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Hike Tax Levy for 2 Years to Recoup City Lawsuit Loss, School Board Advises

Board President Michael Meier shifts thinking toward rapid replenishment of reserves depleted by payout. Also, board approves two-year contract for superintendent with 4 percent raise this year.

In a surprise move, the Wauwatosa School Board advised administrators Monday to boost the school property tax levy over just two years to recover a $2 million payback made to the city after it lost a major tax lawsuit last year.

If the administration heeds the board's wishes, taxes for schools would rise by another $51 a year over the regular levy on a $250,000 home.

Two weeks ago, the board considered options of a three-year or five-year special "charge-back" levy increase to recover the money, which was paid to the city out of reserve funds. Board members were split in that discussion, 3-3, with one member absent.

But Monday night, School Board President Michael Meier put forward his own proposal to replenish the district's reserves over only two years at a higher rate.

His reasoning: Cash reserves are kept to protect the schools from risk in the case of extraordinary events that would demand an immediate and large payout – rather like the lawsuit payout itself. Shorting reserves puts the district in a position where it might have to resort to short-term borrowing to make up the difference.

"We have made the decision as a board that we do not accept the risk position of borrowing," Meier said. "The idea that we would be in a three-year risk position was unacceptable to me."

Rapid repayment vs. lower tax rates

Several board members thought, though, that it was much to ask of taxpayers to raise the levy so much over so short a time. The three-year vs. five-year discussion they had already had was based around spreading out the pain for citizens.

"We have to be mindful of our community's investment," said Sharon Muehlfeld. "Those taxes accrued over 10 years. Is it fair to recoup that in two years?"

Covenant Health Care, now Wheaton Franciscan, sued Wauwatosa in 2003 over collection of property taxes on its Mayfair Road clinics, claiming a large part of the building space should be tax exempt.

The city kept collecting the taxes, and the case wasn't settled until July 2011, when the Wisconsin Supreme Court found in favor of Wheaton and ordered the city to pay the health care company back nearly $8.5 million.

Under state law, in such a case the city may recover the principal in taxes it collected for other entities – Milwaukee County, the Milwaukee Metropolitan Sewerage District, Milwaukee Area Technical College, and the Wauwatosa School District.

The School District's share of that came to $2,053,515.05. That amount was paid back in a lump sum to the city from reserves.

Board member Phil Kroner also argued that it was asking a lot of taxpayers, who had already paid into that $2 million, to pay it back so rapidly.

"After collecting over 10 years," he said, "I don't think we're doing the community any favors recouping over two years."

With that, he offered an amendment to the proposal on the table to spread the special levy increase over four years.

Concerns over a shortage in reserves win the day

But Meier returned to his risk argument.

"It took 10 years to collect it but the stroke of a pen to lose it," he said. "Is it a board position that we back away from an aversion to short-term borrowing? The board has always avoided spending down the fund balance."

Tom Jarosz agreed strongly, saying it was simply sound business practice: The sum is fixed in today's dollars; the longer you stretch out the repayment, the more inflation reduces the value of those dollars.

"You recover it as quickly as you can," Jarosz said. "We're just trying to make the pot right."

In the end, a solid majority of the board was swayed, and Kroner's four-year amendment failed, 5-2, with only Lois Weber joining him.

Weber, in the interest of consensus, then voted in favor of the original proposal as it passed 6-1 with only Kroner still dissenting.

Ertl's contracted extended through 2014

With no debate, the School Board also voted unanimously to extend Superintendent Phil Ertl's contract for two years.

Ertl will be paid $163,738 this year, a 4 percent salary increase.

