La Crosse Taxpayers Shouldn’t Be Fooled By New County Tax Scheme

Here’s my column from the Sunday, March 12 edition of the La Crosse Tribune.

The nightly news and the morning paper are great ways to keep informed. Unfortunately, they’re also great avenues for politicians to peddle their schemes for foisting new taxes on unsuspecting taxpayers.

When I heard La Crosse County wants to become a “premiere resort area,” and that this designation would generate millions to fix roads, at first I felt like I was in Oprah’s audience that day she gave everyone a new car.

In reality, the proposal for a new “Premiere Resort Area Tax,” or PRAT, is more like when you overbid on the showcase showdown on The Price Is Right and the infamous fail horn blares just before you’re escorted from the stage.

The PRAT tax, the latest tax scheme cooked up by La Crosse County officials, is really just another half-percent sales tax that could be imposed on nearly all retail businesses in the county. As with any other sales tax, this $6.6 million new tax will inevitably be paid for by consumers like you.

“But without more money we can’t fill the potholes!” the tax-and-spend crowd keeps shouting in your ear every time you turn on the TV. What they conveniently omit are their own failures to properly prioritize county spending.

La Crosse County budgeted for $136,764,518 in revenue for 2016. It planned nearly $33 million in property tax collections and $11.6 million from the county’s 0.5 percent sales tax. Yes, the county already has a sales tax onto which the proposed PRAT tax would be stacked.

According to the state Department of Revenue, 44 categories of business are subject to this tax in any jurisdiction that enacts it — bars, restaurants, gas stations, clothing retailers, hotels — even a category called “miscellaneous retail stores,” lest any devious boutique business falls through the cracks. In short, pretty much every business that a tourist could theoretically walk into would be subject to the PRAT tax.

The PRAT was conceived for the most innocent of reasons. When the summer residents of certain areas, like the Wisconsin Dells, fled for the winter, the Dells and similar tourist reliant areas needed a consistent revenue source.

Thus the Legislature invented the PRAT, but it required at least 40 percent of assessed property values in the taxed region to be composed of tourism-related businesses in order to be enacted. Thus, only six municipalities in Wisconsin currently have a PRAT tax, according to the Department of Revenue. At 5.3 percent, La Crosse County doesn’t come close to qualifying.

While our home is a beautiful region with plenty of tourist attractions, it’s hardly a “premiere resort area” according to state law. Nobody’s going to be winning a trip to La Crosse on the Wheel of Fortune.

Fortunately for the pro-PRAT crowd, there’s an exemption. After an advisory referendum, the Legislature can pass a special measure allowing the county to proceed with the final steps required to enact the tax.

Taxpayers should keep an eye on the big picture, and I don’t mean the size of their property tax bills.

The county should make better decisions with what it does with taxpayer money, and roads should clearly be a priority. However, when the county board voted to nearly double its debt in 2015 from $59 million to $110 million in one fell swoop, filling potholes or fixing cracks was hardly a priority. Instead, the county embarked on a series of expansions of its office complex downtown.

Thankfully, we have a vast network of paved, pristine bike trails around here–nary a pothole in sight. Or I suppose these days we’re supposed to call them multi-use trails.

The county is clearly taking in significant revenue, it’s just not choosing to spend it on roads. Now, county officials want to hit up hard-working taxpayers for even more. If your neighbor said they desperately needed to borrow money from you, all the while installing an in-ground pool and building a breakfast nook off their foyer, any rational person would raise an eyebrow.

A tax by any other name is still a tax. Taxpayers beware.

Read the original column here.

Government Asbestos

Plans to move the offices of La Crosse County’s administrative center have been in the works for some time. But the word plan implies something predictable and well-run. For La Crosse, the plan has been a boondoggle and a joke, the butt of which is the La Crosse County taxpayer. But you’ll have to read this whole piece to reach the punchline.

