Surprise tax increase draws protests, anger at City Hall
Upon receiving their annual city property tax notices last month, city of Merrill residents learned of a 7.4% increase in 2019. This increase is contrary to what most believed would be a 3% increase, which was adopted into the 2019 city budget on Nov. 28. Despite an explanation being given along with tax notices, the discrepancy drew almost immediate backlash from the community as was readily apparent on local social media. That backlash spilled over into Tuesday night’s common council meeting.
In addition to a handful of community members defying the bitter cold wind to picket outside city hall Tuesday night, a standing room only audience packed into the council chambers.
The reason behind the rather unusually large gathering became evident during public comment session, and glaringly clear following the meeting.
During public comment, 11 speakers addressed the council voicing their concerns, and in some cases outrage over not only the tax increase, but the lack of advance notice from city officials.
The sentiments were summed up by city resident and business owner Mark Bares.
“I have zero confidence in our city administration,” Bares said. “We were all here less than a month ago to discuss the city budget and how the heavy tax burden affects us citizens. The citizens of Merrill were mad, we all signed a petition to stop the city from spending money like drunken sailors. The city levy tax increase would be 3%, but how was it we sat through two budget meetings and the city Finance Director (Kathy Unertl) and city administration didn’t say a word about an additional 4.4% tax increase! Why did they keep that a secret?
“Shame on our city council for letting things go on like this,” Bares added. “The only council members to vote against the budget both times were Steve Hass and Steve Osness. We elected you to protect our city and do what’s best for Merrill. If you believe this is what’s best for Merrill, then it’s not only time for our city administrator and finance director to be fired, but it’s time for a majority of you to go too.”
Prior to the 7 p.m. council meeting, the city’s Personnel and Finance Committee, comprised of 1st District Alderman Paul Russell, 4th District Alderman Steve Osness and 8th District Alderman Tim Meehean, convened in closed session. Prior to entering into closed session, Committee Chair Russell indicated the reasoning for the closed session discussion was to evaluate and consider 130 citizen complaint forms implicating Johnson, Unertl and city attorney Tom Hayden. Due to personnel policy and state statutory code, he was unable to give any additional information. Due to the subject matter at hand, closed session was permitted under state statutes.
Following 60 minutes of closed session discussion, the committee ultimately took no action with no recommendation to the council.
As Tuesday’s council meeting wound to a close, Mayor Derek Woellner cited miscommunication as the key catalyst to the matter.
“You have a right to be angry,” Woellner told the crowd, “there was miscommunication. All I can say is you can’t hold the city employees accountable, your anger needs to be directed at us (indicating himself and the Common Council).
“The people you need to hold accountable, are us,” he added.
In November, the Merrill Common Council adopted a 2019 city budget that included a 1.79% increase in operations expenses and a 2.92% hike in debt service, for a total increase of 4.71%. The tax levy of $5,907,612 would have put the city’s mill rate at $14.49 per $1,000 of assessed property value, compared to the 2018 rate of $13.70.
The following Monday, Mayor Derek Woellner announced via social media that he would veto that budget.
“I believe that a 3% increase is attainable and more palatable for those with frugal tastes,” Woellner stated at the time.
Woellner added that he would like to see increases around 2% in future city budgets.
“This year, 2% is not a reality,” Woellner stated. “I don’t see a way to get us there, but I believe 3% could be. Going forward, I want to see the next three budgets meet the 2% goal.”
Following the mayor’s veto, the Common Council made a subsequent go at passing the 2019 city budget, adopting an amended version by a vote of 6-2 (2nd District Alderman Steve Hass and 4th District Alderman Steve Osness dissenting). As approved, that budget came with a 3% property tax levy increase, carrying an annual property tax increase of $51 per $75,000 assessed value.
The amended budget brought $7,700 in additional cuts to the city’s operational budget. The major reduction in final 2019 tax levy budget (approximately $72,000) was by alternative debt service funding, according to Unertl.
The reduction in debt service was accomplished by: Investing City Undesignated General Fund in early payoff of State Trust Fund Loan (STF) 2004 before 2018 year-end (or first week of 2019); using Non-TID-related Debt Service Fund balance to reduce 2019 tax levy; and further deferring the city repayment to Landfill Fund from 2021 to 2024.
Deductions from the operations budget included: Streets Decorations, $1,500; Municipal Court Education and Conference, $500; Mayor Supplies, $750; City Administrator Cell Phone, $325; Personnel-HR Training, $900; Insurance/Employee Flex Plan-EBC, $725; Information Technology Computer Network/Maintenance, $1,000; and Marketing-PR City Marketing, $2,000.
Woellner indicated agreement with that proposal and did not veto the council vote.
City tax bills mailed in December included a letter, signed by Woellner and Johnson, stating that, “Once all calculations were made, the result is an increase in your City property taxes of about 7.4%. We managed to achieve an operating and debt service budget increase of 3.0%.
“However, with a decrease of $2,372,100 in total community assessed valuation (from $410,015,680 to $407,643,570) due to the State of Wisconsin’s elimination of on assessment class of Personal Property, there resulted in an approximately 2.0% tax rate increase.
“As in prior years, each of the taxing districts (Lincoln County, City of Merrill, Merrill Area Public Schools and Northcentral Technical College) has an allocation for Tax Increment Districts (TIDs). The City of Merrill allocation results in an approximate 2.4& rate increase for 2018. The city is using the tax increment funding for public infrastructure (i.e. paving, curb, gutter, sidewalks and street lighting) and economic development.”
Wednesday morning, Russell indicated another Personnel and Finance Committee would be held early next week during which additional information will be made available.