Journal Times editorial: Intergovernmental fund cannot be a slush fund
Our Perspective

Journal Times editorial: Intergovernmental fund cannot be a slush fund

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In the early 2000s, when the then towns of Mount Pleasant and Caledonia were looking to expand, town leaders and officials from the City of Racine started talking money, politics and sewer service.

As part of a deal to expand sewer services, an agreement was signed and the intergovernmental fund was created where surrounding municipalities contribute funds in exchange for water and sewer service.

The funds are supposed to be dedicated to economic development and the project is expected to result in taxable real estate and exceed the minimum ratio of $5 in new tax base for every $1 of public investment.

The contributions, however, don’t last indefinitely. The deal was for 30 years with Racine set to receive payments through 2032.

Because this fund does not last forever, it is vital that the funds are used to truly build the city’s tax base. It’s concerning to hear that there is so much confusion among aldermen about how the money is spent.

In March 2018, the city announced a new $900,000 initiative for economic development and construction workforce training. One of the caveats was for the city’s Finance and Personnel Committee to receive quarterly updates.

But up until Aug. 26, the council has only received two generic updates, which did not go into detail on how the money was being spent.

That should not be the case.

Eventually, the intergovernmental funds are going to run out and what will there be to show for it?

Instead of lamenting what should have been, aldermen and city committee members should be demanding answers and holding themselves and their predecessors accountable for decisions now.

In 2018, the intergovernmental fund had a reserve of $3,297,905 from previous years and received $1,874,931 in revenue. The amount the fund receives each year has grown alongside the area’s recovery from the 2008 recession.

In 2019, the fund had a reserve of $3,626,335 and received $1,949,279.

Kathleen Fischer, the city’s assistant finance director, estimates the fund will have a reserve of $1,565,473 at the end of 2019. That is a big decrease from the past reserve.

As of last week, city staff estimated Racine would receive about $2 million in 2020. It is unclear what direct effect the Foxconn development in Mount Pleasant will have, but city staff estimates it will not be significant.

The money needs to be spent wisely and aldermen should ask hard questions to understand how the money is used.

This cannot be a slush fund. The money must help the city be able to prosper long after the fund is gone.


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