By way of background…

The current La Crosse County Administrative Center (the interior of which is pictured above, someone pointing out what we must assume is a nest of asbestos bees) was built in the 1960s. Like many buildings from that era, its walls and ceilings cover beams and pipes sprayed with asbestos, a carcinogen that’s no joke. The asbestos currently sits undisturbed and is a relatively benign problem in a building that’s seen recent renovations and boasts more modern amenities that most of the buildings at UW-La Crosse. Across the street is the county jail, and lying diagonally to the administrative center is a large parking lot covering a city block. Also located nearby is an office building owned by Associated Bank. Ok, got it?

I’ll make the implied explicit: I am a cynic when it comes to ostensibly unassailable estimates, costs, and projections presented by any political leadership. My chronic inability to believe the “facts” and “figures” proffered by County Board chairwoman Tara Johnson, former chairman Steve Doyle, county administrator Steve O’Malley, and others is informed by a basic distrust of those in power and my assumption, born too often from experience, that these people hold some level of disdain for the intelligence of the people they represent, and thus a disrespect for their rights as taxpayers.

Now back to the story.

The La Crosse Tribune reported that the supposedly intransigent asbestos has actually been removed in some areas of the building in this persuasion piece from November of 2013, discrediting the argument that an entirely new building was needed. But the basic proposition of renovation rather than razing was apparently not the focus of extended consideration by any official; instead that boring option was the target of a propaganda-driven effort to justify building anew. Eight-figure numbers are thrown around in this piece like an out-of-control tennis ball launcher, but the basic idea was that renovating the current building while removing all remaining asbestos would run about $23-24 million.

In that same story, that same firm, River Architects, estimated the cost of building a brand new building in the aforementioned parking lot at several million less than remodeling the otherwise-fine current building, for a total cost of $21.2 million. Shocker. That the preferred outcome of those in charge would just happen to cost out cheaper isn’t the question, the question is who in the county knew who at River Architects.

I remind you: I doubt these numbers’ core veracity not only out of the agony of a chronic cynicism, but because the liberal majority has never produced any competitive bids or even offered proof that such bids were solicited; they have refused to prove the numbers undergirding their arguments have not been rigged, or at least slanted to fit the purpose of a new building. Someone at the county made a call to River Architects, brought in a guy, and cranked out some numbers with sufficient specificity as to sound credible for presentation to the newspaper. That’s most likely what produced these figures – because to assume a half-asked job was done on behalf of using a patsy newspaper to report slanted figures is simply to err on the side of realism.

Shiny and new.

The decision to remodel or move wasn’t agonizing for the County Board, particularly because it’s controlled by a large spend-happy majority who no doubt would love to start new rather than remodel the current building. That’s just what liberals do, and the 6 or 8 conservatives – some of whom have themselves been some combination of wet-waffle and a patsy in supporting this scheme at one turn or the next – are powerless to stop them. So to build new is where they started.

The plan initially was to build an entirely new administrative center in the parking lot, which spanned (it’s now a hole full of cranes) the entire block across the street from both the current administrative center and the county jail, which itself was recently nearly doubled in size. Facing headwinds as to the need for a new building, the loss of parking, and the concurrent loss of City of La Crosse property tax base by not putting something private-sector on the parking lot, the next option was to buy and move into the Associated Bank building mentioned at the top of this piece.

As for the current county administrative center? It was sold for nearly the average cost of a single family home in Onalaska: $250,000. It will be redeveloped into student housing by a partnership of local developers with whom the county has gotten too cozy. To this cynic, the low price sounds a lot like back scratching that throws the interests of the taxpayer, yet again, under the bus.

In an undue haste, a deal was made that forced county leadership, and, less-wittingly, city leadership, into a very tight and financially risky timetable.

Banking on Plan B.

The county decided to buy the nearby Associated Bank office building for $4.6 million, remodel it, and move in – at a cost of about $19.4 million. The bank building promised to be modern, right-sized, and – most importantly – free of asbestos. It’s also near the current county campus of buildings including the jail and relatively shiny and sound Health and Human Services building.

