The County and Municipal Aid amounts have not been raised once in the last 14 years, and has fallen by over 20% in that time ($949.7 million in 2003, $753.1 million in 2017), and Walker’s budget offers no additional money for the 2017-19 biennium. Now WisGOPs can prop Act 10’s tools all they want, but there is no way they will make up for a total of over $613 million in cuts to shared revenues to counties, cities, villages and towns over those 8 years.
In addition, Walker and the WisGOPs decided to impose strict limits on property taxes, only allowing them to be increased by the amount of net new construction in the municipality, with some exceptions. This may enable Scotty to have a talking point of “look at how much I lowered your property taxes” (your personal situation may vary), but the Legislative Fiscal Bureau says there has definitely been a cost to those cuts, and unlike schools, local governments haven’t been using referenda to get that funding. Instead the local governments are borrowing money in increasing amounts.
In recent years, a significant percentage of school district referenda have been approved. According to the Department of Public Instruction, in calendar year 2016, school district voters approved 38 (81%) non-recurring (operations) referenda, 20 (83%) recurring (operations) referenda, and 64 (77%) of debt-related referenda. In comparison, according to the Department of Revenue, only 14 county and municipal referenda passed between 2006 and 2015 (information on 2016 referenda is not yet available). Approving a municipal levy increase through a vote of electors may be more difficult than passing similar referenda for facility improvements at the school district level. For example, asking for a levy increase at referendum to fund a needed road, street, or related capital improvement may have only limited appeal to voters. This difficulty may occur because unlike improvements to school district facilities, which are typically used by, or associated with, the overall community, municipal and county capital improvements, such as improvements to specific sections of local roads, often affect only voters benefiting most from the improvement. As a result, support for the improvement and the related referendum may be more limited.Interestingly, Walker’s budget includes a provision (explained in this paper) where if the amount used to pay off debt issued before 2005 is “lower in the year of the levy than in the prior year, the local government would be required to reduce its levy authority by the amount of the decrease.” In other words, they have to “give back” the extra amount of property taxes they were able to collect. Yes, this would lower property taxes on the median-valued Wisconsin home by $7 this year and $11 next year, but it also would put already-tight local budgets under even more stress, likely leading to more potholes and budget cuts.
11. Typically, municipalities and counties use tax levy (cash) or issue general obligation bonds to fund capital improvements. Given the limitations of local fiscal controls and absent a referendum to use current levy to fund significant capital improvements, local governments (municipalities and counties) have often looked to borrowing to fund such projects. Because local governments are allowed to exclude from the local levy limit any amounts levied to pay for general obligation debt issued after 2005, issuing such debt for transportation-related capital improvements is another way that local governments can fund those projects without violating the levy limit restrictions. Local governments have taken on increasing levels of debt to fund such capital improvements. Between 2005 and 2015, total outstanding general obligation debt for all local governments has increased by 30.7% and at an average annual rate of 3.1% for counties and 2.6% for municipalities. Annual debt service payments on those obligations increased by 56.8% for all local governments and at an average annual rate of 3.1% for counties and 5.0% for municipalities. In comparison, the Consumer Price Index has increased by 21.4% in total and at an average annual rate of 2.0% over the same period. Providing an increase in county and municipal aid could provide local governments needed financial assistance, which could be used by local governments to assist in funding their operations or in funding capital projects in lieu of additional borrowing.
And that gimmick, along with a stupid plan to use $180 million in General tax dollars to eliminate the state’s Forestry Property tax and $87 million more to pay for a bigger School Tax Levy, means that Walker can claim his budget will cut property taxes for the typical homeowner by $21 over the next 2 years. However, all that would do is reverse the recent property tax increases that have been caused by his lack of funding of local governments. Even with the extra borrowing and levy limits, the LFB says property tax levies have gone up since 2015 by nearly $139 million on the municipal level, and over $85 million at the county level.
That’s not even counting something else Wisconsinites are increasingly paying to local governments in the Age of Fitzwalkerstan - wheel taxes.
Local governments also have another revenue option to meet their transportation infrastructure needs. Since 1967 municipalities have had the authority to impose a local vehicle registration fee or "wheel tax", which is imposed on automobiles and trucks of not more than 8,000 pounds that are registered in the state. Since 1979, counties have had similar authority. There is no limit on the amount of the local registration fee that can be imposed. Any county or municipality that imposes a wheel tax must use the revenues for transportation-related purposes. Since 1967, 23 local governments have imposed or adopted an ordinance to impose a wheel tax. However, 14 of those local governments have adopted an ordinance to impose a wheel tax in just the last two years. In 2015, revenues from the wheel tax totaled 2.8% of the total gross property tax levies of all local government imposing the fee that year.
Yes, Walker’s budget did offer an increase of nearly $76 million in local transportation aids, which in theory might mitigate the need for more wheel taxes. But that funding is limited to a specific purpose, so it won’t do much to help local communities pay for cops or libraries or other services. And with Joint Finance deciding last month to rip up Walker’s DOT budget and start from 2017’s base, there’s no guarantee that the proposed increase in Transportation aids will survive.
This doesn't even take into account the costs of damage that have resulted from yesterday's deadly tornado in Barron County and other problems associated with this severe weather outbreak.
That's usually a supplemental appropriation in a budget that doesn't have much extra money available. And yes, Governor Walker has declared a State of Emergency already, but it'll take a while for the money to flow its way down to the already-strapped local governments to start to pick up the pieces.
The LFB notes that the Legislature could stop the bleeding at the local government level in a couple of ways. One involves giving an increase to local government aids starting in 2018, with every 1% raise costing a little over $7.5 million. Another possibility comes from allowing the levy limits to be raised, which LFB discusses in the “debt rule change” paper. This could allow for a “minimum allowable increase” in tax levies that could be 1% OR net new construction, depending on which is larger. The LFB estimates that every 1% change would increase tax bills by $14, but also might prevent more cutbacks at the local level in case this mini-housing bubble pops.
It seems to be logical for the Joint Finance Committee to get rid of some of those Walker gimmicks where general taxes are paying for property tax breaks, and instead give back some of the flexibility to local government by giving them their first raise in 14 years, and by allowing them to set a property tax level that they feel is appropriate. Oh, who am I kidding? This is the 2010s GOP. They stopped being the “party of local control” several years ago.