VIROQUA, Wis. – Vernon County Finance Director Bobbi Johnson resigned last week after it was discovered that the county tax levy was miscalculated by over $2.2 million dollars. According to Vernon County Administrative Coordinator Cassandra Hanan, Johnson’s last day on the job was Monday, March 11.
Johnson was hired under previous County Administrator Cari Redington in the newly created position of Finance Manager in 2022. She was later promoted to Finance Director in June of 2023. Johnson was previously employed with the City of La Crosse where she held the title of Financial Services Process Analyst and Deputy Director of Finance.
In a written statement Hanan explained the error stating:
“Due to unfortunate clerical error, the County’s debt levy of $2.27 million was not apportioned on the 2023 real estate tax bills. $10,810,908 was levied on the tax bills instead of $13,086,461. This led to Vernon County taxpayers seeing a reduction in the County’s portion of the real estate tax bill and a decrease in revenue for the 2024 adopted budget. The County Board will consider options for filling that gap, including utilizing excess sales tax revenue and allocating ARPA and Ho-Chunk funding as well as utilizing General Fund reserve. The County is seeking a new Finance Director, and is implementing changes in procedures to ensure that this does not happen again in the future.”
Hanan told the Vernon County Finance Committee this week that the mistake was discovered earlier this month and it took some time to unravel exactly how the mistake happened. The miscalculation has resulted in a revenue shortfall for the current year that will have to be filled with funds other than real estate tax revenue. Hanan said the levy adopted by the county board was correct according to what the finance department had given them, and the treasurer’s office also calculated the real estate tax bills according to the numbers they were given by Johnson.
“So when the county board adopted the budget we levied everything on paper, we followed every proper procedure as far as the county board is concerned,” said Hanan. “So the error occurred when that levy was apportioned onto the tax bill (by the finance department). Where we would normally levy for our debt payments due, that did not happen.”
As the spreadsheet above shows the impact for taxpayers is that the tax levy for this year was lower than it should have been, dropping about $1.4 million from the previous year, but that also means the levy will jump over 18 percent next year from $10.1 million to $12.1 million.
In addition, the county was planning on borrowing $2,214,800 for capital improvement projects. Capital improvement projects are large pieces of equipment, buildings, repairs of road projects that can be paid for over a long period of time. That $2.2 million in borrowing had already been included in the 2024 budget.
One possible solution Hanan offered was to borrow the $2.2 million for the capital improvement budget and the $2.2 million for the levy shortfall. As the spreadsheet below shows, based on current bond interest rates the county would be looking at a debt payment of about $350,000 a year for 20 years with that approach. Total cost to borrow that amount would come in at over $6.8 million over 20 years. The committee would ultimately reject that approach.
Finance Committee Chair Rod Ofte said he wanted to avoid borrowing all the amount and tap into some other county resources if possible.
“Process wise we would like finance (committee) to discuss and tee up a recommendation for the board (county board of supervisors) to approve,” said Ofte. “There have been discussions that Cassie and I have had. One, it’s extremely disappointing, but it is what it is, but we need to react and we need to fix it. I don’t wanna kick the can down the road and put a big burden on the taxpayer down the line. We do have a number of in a pots here and there. Rather than just burden the general fund with a massive big hit, there are a bunch of pots here and there, and some creative ways to to fill the hole. Between ARPA (American Rescue Plan Act), some general fund, some here, some there. That’s kind of what I’m hoping the team would support and minimizing both the impact to the board, to the general fund, and to the public.”
Hanan said the county does currently have about $8.9 million in their general fund, has some excess sales tax available and has about $700,000 still available in ARPA funds. Supervisor and committee member Kay Stanek asked how much of the county’s cash reserves they could use before it impacts the county’s bond rating. Sean Lenz with Ehlers said the county has a strong cash position and high bond rating now (AA-). Lenz said the county cash reserves are at about 66 percent of annual revenue, which would be in the highest category for bond rating companies, but could not answer how much of reduction in that cash would impact the county’s rating. Lenz said he would caution spending down the county cash below 50 percent of annual revenue.
Lenz said three areas that bond companies would probably look at in future bond ratings would be Vernon Manor losing money and potentially draining cash reserves, the tax levy error and overall use of cash.
The solution the committee landed on to fill the levy gap was to use cash from variety of sources as outlined in the spreadsheet below.
Every year the county receives $1.2 million from the Ho-Chunk Nation as part of a state gaming compact to based on land owned in the county. The Ho-Chunk have 1,200 acres of land (attached to Kickapoo Valley Reserve) and they pay the county $1,000 per acre. The $200,000 in uncommitted Ho-Chunk funds was in various line items that were not spent in previous years. The committee also decided to recommend using some of the Ho-Chunk funds they have already received this year, but not yet allocated in next year’s budget. Essentially spending those funds a year early.
The county does have sales tax available and historically has not used sales tax to balance the budget. County Treasurer Karen Delap said she usually transfers sales tax to the general fund in March and last year that amount was $2.1 million.
The county was originally awarded awarded about $6 million from the federal government for COVID relief and they have used those dollars for larger capital projects. The ARPA balance remaining is down to around $700,000. The committee is recommending the county use $500,000 of those funds to fill the levy gap.
The committee voted to send a resolution to the Vernon County Board of Supervisors that included the recommended plan to fill the levy gap as outlined in the spreadsheet below. The Vernon County Board of Supervisors will take up the resolution at their meeting on Thursday, March 21.
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