Local governments hurting under Walker/WisGOP shell games, mandates

The League of Wisconsin Municipalities recently released its 2016 State of Wisconsin’s Cities and Villages to give an update on where things stood in local government going into those places’ budget seasons. The LWM combined observations from its members with data collected by the Wisconsin Taxpayers Alliance, and painted a picture of communities struggling under the weight of limits imposed from Madison by Governor Scott Walker and WisGOP legislators.

I wanted to start with an important stat that LWM gives, as many do not understand how local government finances are handcuffed in Wisconsin. By state law, most cities, villages and towns are prohibited from imposing their own sales or income taxes (sales taxes only exist at the county level, or through special districts like Miller Park and the Wisconsin Center). This means the property tax and fees have to be the main way for city, town, and village services to be funded, especially as aid is being cut from the state level.

Wisconsin cities and villages rely to a great degree on the property tax. Of $4.8 billion in city-village revenue, 57% came from property taxes, and another 13% from local fees. Various state aids comprised 21% of the total.

Given that, the effects of state-imposed levy limits and state-aid retrenchment are evident. City and village property taxes increased 5.2% from 2011 to 2014 (or about 1.7% per year). State aids fell a total of 7.5%. Adjusted for inflation, levies were down 0.8% and aids fell 12.8%.

What this means is that there is a 5% gap between the amount of revenues coming in for 2014, and keeping up with inflation for the same services that were provided in 2010 (around $225 million).

Which leads to an interesting breakdown in the report from the LWM on the fiscal effects of the union-busting Act 10. The LWM notes that cities and villages got less of the savings from it than school districts or other levels of government, because those communities have to pay more for police, fire services (whose unions were exempted from Act 10 as payback for past and future support of Scott Walker). Partly due to that, the League concedes that Act 10 didn’t fill all the budget gaps that still existed by 2014 (after Act 10 had been adopted in most places) due to limits on revenues, identifying a $125 million gap between continuing services and the available revenue.

Some of those gaps were filled by negotiations on savings with police and fire unions (funny how that can work), but those gaps also will eliminated by service reductions and delayed maintenance, especially when it came to quality of life items and back office work in government.

With revenues under pressure, spending priorities shifted. Public safety (31.4% of spending) and streets (13.8%) were the two areas that held their expenditure shares over 2009-14. General government administrative costs (9.1%) and spending for parks and related programs (8.2%) showed some erosion.

What’s more alarming is that while communities are spending on streets in a similar proportion to what they did a few years ago, the quality of those streets is getting worse.

Last year, 68% of city and village streets were rated in “good” or better condition. However, the percentage is declining somewhat, as it stood at 72% in 2011. While 37% of municipal streets were rated “excellent” or “very good” in 2010, that percentage had fallen to 31% by 2015. Likewise, those rated “fair” or “poor” increased from 29% to 32%.

And this decline in road quality and the limited revenues the state gives to local communities (as well as the limited options to make up the difference) is exactly why so many places in recent years have either considered or put into law new wheel taxes. The latest example is in the Wausau area, where the Marathon County Board passed a one-year $25 wheel tax this week. I’m guessing the temporary nature of that Marathon County tax is because they are hoping that a more sustainable form of funding comes from the state level with the next budget and legislative session, but Governor Walker made comments in Green Bay this week that indicated he was OK with this kind of tax-shifting shell game.

Gov. Scott Walker said local governments will have to decide for themselves whether wheel taxes are the right way to fund increasing road construction costs.

After speaking at the Governor’s Conference on Highway Safety at the KI Convention Center on Wednesday, Walker said state funding for local road construction and state highway system maintenance will continue to increase.

“They’re going to have to gauge whether or not those increases are enough or if they want some more. But those are things they have to justify to local voters,” Walker said.

In addition to Walker’s casual brushing off of the shell game his “no-tax and pose” policies have created, I need to call out the Gannett writer for a statement here. “State funding will “continue” to increase?” State aids to local governments for transportation and transit are at the same levels they were at 2015, and will stay at that same amount for 2017. The only increases that may exist are due to borrowing more money for highways, which will need to be paid back and further constrain the possibility of getting more aid to local governments.

Lastly, the LWM report didn’t offer much for the future in changing these financial constraints for local communities, and expressed concern over Wisconsin’s smaller towns in particular, as more of those places reported job losses than job gains, and the officials in those areas also reported a lower amount of civic engagement, with many uncontested seats for elected positions in elected government. It seems that local government and small towns in particular are getting choked off in the Age of Fitzwalkerstan, and after shooting the one-time bullet of Act 10 “savings,” there are few options remaining other than reckless new construction and hopes for growth in the property base (and the taxes that go along with it). The current WisGOP regime does not seem interested in giving communities extra options to make up revenue and services that have been cut over the last 5 ½ years- options that could come in the form of increasing shared revenues, or in allowing local communities to raise their own revenues through property and/or sales taxes.

What that means is that if we see the WisGOPs stay in power past this November, the “pose over policy” mentality will continue, and Wisconsin municipalities will continue to decline with even less of an opportunity of keeping up with their growing service needs. Don’t like that option? Then don’t vote Republican this November.