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How a $2.2 Million Bill Cost Taxpayers $4.4 Million

It all started with a lawsuit by Wheaton Franciscan over a tax bill, but because of two bad decisions by two separate boards, it will cost Wauwatosa twice as much as it should to pay them back.

It all started with a lawsuit by Wheaten Franciscan Health Care, where they alleged, and eventually proved that the City of Wauwatosa, the Wauwatosa School District, and other entities had overtaxed them by many millions because they were partially a tax-exempt entity. Not surprisingly, they want their money back.

Now the question comes as to how we pay them back. . The City of Wauwatosa, apparently without discussing this with anyone on the School Board, .  The only problem? The School District didn't want to pay the bill using borrowing, and declined the money.

So now, the City of Wauwatosa, which had already borrowed the money is flush with an extra $2.2 million that it gets to spend on whatever project it wants at the expense of Wauwatosa taxpayers, and the Wauwatosa School District still has to come up with the money to pay it's bill.

Last night, we found out how the Wauwatosa School District intends to pay... . In other words, each citizen in Wauwatosa is essentially double paying this bill right now.

The School Board has said that it doesn't like to use short term borrowing, because it would affect their credit rating, and is like "using credit cards" to pay the bills. That is an excellent sentiment, and should be generally applauded. Unfortunately in this instance, it makes no sense, because the money was already borrowed. 

The City of Wauwatosa already spent the money on the credit card on the behalf of the School District. In the business world, we refer to this as "sunk cost". In other words, it's a decision that cannot be undone. However, the School District is making it's decisions regarding this bill as if City didn't take the action that nobody wanted it to take. Whether people like it or not though, the city did already borrow that money, and so the School District should utilize it.

The Wauwatosa School Board and the City of Wauwatosa may be two separate entities, with their own elected boards, and their own taxation powers, but that doesn't mean that they should make decisions as if the other didn't exist, because the bills for both come to the same people... the citizens of Wauwatosa.

The City Council was dead wrong, and irresponsible in borrowing that much money without even discussing it with the School Board. Despite that, the School Board is just as wrong in turning down that money now, and costing the taxpayers twice as much as it should.

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Dirk Gutzmiller June 14, 2012 at 01:37 AM
As it was explained to me by an alderman, the Wauwatosa City Council essentially hires the City staff, then trusts them and backs them up. OK, so anyone who has been a manager has somewhere in their career has hired the wrong person. Compounding the problem is there are 16 aldermen that get paid around $4800 a year, hardly enough to cover just attending all the meetings, let alone probing the details. Even further compounding the problem is a 5 year budgeting process recently implemented, so funds can now be borrowed from the future 5 years out. The Board should shrink to 8 or fewer aldermen, pay them twice as much, and hope they can worry about losing their jobs. Right now, the alderman position is little more than being a paid volunteer, and they appear overwhelmed with the new complexities and, frankly, screwups. their staff presents them with.
Alfred June 14, 2012 at 02:29 AM
No, you simply fire the staff for F'ing up the deal and hire qualified folks. You know, like the private sector.
Nick Schweitzer June 14, 2012 at 02:07 PM
If you hire a wrong person, and they make a $2.2 million dollar mistake, then yes... you still fire them even though this is government. This is the second multi-million dollar mistake that the City has made in as many months, now that we've found out about the extra cost of the Meineke Sewer project, and the fact that the money that we thought was there suddenly isn't there. With that said, I am all for having far fewer Aldermen than we currently have... unfortunately it seems like most of the Common Council disagrees. At the very least, if they feel like "paid volunteers", then that should affect the kind of role the City decides to take in the lives of its citizens and it's business. A "volunteer" Common Council cannot both create an overly complicate bureaucracy requiring City involvement in almost all business growth decisions, and complain that they're overworked volunteers.
Alfred June 14, 2012 at 02:14 PM
Part of the problem is lack of talent on the Board and in the employee ranks. Couple that with spending other peoples money, and no fear of being fired for screwing up, this is what you get. The best way to approach this problem would have been to have the folks who need the work done pay for it themselves instead of soaking us responsbile folks for their poor judgement.
John T. Pokrandt June 14, 2012 at 08:05 PM
If as Wheaton contends the facility is a hospital then it was built out of compliance with zoning for the site. A little hardball way back when, say denying them their occupancy permit might have caused things to turn out differently. The second issue of course is that while we were continuing (rightly I believe) to collect property tax from Wheaton the matter was in court. The smart course would have been to set the money aside on the off chance that a court would rule against the city which is what happened.

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