2019 Annual Report on the Condition of The County Nick Osborne, County Administrator July 2019

Wisconsin Statutes sec. 59.18 The County Administrator shall annually… communicate to the Board the condition of the county. Wisconsin Statutes sec. 59.18

Polk County Data vs Wisconsin Source- Forward Analytics Green Book

2018 Revenues Above Budget Revenue Budget Actual Variance Taxes $ 15,428,551 $ 16,301,860 $ 873,309 Intergovernmental 3,939,989 4,365,533 425,544 License and Permits 419,729 383,264 -36,465 Fines and forfeits 139,050 105,377 -33,673 Public charges 1,560,772 1,798,492 237,720 Intergovernmental charges 760,739 844,393 83,654 Miscellaneous 625,885 1,058,205 432,320 Total Revenues $ 22,874,715 $ 24,857,124 $ 1,982,409

Sales Tax Continues to Grow

County Revenue Mostly Flat Since 2010

2018 Expenditures Below Budget Expenditure Category Budget Actual Difference General Government $ 8,320,063 $ 7,237,654 $ 1,082,409 Public Safety 8,228,730 8,469,086 -240,356 Highway (General Fund Transfer) 5,048,871 Sanitation 666,989 617,839 49,150 Health and Human Services (General Fund Share Only) 1,756,329 1,641,116 115,213 Culture, Recreation and Education 8,320,063 7,237,654 1,082,409 Total Expenditures $ 25,296,434 $ 24,225,251 $ 1,071,183

Lessons from the Ant and the Grasshopper "Why bother about winter?" said the Grasshopper; we have got plenty of food at present."  But the Ant went on its way and continued its toil.  When the winter came the Grasshopper had no food and found itself dying of hunger, while it saw the ants distributing every day corn and grain from the stores they had collected in the summer.” Source: Aesop’s Fables

Yield Curve Inversion When long-term interest rates are paying out less than short-term rates Has been flattening out and sloping down for more than a year On June 30, an inauspicious milestone was achieved: The yield curve remained inverted for three months, or an entire quarter, which has for half a century been a clear signal that the economy is heading for recession in the next nine to 18 months Source: National Public Radio, June 30, 2019

Source- National Public Radio, June 30, 2019

Why is this important? Fund balance needs to be set at appropriate level It protects against: Cash flow irregularities Poor credit rating Volatile revenues or expenditures (snowplowing) Unforeseen and significant costs Exposure from other sources (enterprise funds, recession)

2018 Fund Balance Change Summary HWY Facility $ 907,527 Sales Tax 271,675 Community Services -688,337 Contingency 77,496 Asset Fund 187,200 Fleet -3,878 General Government 1,073,244 Total Change $ 1,824,927 *Total Unassigned Fund Balance 2018- ~$11.78 million

Fund Balance Remains Healthy

Summary: Financial Condition Budget Plan in place for 2019 and 2020 Ceilings set for departments in budget preparation Aging buildings and equipment will continue to be a problem Zero revenue growth budgeting strategy cannot go on indefinitely

Management Issues

MANAGEMENT ISSUES Analysis of Mandated & Optional Services Capital Needs Planning Analysis of Mandated & Optional Services Division Structure Implementation

Capital Needs Planning Existing bonding strategy- payment levels drop from $2.4 million in 2021 to $1.3 million in 2022. Cedar Corps study of Fairgrounds to include long term capital plan $76,000 carryover from 2018 Budget for Government Center Security Analysis Overall analysis of aging equipment

Analysis of Mandated & Optional Services Almost all County services are mandated, but will continue to seek efficiencies Recycling Center Lime Quarry Other analyses as required

Division Structure Implementation First adopted in 2018 with more detailed plan in May 2019 Intended to increase efficiencies and encourage cooperation between departments Evolving concept This Photo by Unknown Author is licensed under CC BY-NC-ND

Overall Conclusions Polk County is in good fiscal health, but challenges could be on the horizon Work on management issues could lead to policy decisions/changes 2020 Budget process is underway

Questions?