Tuesday, June 17, 2014

Weathering the storms

Last night featured some nasty tornadoes that blew through Southern Wisconsin, with winds up to 120 miles an hour. This caused serious damage to many buildings on and around the UW-Platteville campus, as well as in Verona, where an elementary school was among those places damaged. Madison also had several homes suffer damage (we were spared, fortunately), and power outages were reported throughout these areas.

Gov. Walker surveyed this elementary school in Verona as well as the UW-Platteville campus to give a more thorough accounting to the feds, so the state can give that information to the feds in the hopes of getting a federal disaster declaration, much as Walker did 2 years ago in light of massive flooding near Superior. The storm will lead to huge costs for UW-Platteville andthe Verona school district, with new expenses for previous unforeseen repairs being required. An interesting sidelight to this is that the UW System's budget was just approved by the Board of Regents earlier this month, including all tuition and room and board rates. Obviously, this was with the assumption that Platteville's dorms and football stadium would be operating at full strength, and if that is not the case when school starts in 2 1/2 months, there could be some serious budgetary adjustments to come if there is not state and/or federal aid coming, and not just at the Platteville campus.

In addition, the tornadoes are causing numerous disruptions to homes and streets, and the extra up-front costs involved in these expenses could also cause a burden without other outside assistance. There may be an assumption of risk and regular "Act of God" funds set aside, but I have a hard time believing individuals, insurance companies and the communities that got hit by the storms were counting on something this severe.

Ironically, there was another story on weather-related budget issues in the news today, as the Appleton Post-Crescent mentioned several communities in their area are already feeling a budget pinch from the Polar Vortex winter.
...the phenomenon also took a heavy toll on snow- and ice-removal budgets in Appleton, Kaukauna, Menasha and Neenah.

A review by Post-Crescent Media shows the four cities overspent their 2013 snow- and ice-removal budgets by 17 percent to 44 percent.

It also shows the cities largely have spent their 2014 snow- and ice-removal budgets in the first few months of the year, leaving little or no money for winter storms that might occur in November and December.

“This is as bad as I can recall,” Neenah Finance Director Mike Easker said. “It’s not only what happened at the end of December, but all of a sudden we’re behind the eight ball in the beginning of the year. We’ve literally spent the entire weather budget in the first three months of the year.”
Those cities were able to cover their large expenses in 2013 by moving money from other areas of the budget, such as not buying pieces of equipment or by using savings in other departments. But that also means that it becomes much more difficult to pull from those sources if we get more snow before the end of this year, and deferred maintenance and equipment now means more expenses that have to be paid for in the future.

So far, the State Legislature hasn't made a move to make up the difference caused by excessive local street maintenance costs in 2014, but communities in Wisconsin will see an increase in state aids of a little over $7 million statewide for 2015 (as noted on Page 14 of this report). Also, there is $9 million set aside for
...a sum sufficient appropriation from the general fund to fund a transfer to the transportation fund in the second year of each biennium equal to the amount of disaster aid payments made in that biennium in excess of $1 million for any single disaster event. Estimate the transfer at $9,000,000 GPR in 2014-15, which would increase estimated transportation fund revenue in 2014-15 by the same amount.
However, it remains to be seen if that $9 million is enough to handle the damage and repairs to state facilities that result from this storm alone. And that's before bringing up extra costs from the winter, or other natural disasters that have happened in the last year and are sure to happen in the next 12 months.

It is fortunate that we are only talking about repairs from the tornadoes today as opposed to loss of life like we did in places like Joplin, Missouri and Tuscaloosa, Alabama in recent years. But there is no doubt that these Wisconsin weather events are carrying a price tag, and in a state that already has budget deficits and major road work looming, the need to clean up and fix structures damaged by these storms just adds to those fiscal problems.

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