A complex series of deals and digging has ensued in which the parking lot (formally called Lot C for the sake of convenience) is being redeveloped by local businessman Don Weber. A strict timeline that Weber’s organization is strictly holding to is necessary to make sure Associated Bank can move into new digs at that development site before the county moves into the bank’s old place. The parking lot will also host additional developments, from retail to office to residential.

I’m the last to argue that turning a weed-strewn old glob of pavement into a new development is anything but good for downtown La Crosse, but a very important question was kicked down the road by a listless county board: where will all those people park? That’s a huge parking lot that’s being eliminated. To put it briefly, the answer is still elusive. The new development will feature some underground parking to replace the surface lot it’s supplanting. Now, Weber’s organization may be forced to purchase another nearby property and build another parking ramp, potentially exposing the City of La Crosse (a unit of government we must distinguish from La Crosse County; the two have been at odds) to financial risk.

One thing’s clear thus far: were it not for the leadership of Weber (in other words, if the county was handling this by itself), the unnecessarily complex and tight timeline that hasty decisions by the county necessitated would have devolved into unmitigated failure.

Whoops…

Another option considered early was to expand the nearby county Health and Human Services Building and convert the building into a nexus of county operations. That option was quickly nixed in favor of buying the bank due to its size and smaller impact on the already-short parking situation.

As it happened, the bank was never big enough to meet the county’s needs, despite earlier reporting that the current asbestos-ridden hellhole was actually too big. Reported the Tribune early last year, “While the bank’s drive-through area would be enclosed and converted to offices, the approximately 50,000-square-foot building still doesn’t have enough space to completely meet the county’s needs.” So the HHS addition will be needed, anyway.

An old restaurant saying goes, “proper prior planning prevents pisspoor performance.” Perhaps if county admin Steve O’Malley, whose current contract essentially shovels a million dollars into his early retirement/yacht fund, bought into this crude phrase, homeowners in La Crosse County wouldn’t have tire tracks on their face.

So in an article entitled “Firm Recommends HHS Building Addition,” the paper reported that millions more would need to be spent to expand the HHS building, in part to support jobs that are currently at the whim of temporary federal grant money, risky money which is somehow portrayed by the paper as a financial windfall, like a desperate job-seeker who buys a new Tesla after getting a temp job at a concert venue.

Oh, and the firm cited by the article is a familiar one: River Architects.

Taxpayers pay the price.

The County Board recently voted to more than double the county’s debt load to more than $100 million to fund this interlocking series of hasty decisions and boondoggles that will continue until Don Weber and La Crosse mayor Tim Kabat figure out a way to solve the parking disaster the county has created.

Just a few weeks ago, the Tribune again pressed the plunger on the morphine syringe, reporting a relatively manageable impact on taxpayers from these projects “The $23 million in bonding for the three projects will raise the county tax rate by 6 cents in 2016 and 2017, then another 8 cents in 2018. It will add about $20 to the annual tax bill on a $100,000 home, officials said.” That sounds like a good deal!

I urge La Crosse taxpayers to adopt my suspicion of numbers proffered by officials interested in self-promotion and the retention of their own jobs. Figures presented don’t take into account recently relieved debt service on the first jail addition; it doesn’t account for the tremendous expenditures at the county landfill; it doesn’t account for the pressing need for road improvements, which is now spurring its own new tax, a wheel tax surcharge on vehicle registration. These and others were potential inflection points for tax rates – up or down? The current leadership chose the upward trajectory.

More importantly, in a region in which municipal, school, county, and technical school property taxes have continued to rise far faster than wage inflation, area districts are referendum-happy, and tens of millions disappear without notice into unquestioned projects like the Hillview Nursing Home revamp, the real lost opportunities are 1. Tax savings by adopting fiscal restraint and 2. The itinerant financial flexibility such a course opens for frivolities like filling potholes.

Rather than take regional growth for granted, La Crosse County needs to adopt a more fiscally responsible modus operandi. Nay – simply a more responsible one.

The punchline.

Brad Williams of WIZM recently reported that asbestos has been found in the bank building; this, the bank building whose purchase plunged La Crosse County taxpayers into a debt spiral because it would be the right size, and because it didn’t have the asbestos.