3393 October 09, 2012 at 05:25 PM
Taxpayers get slammed with an increase in the tax levy and Dr. Ertl gets a pay raise the same night the board is panicking about cash reserves. Wow! You can't make this stuff up.
Nick Schweitzer October 09, 2012 at 05:25 PM
Just so I'm straight here... you ask all the taxpayers to make an extra sacrifice the same day you bump the salary of the Superintendent... because you wanted to replenish the RESERVES faster? Are you f*ing kidding me?
Lennie Jarratt October 09, 2012 at 06:08 PM
The disregard of the taxpayers who are paying the bills, is getting way out of control.
Random Blog Commenter October 09, 2012 at 06:35 PM
We have to pay for the obligations we have. Might as well get it done as early as possible. Although the tax screwup was the city's fault, not the school's, the district was pretty tone-deaf when it passed out a raise to the superintendent. Ertl's raise won't break the budget, but leaders should sacrifice when the organization is in a hole. Too bad we can't hold any of the 2003 city hall folks accountable for this screwup.
pupdog1 October 09, 2012 at 06:39 PM
There is no deterrence to gross incompetence by the city, such as taxing Wheaton incorrectly for a number of years, when the taxpayer always foots the bill. Sure, we'll pay--right after you fire every city employee responsible. Isn't this the same city department that "lost" millions in Tosa tax revenue because they don't know how to use basic spreadsheets?
3393 October 09, 2012 at 07:05 PM
Nice try. I'm told I'm " pitching in" everytime I'm taxed for irresponsibility. I like how you try to blame me for the incompetence of government. No wonder a pay raise was given on the same night board members were worried about cash reserves. They have suckers like you voting them in.
3393 October 09, 2012 at 07:18 PM
Using your logic that we can all just afford it otherwise we must be stupid financial life planners, then the Superintendent can afford it and decline the raise.
Nick Schweitzer October 09, 2012 at 07:22 PM
@Taoist and Random Blog Commenter... Reread the article. We ALREADY paid back the money to Wheaton. The tax increase is purely to build up the RESERVE as fast as possible. They set an arbitrary amount of money they WISH was in their Saving account, and are upset that it's empty, and want to fill it within two years. They chose an arbitrary amount of money for their savings account, and now an arbitrary amount of time to fill it. As it said in the article, it took 10 years to build it up last time. Why the hurry now?
3393 October 09, 2012 at 08:00 PM
Nick, Taoist doesn't want you to think logically or question temporary politicians and board members. Just be a good boy and move from Tosa if you aren't a union sucking liberal.
Random Blog Commenter October 09, 2012 at 09:00 PM
Mr. Schweitzer, I set aside an arbitrary amount in my personal financial reserve. When I spend it unexpectedly, such as on the new furnace or a major car repair, I prioritize refilling that reserve. I guess I could take ten years to refill it, but life has a penchant for interrupting 10-year plans. I have lots of issues with the school board, but this isn't one of them.
H.E. Pennypacker October 09, 2012 at 09:14 PM
Taoist is one of those tight ass cheap skate liberals who can't afford to live in Whitefish Bay or Shorewood, so she has to bring her lefty hatred here to Tosa.
Nick Schweitzer October 09, 2012 at 09:27 PM
I have a financial reserve as well. But then again, when my reserve is low, I can't go to my neighbors and demand that they give me more to fill it, or I take away their homes. When you are filling the reserve with other people's money, they manner in which you do so should be extra conscious of that fact, especially in a tough economy. Is $51 a huge sum of money? No, but it's MY money, and every little bit counts.
Nick Schweitzer October 09, 2012 at 09:29 PM
Also, when my reserve is wiped out, I can't simply go to my boss and demand a raise. I have to refill my reserve by cutting expenses elsewhere, and perhaps cutting out an extra luxury. Why can't the School Board be forced to fit within that same constraint? If the reserve is that important, then they should look within their own budget to find that money from a luxury item, not immediately come to us for more.
alt ideas needed October 10, 2012 at 01:26 PM
roll it on down, tax the residents of Tosa, that will fix everything.
3393 October 10, 2012 at 02:04 PM
After 2 years will this this tax levy hike to replenish the cash reserve be removed? Also, thank you to Mr. Kroner for always considering the taxpayer in your decisions.
H.E. Pennypacker October 10, 2012 at 02:31 PM
what a bunch of idiots we have running Tosa...over tax the good citizens for a slush fund just in case we screw up again, then give the goof ball administrator a raise for be a screw up. Tosa is very close to becoming Brown Deer.

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