Veilluex’s Phony Numbers
By
Just 6 months ago, New Richmond School District Superintendent Morrie Veilluex was strutting around town telling everyone the District’s 8,000 residents could easily borrow $93 million to build new schools. Even though this would be the largest amount ever borrowed by any school district in all of Wisconsin, New Richmond was growing so fast, that it would be easy to pay off over the next 20 years. All the growth would increase property valuations which would offset the mill-rate alleviating any severe financial pain.
As a matter of fact, Veilluex’s own, School District of New Richmond: Facilities Presentation – 2007, powerpoint slide show stated that New Richmond would see the following property valuation increases for the next 20 years:
* Growth in equalized value (12.27% over last 11 years)
* 8% for 3 years
* 6% for 6 years
* 4% for 4 years
* 2% thereafter
This information is taken from page 40 of the slide show.
Unfortunately, according to information just released from the State of WI Department of Revenue, St Croix County’s property valuations are not just increasing at a slower rate, but are actually in decline. The DOR report identifies St Croix County’s property valuation as declining by more than $107 million or a 2% decline in value for the last year of 2006.
Using estimates of 8% compounded growth for 3 consecutive years as a starting point to justify borrowing $93 million was phony. The worse part about this is that Veilluex and his cronies all were told this was phony and they chose not to listen.
This costly claim in pretending virtually unlimited growth to pay for all the school building construction will turn out to be one of the worst mistakes New Richmond ever made. What this essentially means is that the claims by Veilluex to convince local residents that new homes and businesses would be the ones paying for the debts payments on the $93 million are not going to come true. The numbers don’t lie. There is no new property valuation increases in New Richmond. No homes are selling, our existing properties are worth less and now we’ll have to pay more for it.
The District will present in a couple of weeks a new operating budget for the next year at the District’s Annual Meeting. Watch for the increase in the operating budget in this presentation from previous years. How much more financial burden will the District place on local New Richmond property taxpayers in advance of the property taxes levies based upon a lower valuation to tax.
Here is an article from Rivertowns.net detailing the DOR report:
Pierce and St. Croix growth drops in state’s measure of real estate value
By Judy Wiff, Regional Editor
After being among state leaders in the rate of property value growth for several years, St. Croix and Pierce counties have slipped to near the bottom.
In both counties, the value of existing houses — rather than increasing — took a significant drop. New construction showed modest increases.
According to equalized value reports released by the Wisconsin Department of Revenue earlier this month, St. Croix County — which ranked fifth in rate of growth in 2005 and 17th in 2006 — slid to 70th place this year.
Pierce County — which ranked 28th for both 2005 and 2006 — slipped to 68th place.
Meredith Helgerson, communications officer for the Department of Revenue, said the value of existing housing is based on sales information obtained from reports of real estate transfers and on information supplied by local assessors.
“We analyze the data to see what the market is doing,” said Helgerson.
Using that analysis, the DOR dropped the total value of existing houses in St. Croix County by two percent. That’s a decrease of $107.5 million since last year.
The value of existing houses in Pierce County was cut $12.8 million, a drop of one percent.
“Those two counties have had significant growth in years past, and this is just stabilization,” said Helgerson of the decrease in equalized value of residential property.
According to the DOR’s equalized value reports, the worth of all real estate in St. Croix increased only three percent in the past year. That’s after double digit increases in each of the last eight years.
Although Pierce County’s rates of increase haven’t been as high as St. Croix’s, the Pierce rate slipped to four percent this year — well below the eight percent to 10% increases it has seen in the last several years.
As for the percentage change in the value of new construction, this year St. Croix chalked up a three percent increase. That compares to increases of 4.974% last year and 6.645% in 2005.
Pierce County’s percentage increase in value of new construction over the past year is two percent. The county’s new construction increased 3.366% in 2006 and 3.411% in 2005.
Statewide, the value of existing houses has increased three percent in the last year; the value of new construction, three percent; and the total value of real estate, six percent.
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You are a little harsh on Veilluex’s numbers. HIs powerpoint only regurgitated the hotshot bond consultant’s projections which were wild assed guesses. Getting a consultant’s numbers gives them a sense of validity you see.
I didn’t believe them either, and ran projections based on 6 percent, 4 percent and 2 percent then no growth at all.
With static equalized evaluation, 3.0 percent budget increase (guaranteed) and debt service’ the school property taxes will go from 7.04mils to 18.64 mils in year 2026, a 265 percent increase.
Then there is the free spending of New Richmond (The city beautiful) that is considering leasing lots in a 28 area plot of dirt they can’t sell. By leasing this saves the homeowner $30K to $40K in land cost and the taxes thereon. This cockamanie plan is to help people with “affordable housing” you see. Including are walking paths and a frickin DOG PARK.
OH yes this project won’t move forward unless the City can get a Federal grant for $1.4 million. One city official told me if we don’t get it Texas will. One member of the audience commented that if we did away with all grants in the country, taxes will go down. He got applause from the crowd of about 60 people.
You thought you guys in Hudson had it bad..