Asbestos is a bad thing. But when an incompetent local government sets out to fix it, it manages not to do so, make a huge mess that others must clean up, all the while spending tens of millions, doubling taxpayers’ debt load, debt which today’s first graders will still be paying when they’re looking for their first house in La Crescent.

La Crosse taxpayers: this is a joke, and it’s on you.

 

Millionaire O’Malley

The La Crosse County Board has passed a new 4-year contract for administrator Steve O’Malley, which I had correctly claimed was a fait accompli.

I was right, but the size and quality of the dissent was heartening. That in a minute.

The contract entitles O’Malley to annual increases in “deferred compensation” and other provisions like a guarantee of the same salary increase as other county managerial staff. Though he has reached the fourth “step” increase outlined in his previous contract of just over $180,000 a year, other fringes from his previous contract continue for the next four years.

The deferred compensation bonuses (which get socked away in a retirement account) add $1,000 annually to the $12,000 he currently receives. So by the time O’Malley, now 59 years old, hobbles across the finish line of this new contract, county taxpayers will be stacking $16,000 a year in bonuses into his account.

The La Crosse Tribune also reported a comment by O’Malley that he’ll be ready by the end of this contract to hang it up and retire to a leisurely life not so encumbered by the heavy burden of negotiating himself lavish new contracts and burning through tens of millions of taxpayer dollars on frivolous projects that Steve Doyle wanted. Obviously I dolled up the quote a bit.

The most interesting fact wasn’t reported by the media. During yesterday’s meeting, Supervisor Hubert Hoffman requested the total compensation of O’Malley under the new terms – including salary, retirement, benefits, and so on. The figure is just north of $230,000 a year.

That means Steve O’Malley will be paid by La Crosse County taxpayers nearly a million dollars over the four years of this new contract. Eight other fiscally conservative supervisors opposed going to closed session, others proposed amending the contract’s lavish terms (which Doyle protested), and in the end a respectable eight voted against the deal.

My esteemed partner in lambasting the misdeeds of lefty crooks has also weighed in, describing the failure of genuine economics to support the kind of pay O’Malley will be enjoying for the next four years. He makes a great point in saying that cronyism neuters market forces, rendering meaningless a free market argument in favor of deals like this.

O’Malley and Doyle last night championed a plot to nearly double the county’s indebtedness – for his part, Doyle (O’Malley’s benefactor) argued that the sky will literally fall and asbestos will rain down if supervisors didn’t approve $51 million in new borrowing.

For their $1 million in outlays to O’Malley, La Crosse County taxpayers got in return $51 million in new debt that we’ll still be paying off when a 79-year-old O’Malley is sipping Metamucil Screwdrivers on a modest yacht named “Thx Lax” on Lake Minnetonka in 2036.

When a ROI is eight figures with a negative sign in front of it, you know something doesn’t add up.

Steve O’Malley’s Contract

This weekend, I wrote about the salary of La Crosse County Administrator Steve O’Malley, whom I described as the most overpaid bureaucrat in the state with a salary of more than $180,000 per year. In this post, I’ll make my own (tongue-in-cheek) case to be hired as County Administrator at a rate of $40,000 per year.

I obtained O’Malley’s contract and re-posted it here; it also includes a resolution re-authorizing the contract through Dec. 31, 2019.

The contract provides for the following highlights:

