As a result of this crunch, 15 Wisconsin Republican legislators and 2 Democrats (mostly from rural and/or northern Wisconsin) have introduced a bill that would allow for a local sales tax to be instituted to take a sizable amount of road repairs off of the property tax. The legislation is Assembly Bill 210, and following a minor tweak to the bill by State Rep. Dean Knudson, the Legislative Reference Bureau says it would do the following.
Under this substitute amendment, with the approval of the electors in the county at a referendum, a county may impose an additional sales and use tax at the rate of 0.5 percent of the sales price of tangible personal property, goods, and services sold or used in the county for maintenance of streets and highways. The county may impose the tax for four years. If the county wishes to extend the tax, it must be approved again at a referendum. The substitute amendment requires the county to retain a portion of the tax revenue and distribute the remainder to the towns, cities, and villages in the county to maintain, repair, and construct streets and roads. The county distributes the revenue using a formula based on road miles and population. Finally, for each year in which a county imposes the tax, the county and each municipality that receives the tax revenue must expend on highway or street maintenance and repair an amount equal to the average of the amount it spent for such purposes in the previous five years from sources other than the tax, plus the average amount of the tax revenues it received in the previous five years.The last part about a minimum amount of highway/street repair is what was added in Knudson’s amendment, and seems to be intended to “lock in” the sales tax for added street and road repairs. The amendment also mandates that the sales tax be county-wide, instead of imposed community by community, but with some of the money being sent down to municipalities within the county.
The Assembly’s Transportation Committee held a hearing on the local “sales tax for streets” bill, but a formal vote in that committee that could have come today was removed. It seems possible that such a measure could be folded into the state budget as Transportation issues are discussed on Friday, as an excuse to conserve state aids for street repair.
And that isn’t the only method outside of the property tax that local communities in Wisconsin have taken to in recent years to fund their street repairs. 6 municipalities and 3 counties in the state have “wheel taxes” that are tacked on to a person’s vehicle registration fee, and they include high-population areas such as Milwaukee, Appleton, Beloit, Janesville, and Saint Croix County. 5 of those 9 were just added in the past year, and Beloit doubled their local fee from $10 to $20 for 2015.
It’s telling that many of the sponsors of the “local sales tax for streets” bill come from areas that have such a wheel tax (including Knudson), or may soon be considering one. Installing a sales tax could be a substitute for such a wheel tax, and is a way for local areas to grab needed revenue from non-residents that use the roads which need to be fixed (this would seem especially in tourist areas up North). It also may be an easier way to hide the tax from constituents, as it would be paid as a portion of the regular sales tax throughout the year, and avoids the surprise of seeing an extra $10 or $20 on their next bill from the Bureau of Motor Vehicles.
There is another local sales tax option for places which rely heavily on tourism, and that’s the Premier Resort Tax, which is already in effect for both Wisconsin Dells and Lake Delton, as well as the northern communities of Bayfield, Stockholm and Eagle River. Channel 12 in Rhinelander reports that the Joint Finance Committee approved a measure last week which would add that city to the list, with a 0.5% sales tax on “tourist-related items.” Voters in Rhinelander approved of the new sales tax by more than 2-to-1 in an advisory referendum last month, and the local newspaper article written at the time of the vote explains why they felt it was needed.
The alternative would have been to raise property taxes about 10 percent to raise the $400,000 that the tax is anticipated to raise each year. This would have asked the residents of Rhinelander to shoulder all the costs of maintaining roads and streets used by the many people who come into town on a daily basis. The tax will be borne by commuters and residents alike.What’s clear from Administrator Oborn’s words is that the restrictive, tax-limiting policies of Scott Walker and the GOP-run Legislature over the last four years hasn’t provided nearly enough funds to local communities to handle the growing infrastructure needs. And since the Governor’s budget does not increase aids for local streets for either 2016 or 2017, which keeps those aids at a lower level than they were at in 2011. In the absence of that state aid in the Age of Fitzwalkerstan, it’s left up to the local communities to raise the taxes to get those potholes fixed.
"We educated everybody," [Rhinelander City Administrator Blaine] Oborn said. "That's the conservative number that we're starting with for budget purposes. But it will be $400,000, at least."…
Now comes the hard part of where to start spending the money first.
"Asphalt's very expensive, and we've got $2 million right in the short-term immediate repairs on our wish list," Oborn said. "But over the years, this will go a long way in catching up on our roads. So we really appreciate the support of the voters and getting this tool."
What’s interesting is that it seems like Wisconsin is slowly evolving toward this local sales/wheel tax-based system in paying for its local roads, in a time when the state refuses to step up, leading to a sort of back-door “tax reform” that starts to uncouple property tax from being such a large generator of local revenue. Wonder if that trend will carry over into other services as well?