Brookfield sees itself in a bind under state levy limits

A new multi-million dollar development is nothing to sneeze at, but when it comes to helping a city like Brookfield pay its bills, developing the last remaining open spots of land won't bring any kind of saving grace.

Under the state's new property tax cap formulas, municipalities are beholden to new growth almost exclusively in order to justify a tax increase. In 2012, for instance, the city was only allowed to levy $335,000 additional dollars, or about 0.42 percent.

The city took advantage of nearly that entire amount, raising the levy $333,000 to $35.3 million. Unfortunately, costs are rising at a rate incongruent with that of new development, officials say.

It's not that Brookfield isn't continuing to grow, but its period of substantial, fast growth is in the past. Over the last 40 years, Brookfield has become a commercial center, now boasting a value of more than $6 billion.

With inflation moving costs up at least 1 percent a year, Brookfield's allowable revenue increases can't move in lock step with its needs, officials say.

"Just the cost of nominal wage adjustments to run a city, just general inflation is going up 1 to 2 percent a year," Finance Director Robert Scott said.

"If our allowable growth for the tax levy for operating purposes is less than half a percent, which it's going to be, when you're talking percentages even $100 million in new construction on a $6 billion tax base doesn't generate much on a relative basis."

In some ways, Brookfield is a victim of its own success. In the 2011 budget, created before the new tax limits, the city was $2 million under the allowable levy limit and still had a balanced budget that included new business growth.

Expansion not a solution

There are a few spots where Brookfield can expand: the former Ruby Farms, the Capitol Airport area and other smaller parcels. But overall, Brookfield is built out. Community Development Director Dan Ertl said his focus has to be maintaining the city's current value.

"You certainly don't want to take steps backward, meaning if you go in reverse, if you start losing value, it makes it that much more difficult to capture new value," Ertl said.

"You need to maintain the economic base you have now. If those buildings remain vacant, the owners could theoretically ask for a reduction in their property value, therefore a reduction in property taxes."

Ertl points to the fact that Brookfield has a balanced tax base, a mix of commercial and residential taxes that allows the city to weather the ebbs and flows of multiple markets.

Recently, several new businesses have filled formerly vacant office buildings in Bishop's Woods, and pushing re-investment is something the city will have to continue to prioritize.

Unfortunately, city administrators agree, the new state constraints were overly broad and hurt communities that have been fiscally responsible.

"It's simple math. If you can't raise revenue more than half a percent, but your costs are going up 1 to 2 percent, you can't pay for your costs," Scott said.

"In years past, it was more of a choice for aldermen - how much did they feel comfortable raising taxes in terms of what made sense.

"Now, literally, they can't raise taxes legally."

Facing tough decisions

Mayor Steven Ponto said he has spoken to the governor about this situation, but no relief seems imminent. A statement from the governor's office said Gov. Scott Walker hasn't received any recommendations from state offices about changing these codes, although Walker may be open to discussions.

"It would be premature to comment," Walker's Deputy Communications Director Julie Lund said.

"However, the governor is happy to take suggestions such as those from Brookfield into consideration for the next budget. He and his staff have already been doing so for months in order to gather input from as many stakeholders as possible. The governor is not scheduled to introduce his budget until February of 2013."

Brookfield's state representative, Dale Kooyenga, did not return a request for comment.

As far as Ponto is concerned, the state's approach simply doesn't work for Brookfield.

Ponto points to the 0.06 percent increase in the levy in 2011, the lowest in 20 years.

"Brookfield was already acting very, very responsibly, and I think, to some extent, it was overly restrictive on us because of some other communities they have to deal with that have not been as financially responsible.

"Any time you do something like that, it's certainly not with a scalpel. That kind of overall, statewide limit is more of a sledge-hammer approach."

And it may leave Brookfield having to swing a hammer of its own.

"At some point, since much of our budget is personnel cost, we're going to be in a difficult situation as to whether or not we can maintain the level of service that I think people are proud of in Brookfield," Ponto said.