  • A step 4 base salary of $180,245. As noted, I’ll do the job for less than one-quarter that.
  • A $200/month car allowance. My car payment is less than this, but I’ll just pocket the difference.
  • Professional development opportunities (nothing extravagant here, except for the fact that in the past such opportunities included a free Masters degree). I have a bachelor’s in Business Management, but I would be eager to obtain a free master’s degree in public administration.
  • Generous vacation, personal leave, and sick leave days. I’d take half – mathematically, even that is infinitely more than I have now.
  • A $3,000 quarterly “retention” bonus paid simply for not quitting, which is increased by $1,000 each year of the contract. In essence, Steve will be paid an additional $12,000 in bonuses the first year and $16,000 in 2019 for NOT QUITTING HIS JOB or being fired. I’ll keep the bonus – daddy needs a new transmission in his Jetta.
  • O’Malley is required to join, at his own expense, one local civic club or organization. I’ve already served on a number of local boards, executive committees, and organizations.
  • He gets an office and a secretary. Can’t really criticize that.
  • Six months’ salary plus extended benefits should he be terminated; the definition of “Termination” includes “A decision by the County Board to make substantial changes in the authority of the position, or reduce the Administrator’s compensation.” Any effort to cut the position’s pay constitutes termination? I’d take that kind of deal in a second.

An interesting passage in the contract that will be the subject of further commentary is a provision of the contract that says, “The County Administrator agrees to and shall be required to use his best efforts at all times to coordinate, streamline and make efficient County operations.”

A streamlined, more efficient government implies less spending and lower taxes. Taxes have not gone down in La Crosse County since O’Malley was hired, to use whatever is the opposite of hyperbole.

The County Board votes on the contract changes tomorrow night.

PS – Having taken a class in negotiation, I know everything there is to know about negotiation. With that in mind, I’m changing my bargaining position to $60,000. There’s obviously fertile ground here for robbing the shop.

The Most Overpaid Bureaucrat in Wisconsin?

La Crosse County Administrator Steve O’Malley is by a gaping chasm the highest-paid county administrator in the state of Wisconsin. In fact, he makes considerably more than the governor, the state’s top bureaucrat, and any other county administrator – and now he’s up for a raise.

According to this analysis comparing county administrator salaries conducted in 2011, the average salary at that time was $110,481 among the counties that reported their county’s salary data. That year, O’Malley in La Crosse was paid a salary of $167,314, which included 67.37 compensated days off under categories vacation, sick, holiday, and personal leave days, which is more than 13 work weeks.

O’Malley’s salary is $56,833 more than the average county administrator. His salary is much more than triple the pay of a state representative, who makes about $50,000 per year – and about 3.5 times more than the median household income in La Crosse County.

Sometimes, the population of the region a bureaucrat oversees is a factor in determining the amount of money taxpayers are forced to fund the bureaucrat’s position. Since our comparative data is from 2011, we’ll use that year for our comparison.

The population of La Crosse County in 2011 was 115,291. By contrast, the county administrator in Rock County – which in 2011 had 160,026 residents – earned $123,935, or $43,379 less than O’Malley in La Crosse County, which had at that time just 72 percent the population of Rock County. The comparative population today is virtually identical.

In 2015, O’Malley’s salary on the same basis was $183,454 – that’s a pay raise since 2011 of $16,140. O’Malley makes far more than the Governor at $147,328 and the state’s top bureaucrat, Secretary of Administration Scott Neitzel, who makes about $128,000.

The La Crosse Tribune now reports that the La Crosse County Board next week will consider a generous pay raise that will go into the 57-year-old O’Malley’s retirement account:

The new contract, which takes effect at the start of 2016, will increase the annual deferred compensation bonus to $13,000 in 2016 and $16,000 by the end of 2019.

The question of giving O’Malley yet another pay raise has not been done in the light of day, which is the modus operandi of County Board Chairwoman Tara Johnson and the predecessor to whom she is loyal, now-state-rep Steve Doyle, who created the position and hired O’Malley for it in 2003.

That the terms of O’Malley’s contract would be revised did not come up in last Monday’s planning meeting, according to a La Crosse County Board supervisor with whom I spoke but who, by my own choice, I will not name. Instead, a cryptic email was sent around to the county board asking supervisors to rate O’Malley’s performance, without mentioning that the evaluation would be used as propaganda justifying giving O’Malley a contract extension and pay raise.

(The evaluation was not anonymous and opens by asking supervisors for “Any positive feedback that you have to offer on Steve’s performance.”) 

