The Village of Shorewood is at a fiscal crossroads, several village staff and officials have said in recent months.
Facing cost increases, the end of debt stabilization funds and a litany of vital infrastructure projects (some mandated and others pushed off for decades), the village must consider a 6% property tax levy increase and several new fees to address projected shortfalls in its proposed 2025 budget.
A public hearing for the proposed 2025 budget will take place at 7:30 p.m. Monday, Nov. 18, as part of the regular Village Board meeting. The board will then vote on whether to adopt the budget and levy.
Village staff and officials have already fielded some tough questions from residents during town hall presentations about why the village is in this scenario and whether it's sought enough grant funding or outside funding to try to mitigate the levy increase.
For the past several years, the village has maintained 2% levy increases, even as expenditures have increased between 3% and 4.5%, Village Manager Rebecca Ewald said at a town hall on Sept. 23.
The village has maintained these smaller levy increases by utilizing extra money in its general fund balance generated over the last two decades, referred to as debt stabilization, she said.
But she said those debt stabilization funds have run dry.
As that resource ends with the close of the 2024 budget cycle, the village must take on several new projects without that cushion, including lead service line replacements, a new public works facility, streetlight system replacements, and fixing the combined sanitary and storm sewage system.
However, village officials are working with other elected representatives, including U.S. Rep. Gwen Moore and State Rep. Darrin Madison, to seek grants and funding from state and federal pools, Village Trustee Matt McGovern said at an Oct. 21 Village Board meeting.
Here's what to know about the projects and costs ballooning Shorewood's 2025 budget and the proposed solutions to address the projected shortfall.
What are the larger new projects and costs Shorewood is facing?
The biggest cause of the increase comes from a recent Environmental Protection Agency rule requiring lead pipes nationwide to be replaced within 10 years. The village estimates this will cost $44 million.
Because much of Shorewood's water main infrastructure was built before 1941, that $44 million price tag includes replacement of all mains and service lines that have not yet been replaced.
"You can only stick so many pieces of pipe that are new into an old fragile main before you're at risk of having that line collapse," Village Manager Rebecca Ewald explained to residents during town hall presentations on Sept. 19 and 23.
Another cost the village faces is the estimated $20 million needed to build a new public works facility.
Employees and officials have said the current facility is outdated, undersized and does not meet Shorewood's needs, and over the last six years, three mechanics have resigned to work in other municipalities, saying a primary reason for leaving was the outdated infrastructure causing difficulties, Ewald said.
The Village Board has hired a broker to look at potential sites outside of the village due to the lack of unoccupied land in Shorewood, she said.
Additionally, the village estimates it will need to spend $17.4 million over the next five years to replace its outdated streetlight system. Ewald said this is especially needed to protect the safety of employees who often have to fix broken streetlight boxes and equipment and to ensure paths and walkways are visible during dark hours.
Another expense the village faces is $18 million for the Southeast Area Combined Sewer Improvements, which would address the half of the village connected to a combined sanitary and storm sewage system, Ewald said.
Many of Shorewood's combined sewers date to the early 1900s and intense rain can easily overwhelm combined sewer systems, causing basement backups, according to the Village's webpage on the project.
"The village has studied this topic every decade but has typically walked away from it because of cost," Ewald said.
But since 2017, village staff have been planning to finally tackle the issue with projected completion in 2025, Ewald said.
Lake Drive also needs $2.9 million from the village for improvements through a WisDOT project that will replace pavement where there's on-street parking and add bike lane configurations, other pedestrian improvements and rapid flashing beacons.
What's the village's plan to afford these projects and costs?
The village is considering a 6% village property tax increase that would bring in $755,000. It would cost a taxpayer with a $340,000 home an extra $155 per year, according to the village's budget webpage.
The village is also looking at several flat fees related to refuse services:
Currently, all property owners, residential and commercial, pay for recycling and refuse services through property taxes based on their property's assessed value. The village also currently incentivizes composting with a subsidy of $1.20 per pickup, around $6,300 annually which is used by around 350 residential property owners.
A proposed change the village will consider is charging residential property owners an additional $150 for recycling and refuse services and removing the subsidy that incentivizes composting. The village estimates this measure would bring in $550,000 in revenue to fund other expenses.
Already, the village board Oct. 21 voted to add a $30 municipal vehicle registration fee. State law allows municipalities to collect these "wheel taxes" in addition to the regular annual registration fee paid for a vehicle. Milwaukee County and the City of Milwaukee are two entities with the same vehicle registration fee, both $30.
The village has approximately 7,800 registered vehicles, which would generate approximately $234,000 annually.
Under state law, the funds can only be used for transportation-related purposes. The village would plan to use the registration fee revenue to offset some of the roadway reconstruction costs associated with lead service line replacement project.
The village is also considering charging residential property owners $153 per parcel for the streetlight system replacement project and charging commercial parcels anywhere between $306 and $1,528 based on assessed value.
Additionally, the village's parking utility, which oversees overnight parking lot permits, has accumulated $475,000 in reserve funds that could be used toward the aforementioned projects. However, using this bucket of funds would divert them from their initial purpose of improving the lots.
Finally, the village is also considering deferring capital asset purchases for certain vehicles and equipment, eliminating non-essential equipment or phasing out purchases over the next decade due to changes in staff, contracting, or service level modifications.
On Nov. 18, the Village Board will vote on whether to delay all non-critical asset purchases for one year. If that measure is approved, the village will spend the first half of 2025 discussing policy for budgets moving forward.