The Town of Linn General Meeting to discuss the potential rezone of Lake Geneva property to allow for commercial development along the water’s edge will go down on the August 24 , at 7:00 p.m., at the Town of Linn City Hall. If you don’t care about Lake Geneva cloning itself into a poor man’s version of the raucous, tacky, and tinsel strewn Wisconsin Dells, then don’t show up.
Lake Geneva’s Revolving Debt was discoursed about in the most recent issue of the Lake Geneva Regional News. The manager of that newspaper took Terry O’Neill to task over research he was a part of for a recent Geneva Shore Report story.
What follows is a response to Mr. Halverson’s rather dissembling editorial.
“Mr. Halverson, I do agree that compared to other cities, the City of Lake Geneva’s debt is quite low. But increasing or maintaining a city debt is not the way to go. Debt is not a good thing. It never has been, nor will it ever be, although the purpose for which one incurs a debt can be justified and done for a good purpose. Regardless, debt is a financial obligation that burdens and restricts personal and/or community liberty until that debt is paid off.”
But in the case of Lake Geneva’s revolving debt (at least under Dennis Jordan) it would never be paid off, because it was used as a source of revenue for the city.
How can city debt be a source of revenue?
The mill rate, or tax rate, is a percentage of worth at which the residents of Wisconsin have been frozen at by the State of Wisconsin. The city cannot increase the percent of assessed value that it collects, except under very limited criteria. However, paying off city debt is an exception to that frozen limit, so the rate can be increased to cover the debt payment.
This special exception is called a debt service tax, and it’s currently running at 16% of the city’s portion of resident’s property tax. The city borrows and spends the money, and then the debt it creates is paid down by the residents. When the debt is paid down, the city can again borrow and spend money to bring the debt back up to where it was. This cycle of paying down the debt, and then borrowing to bring it back up, creates an extra revenue stream for the city of about $2.5 million every 3 years.
For example: At the end of 2011 the debt was $7,275,000 and at the end of 2014 the debt was virtually unchanged at $7,205,000. In between 2011 and 2014 the city collected an extra $3,126,492 from city residents in debt service tax that (in theory) was to help pay off the debt. But in those 3 years the city only paid off $70,000 of the debt, while spending $556,492 on interest payments, which enabled the city to spend $2,560,000 on new capital projects.
Complex, weird accounting.
Some might call it creative,
I call it deceptive.
Over the last 3 years alone this scheme, set into play by Mr. Jordan, has cost the taxpayers of Lake Geneva over half a million dollars in interest. And it was done in a manner that regularly goes unnoticed by the tax payers. About half of the borrowed $2.5 million was spent on road repair, which was a badly needed repair, because of previous neglect. But it didn’t have to be that way. If the city used what was intended from the state’s transportation aid for road repair, about $2 million (3 yr. total of the $600,000 to $700,000 per yr.) that money would cover the costs, and thus making borrowing for road repairs totally unnecessary. That would be just too simple and straight forward for Lake Geneva’s city council to get involved with, however.
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