In fact, the four-year pay raise for O’Malley was never on any agenda. Instead, following her asking the County Board to evaluate O’Malley’s job performance, Johnson gave an interview to the La Crosse Tribune in which she praised his performance, described the terms of the contract and pay raise, and justified the move as part of a retention effort. An agenda for the executive committee meeting that was posted on June 4 and held on June 10 stated that the meeting was to go to closed session to discuss the terms of the contract, but no communication on the matter was sent until the story had already posted to the Tribune website, meaning supervisors found out when everyone else did.

In a wee-hours-of-Thursday-morning email to County Board supervisors, Johnson wrote:

Thursday’s La Crosse Tribune will have an article about the Executive Committee’s decision on Wednesday to recommend extending Steve O’Malley’s contract and the details of its terms…Although I am not a consumer of it, I assume this message is lagging the on-line version of the Tribune.  However, hopefully it is a heads-up, albeit brief, in advance of the publishing of the print version…The Executive Committee will hold a special meeting at 5:30 next Thursday to vote on the resolution that will be on the County Board agenda that evening…I look forward to our discussion next week on this important matter, and, as always, feel free to contact me with any questions or concerns.

The email came out at 2:48 a.m. this past Thursday, after the Tribune article had posted, and was the first that supervisors not included in the closed-door executive committee meeting on the matter had heard the details of the contract changes.

An additional meeting to consider the contract changes will occur immediately before the next meeting of the County Board, where the changes will be voted on and will almost certainly pass. “We were not told about this in any of our meetings,” the supervisor I spoke with said. The supervisor confirmed that it’s fair to say no county board supervisor was told about the plans for O’Malley’s contract prior to the Tribune article being posted and Johnson’s email being sent just after bartime.

O’Malley has always had a cushy gig; when he was hired in 2003, he did not have a master’s degree, usually a prerequisite for such a job, let alone the highest-paying one in the state. As part of the deal O’Malley’s master’s degree was paid for by the county.

In 2011, under the leadership of Chairman Steve Doyle, the County Board considered new language for O’Malley’s contract that replaced the term “as per contract” with “indefinite” granting O’Malley essentially a lifelong gravy train and, should he be fired, a golden parachute entitling him to exhaust the contract.

The Tribune story dutifully repeated the pleas of Johnson that nobody but O’Malley can do the job he does, and La Crosse County should pay him whatever he wants to keep him from leaving:

County board Chairwoman Tara Johnson said O’Malley’s level of expertise and experience merits making sure he’ll stay. He regularly is approached about other jobs, she said, and in 2013 was a finalist as administrator for Hennepin County, which has the highest population in Minnesota.

The option to leverage oneself into a massive pay raise simply by entertaining an equally lucrative offer from another county closer to home must be nice. But the truth of the matter isn’t that the world lacks public admin graduates with experience as flacks in county administrators’ offices, but that leadership in La Crosse County likes having O’Malley around, and is too ineffective to even successfully find a deputy administrator for nearly $100,000 a year.

(My guess is that the search for a deputy administrator, for which I could’ve recommended several outstanding candidates, was insincere and an effort to establish justification for deals like this.)

As a matter of basic economics, if Hennepin County (ten times the size of La Crosse County with a population of 1.2 million) can pay O’Malley considerably more money than La Crosse County can, he should turn in his keys and pack up the station wagon. O’Malley’s salary should be dictated by the market, even if he’s really the best thing to happen to La Crosse since the World’s Largest Six Pack. If he’s eminently qualified to manage a much larger county and they’re lining up to pay him commensurately, then that’s what he should do.

The insinuation that nobody but Steve O’Malley can or will do the job at a rate that’s fair to taxpayers is absurd, and if he truly would leave but for the largesse available on the backs of La Crosse taxpayers, I hope he doesn’t let the door hit him on the way out.

Simply as a share of the La Crosse County budget, Steve O’Malley’s lavish salary is a raindrop in a downpour. But as a symbol of the cronyism and corruption of his benefactor, Steve Doyle, he’s both a jewel and a monument to the rotten state of our county government and the spectacular failure of La Crosse’s media.