What is Door County doing with its $2.6 million increase in state aid this year?

This article is the first in a series investigating how Door County and its municipalities are using  or planning to use their state supplemental county and municipal aid in 2024, 2025 and beyond. 

Door County and its municipalities are set to receive a large increase in shared revenue payments from the state in 2024 and beyond, after bipartisan compromise in the legislature led to Wisconsin Act 12, signed by Gov. Tony Evers in June 2023. 

Over $2 million in supplemental county and municipal aid will be disbursed to Door County and its municipalities in 2024 alone as a result of the increase. However, Washington Island is one Door County community that will not be receiving any of those additional funds until 2026. 

In 2019 the Town of Washington passed a levy limit increase deemed illegal by the Wisconsin Department of Revenue, and the state is taking the penalty – to the tune of $177,739 – out of the town’s supplemental municipal aid. 

What happened

In an April 23, 2019, financial audit report, Karen Kerber, auditor at Kerber Rose CPA, issued a warning to the Washington Island town board: balance the budget or face bankruptcy as soon as the following year. 

According to Kerber, the town’s deficit spending in 2017, 2018 and 2019 had led to the town coming dangerously close to violating its own financial policy. 

Under state law, Wisconsin town budgets and levy limit increases must be voted on by the electorate. At a November 2019 annual budget meeting, the Town of Washington electorate passed a levy limit increase that amounted to a 4.6 percent tax increase. The amount of the increase would total $177,739, boosting revenue and helping the town out of their financial slump. 

According to Richard Tobey who was town chairman from April 2019 to April 2021, that was the first levy limit increase he had ever run. Prior to 2019, there had not been a levy limit increase in over a decade on Washington Island.

“Using the Department of Revenue’s calculations and formulas and template, we presented the levy limit increase info to the town by making a slide presentation that was easier to understand,” Tobey said. 

The DOR said it was not done properly and according to Tobey, “we agreed to redo it in 2020 and that was reviewed and approved.” 

Tobey and Valerie Carpenter, who was town clerk/treasurer from 2003-2021, both said they knew nothing about a penalty assessed for an illegal levy limit increase. 

A letter from the DOR to Carpenter, dated June 3, 2020, served as a notice of levy limit violation. The letter stated that the penalty for the violation was assessed at $177,739 and would be taken out of Washington Island’s municipal aid payments until it was satisfied. 

After an open records request from Knock, current clerk/treasurer Alex McDonald had to get a copy of the letter from the DOR, she said, as she could not find a copy in the town office files. That could be due to an office reorganization in 2021, but she is not sure. 

Carpenter said she has no memory of seeing that letter. “I would never withhold something like that from the board,” she said.

Tobey also said he was not aware of the letter or the penalty and thought it had been resolved “amicably.” 

Any mistakes made during 2019’s levy limit increase were due to lack of experience, he added,  and there was no deceiving or misinforming of the electorate. 

According to McDonald’s understanding, Tobey did not use the same format the DOR requires to draft the levy limit resolution and present it to the electorate, she said, and there weren’t any errors in calculations.

The DOR has become very particular about the formatting of resolutions in the last five to ten years, according to McDonald.

The resolutions on file for 2019’s levy limit increase do not match the format required by the DOR, which includes detailed information about the way the levy limit amount is calculated. The town’s resolutions omit that information, even though the correct calculations were used. 

Hans Lux is the current town chairman on Washington Island. He took office in April 2021 and had served as supervisor during Tobey’s tenure. The current board is fully aware of the penalty and that the town will not be receiving their existing and supplemental municipal aid payments for at least the next few years, he said. 

The levy limit increase error and resulting penalty was a result of “mismanagement problems in town government”, according to Lux. 

The DOR was contacted, but did not provide additional records or comment by time of publication. 

The town’s capital improvement fund will bear the impact of not receiving the money, Clerk/Treasurer McDonald said, as that is usually where the aid has been and would be allocated in the budget.

However, “the municipality would love to have another $50,000 sitting around,” Lux said, listing some public safety-related projects the board needs money for, including an emergency generator and roof repairs for the town’s fire station. 

More about supplemental municipal aid

Every year in Wisconsin, municipalities receive shared revenue from state income and sales tax. The money is disbursed by the state in the form of aid and until recently, amounts to between $7,000 and $10,000 for municipalities the size of Washington Island. 

But in 2023, Evers signed Wisconsin Act 12, which increased aid by an average of 36 percent to municipalities. The increased aid is for 2024-2026 and beyond, according to a press release from the governor’s office.

The first round of increased supplemental aid was paid out in July 2024, with a second annual payment set for November 2024. The money cannot be spent on anything a municipality wants, however. According to the state, supplemental county and municipal aid is “specifically allocated to support essential services such as law enforcement, fire protection, emergency medical services, emergency response communications, public works, courts, and transportation.” 

According to the DOR’s shared revenue estimates, in 2024 the Town of Washington would be receiving $9,227.38 in existing municipal aid, and an additional $43,158.13 in supplemental aid, for a total of $52,385.51.

In 2025, it would receive $9,438.93 in existing aid and an additional $44,150.77 in supplemental aid, for a total of $53,589.70. 

The DOR has already withheld the town’s existing municipal aid every year from 2020 through 2023, putting it towards the penalty total. Based on the estimates of aid for the town in 2024 and 2025, there will still be a penalty balance of $16,000 remaining in 2026.