So, a 265% increase with slower growth than Veilluex and his selected consultant projected. Please redo your calculations and show a 2% DECLINE in property values.
When I did these calculations, I thought zero growth was ridiculous. At Jessa Nelson’s (NR housing director) meeting the figure was thrown out of a 2.5 percent equalized asset growth based on new and improvement construction.
I’m sure a -2.5 percent growth will mil rate close to triple the 2007 mil rate. I don’t need to do math that will make me cry.
Based on history on housing prices, I find it hard to believe that -2.5 percent drop will stick for more than a year or two when looking forward to 2026. If nothing else inflation will take hold and push prices higher.
When studying growth, either negative or positive, the base year is important. An estimate of 8% the first year, versus, 2% negative the first year is astounding. It would be like planning to earn 8% in a savings acount and finding the bank actually took 2%. If you planned 8% on a $1,000 investment for year one, you’d have $1,080 at the end of the year. If however, the bank took 2% you end up with $980 at the end of the year. A completely different place to start year two and going forward.
Your admitted “thought” that zero growth was ridiculous as much of your logic. You still believe growth will pull you out of the huge tax increases in the next several years you voted in favor of. Ziller, if you pay $2,000 per year now, you will easily be paying $5,000 by the year 2012 – each year.
By the way, thank Mr Veilluex for your increased payments.
Bob, I wrote a post a week or so ago in which I pointed out that a great mistake many people make when calculating the odds of an event happening is to assume that an event with a very low probability cannot occur. You stated that you felt that it was impossible to have zero growth and stagnant housing valuations. However under the right set of circumstances such an event could very well happen. After all the chances of getting struck by lightening differ greatly depending on whether you are in the basement or outside swinging a golf club during a thunderstorm.
Many of us foresaw the right ingtredients coming together that could very well make it possible for a no growth scenario to exist. Personally, I have been warnining on this blog and elsewhere over the last 15 months or so of a macroeconomic melt-down. The forces precluding such an event are now bubbling to the surface and New Richmond is not immune from such an event. The bottom line is that the impossible now seems to be quite probable.
In all the posts and comments I read in the past year, the authors played around with dire consequences of “slow down” in building and selling, and increases in foreclosures, but never numbers on projected sales and equalized evaluation for the next 20 years
Just hand wringing and doom and gloom.
The 265 percent increase in mil rate to the year 2026 was based on zero growth in student enrollment and equalized evaluation.
The one flaw is the budget increase of 3.0 percent. The district can increase the budget (without referendum) by 3.0 percent PLUS student enrollment percent increase. I don’t believe a drop in student enrollment causes a drop in school budget. A little tidbit from your state government to fool the taxpayers and satisfy districts with declining enrollment.
I’ve done my work in projecting future mil rates; now it’s your turn and I’ll be the critic.
And of course your local state elected representatives are no where to be found… or rather, they ask the fool and thinker to meet half-way.
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Seems to me a very rational solution to all of this was put forth on this very blog on numerous occasions starting round about 2004 – there is one and only one solution to this madness.
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Remove your sanction.
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Demand statewide universal education tax credits, OR, as a stop gap, demand local levy educational tax credits.
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The gang of looters in Hudson were afraid to allow Mr. Danielson (who, if I am not mistaken, invented the idea of the Local Levy Tax Credit) to even address the school board on the actual details of implementing such a forward thinking and robust financial model for education. That board was simply scared to death of his ideas. Imagine, a board of education afraid of an idea? There is a reason, and it stinks.
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I agree with every one of your points masked flash. It would be nice, but it’s pushing water uphill. Your solution is on par with killing all the lawyers.
I feel the only hope is to get rid of the RINO’s and other wienies in the Republican Party and maybe we’ll get somewhere.
I agree with you Mr. Ziller. We need to rid ourselves of all the RINO’s in the Republican Party. The first one we need out the door is YOU.
Sorry Lukie, but I don’t hold an elected office. I learned a long time ago that the networking and infrastructure of the Reps and Dems makes being an independent or member of a third party a waste of time.
Your best bet is to join the Republican Party and pull the rope toward the Libertarian side.
Well Bobbie, whether or not you hold public office is not the point. The point is that it is people like you who have watered the Repbulican Party down to where it is impotent. Not unlike a senile old man who can’t figure out if he is a conservative or communist.
Your chance is coming. Until 1 Jan 08 you can file for public office in any number of city, county, state, or federal offices. Come out of the closet and tell us what you believe and see how many votes you can garner.
Let’s talk about your campaign at the Lincoln Day Dinner.
Lincoln Day Dinner…. Is that where all the RINO’s hang out? You’d better start saving your money Mr. Ziller because your leadership on the last referendum will be costing you plenty in the coming years.
All already computed it Luke. I know how much it will cost me out to the year 2026. By the way the 3.0 percent compounded yearly of the budget increase makes the debt service almost disappear.
If all you want to do is hang around the outside and bitch on a blog, then your voice will be ineffective. But you’ll probably feel good.