Reedsburg council didn’t question 2019 budget errors

December 19, 2018

Frustration immediately set in when Reedsburg Third District Alderperson Phil Peterson received his tax bill in the mail Dec. 8.

He said he reviewed the 50 page budget “a dozen different times” prior to its unanimous passing Nov. 26. While he asked a number of questions about the budget, he didn’t think to ask if the numbers to calculate the levy were correct.

“That information was not presented to us,” Peterson said.

City Administrator Stephen Compton incorrectly presented the city had $600 million in assessed value and $557 million in equalized property value. In reality, the numbers were backwards. The results caused a 6.2 percent increase in the city’s tax rate instead of a zero percent increase unanimously passed Nov. 26.

Compton announced his resignation Dec. 11 with his last day scheduled for Dec. 19.

According to the city’s Chapter 3 Finance and Taxation municipal ordinance, the city administrator is to prepare the city’s annual budget. The budget then goes to the finance committee which reviews the budget with each department head before a final version is submitted to the council for a public hearing and possible adoption.

The 2019 budget was presented over the course of four meetings from Oct. 22 through Nov 26, including one with the finance committee Nov. 12. Even then the error was not caught and no one questioned to ask if any of the information was correct.

Complete trust

The city administrator also serves as the city comptroller and controls the budget process, said City Clerk/Treasurer Jacob Crosetto. While the council, committees and department heads have access to a summary of the information for review, the formulas, numbers and drafts used to build the budget are saved for the city administrator.

“They (the council) didn’t get the full excel sheet so they never saw the portion that was wrong to begin with,” Crosetto said. “They wouldn’t have had the information to double check it.”

“Because the error was using equalized value instead of assessed value the department heads would’ve necessarily know that was an error,” Crosetto said. “Everyone is kind of expected to do their own job.”

Crosetto said while there are checks and balances, with the numbers in the wrong spot there wasn’t any way to compare if anything was wrong.

“That was the unfortunate thing is that there are checks and balances and it’s important for myself as a city treasurer and the council review everything,” Crosetto said. “But we were given the wrong numbers to begin with so we had no way to compare.”

Peterson, who also sits on the finance committee, said there was complete trust in Compton to have the correct formulas and numbers needed to calculate the 2019 tax levy. It was Compton’s third budget with the council since he was hired as a part-time administrator in 2016, so they really didn’t question if anything was amiss.

First District Alderperson David Moon agrees.

“Could I have sat down with (Compton) and gone over it with him fine-tooth comb? I suppose. But I’ve never done that in the past and never needed too,” Moon said. “I try very hard to learn the numbers but at the end of the day I am not a professional accountant, it’s not what I do. We have to hire people who do that for a living and whose trust we place.”

Fourth District Alderperson David Knudsen said he understood there was going to be some substantial growth with the additional building projects, like Casey’s General Store and Sharratt Warehouse, coming into the city but didn’t realize the wrong numbers were being used to calculate that growth.

“Some of us are more adapt to budgeting but none of us are accountants,” Knudsen said.

Knudsen said he didn’t see any “red flags.”

“We weren’t adept enough to understand that there was a wrong figure given to us and all of our figures were based off an errant number,” he said.

Knudsen said a lot of the vast information to build the budget isn’t given to the council. It’s main function is to review the budget to see that it is proceeding in the way it is projected.

“The integrity’s involved in the process are so vast and so much… we are not accountants, we are not administrative experts, we are citizen members,” Knudsen said. “If any of us had an idea or an indication I think we would have asked the questions that could have brought that to light. But there was no indicators there was nothing that stood out to us that told us we needed to dig deeper to ask some of those questions.”

Moving forward

With the complexities involved in the budget process, Peterson said the error was just a “huge mistake” Compton made.

“(Compton’s) a good man, he made an error here,” Peterson said. “There were no issues in the past that lead to any kind of discipline so this was such a surprise to all of us.”

With property tax bills already sent out there is little the council can do immediately to rectify the budget. It can only wait until next years budget to have a possible answer for a very complex situation.

Alderperson-At-Large Brandt Werner, who also sits on the finance committee, said before he votes on any future budget he would like to see how the mill rate is calculated and see more of the numbers for the budget process.

“We’ve got to see that item. That way we will know if the mill rate is wacked,” Werner said. “We’ve got to make sure we’ve got the good solid number there that’s been double and triple checked so that we don’t run in to this.”

The city is also looking to find a new full-time city administrator, a position that had been part-time since 2016. Another role the city is looking to hire is an accountant assistant. Besides helping with day to day financial operations, one of its duties in the job description is to help the administration department with the budgeting process and prepare the tax role, according to the city’s website.

Even with additional help Knudsen said he will be prepared to ask additional questions. While he isn’t sure if the public will re-elect him in April, he said the council has a learning curve ahead while still digesting what’s happened.

“I guess we’ll have a lot more experience next time around all of us,” Knudsen said. “There’s still a lot of confusion as to how it could have happened… I want to make sure if I’m involved in the future this doesn’t happen again.”

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