must build our capacity and our Development Director needs a strong and able second-in-command to marshal projects through from origination and interest to completion. 

Second, we are creating a Neighborhood Enhancement Division or NED if you prefer, within the Department of City Development. The NED will bring housing inspectors together in one place to promote and enforce the RENTS ordinance. The NED team will be a one stop shop for residents to call for assistance with everything related to their housing, including housing conditions. The NED team will also be tasked with conducting the proactive rental housing inspection efforts we will begin as soon as the public health concerns from COVID-19 subside. In order to reduce the burden to our tax levy, this new division is in partly funded through federal CDBG funds.

Finally, as part of efforts to stabilize neighborhoods and increase minority homeownership, we are working with the County on expanding a land bank program to bring new life and new owners to foreclosed properties in the City. It is our hope that if City residents have done the hard work of building their credit through the Financial Empowerment Center, and are at a place where they can afford a home, the City, through the land bank can help find then a great place to live.

I hope that you will notice something about these initiatives: in addition to them fulfilling our goals and our values, the vast majority of this work is being done with other resources that we were able to bring to the City.

This year, the staff in my office raised approximately $5 million to further our initiatives and build partnerships in the process.  They add tremendous value to our City.

Tonight you have a budget before you that doesn’t layoff a single employee and doesn’t reduce services to our residents. It reduces our debt and keeps the property tax rate in check. And hopefully, tonight I have also reminded you about the tremendous work still being done here in the City each and every day.  In the midst of a pandemic, with fewer services, and less remuneration, our public servants show up every day to keep us safe and healthy.  We cannot thank them enough.

This budget makes our City government more efficient. This budget will see our City staff working more collaboratively than ever before to accomplish ambitious goals related to our neighborhoods, equity, sustainability, and smart city.  We will be doing more while still living within our means. This budget is a testament to the innovative and creative spirit of our staff who have worked hard to find solutions to our City’s challenges.

I believe we can accomplish great things as a City and I am excited about our future. Through the work of our employees and our partners, we continue to find creative and innovative ways to improve our community, provide better service, and strengthen our future, even under the fiscal constraints we face.

While this budget comes from my office, it is truly a collaborative work that would not be possible without the suggestions, expertise, and contributions of so many others. I’d like to briefly extend my gratitude to those who have helped to shape this document.

First, I want to thank the Alders for their willingness to meet with Kathleen, Shannon, and myself. Your insights and suggestions were incredibly helpful in our decision-making process.

I would like to thank each department head for their work in putting this budget together. This was a difficult process I realize but I am grateful for your help.  In particular, I need to thank Kathleen Fischer As you know, Kathleen is doing double duty as budget director and also interim city administrator. She has put in a tremendous amount of time on this and I sincerely appreciate her.  Many thanks also to Shannon Powell, Vicky Selkowe, and Cara Pratt in my office for their time and diligence putting the budget together as well.  Also thanks to Ellen Nuechterlein, Mari Mora, and Ruby Ward who keep the office operating smoothly day in and day out.

I would also be remiss if I don’t acknowledge that the budget process next year will feel very different because several of our department heads are retiring in the coming months. I want to thank

●       Police Chief Art Howell

●       MIS Director Paul Ancona

●       Water and Wastewater Manager Keith Haas

●       and Finance Director Dave Brown

for their service to the City. The collective institutional knowledge you collectively share about this City is an asset and it will be sorely missed. We wish you well on your next journeys. 

Finally, I want to thank my wife Rebecca and my children Eleanor, Amelia, and Cory. 

I do not spend nearly enough time with them, and I can’t thank them enough for tolerating my long hours. I love you.

Thank you, stay safe, Godspeed, and good night.

 

City Budget Address 2021