2017 Urban Policy Forum
Revenue Sources for Wisconsin
Municipalities
Curt Witynski
Assistant Director
League of Wisconsin Municipalities
Current Revenue Options for Wisconsin
Municipalities
Wisconsin Municipalities have a narrow
revenue base compared to local governments
in other states.
Revenue Options Wisconsin Municipalities
Don’t have
• Local Income Tax
• Local Sales Tax (except for premier resort
areas)
• Local Gas Tax
• Local Telecommunication Taxes
Revenue Options Available to Wisconsin
Municipalities
Wisconsin municipalities pay for public
services and capital assets through a
combination of property taxes, fees for
services (i.e., utility charges), state aids, and
borrowing.
Abbreviated List of Municipal Revenue Sources
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Property taxes
Utility charges
Fees for public services
State aids and grants
Water Utility PILOT
Special assessments
Impact fees
Interest income
Room tax
Borrowing
Payment in lieu of taxes (PILOT) from tax exempts
Local vehicle registration fee (wheel tax)
Forfeitures
GREEN – Limited by State Law
Yellow – Threatened by State
Utility Revenues
11.7%
Other
3.3%
Taxes 36.1%
Interest
Income
.5
Long-Term
Debt
14.8%
Intergovernmental
Charges
4%
Public Charges
for Services
16.3%
Fines &
Forfeitures
.8
Licenses & Permits
2%
Source: Information Paper 16, Municipal and County Finance, Wisconsin Legislative Fiscal Bureau, January 2017.
Intergovernmental
Revenues
9.9%
REVENUE SOURCES FOR CITIES
Utility Revenues
15.5%
Other
2.8%
Taxes 29.8%
Interest
Income
.5
Long-Term
Debt
13.1%
Intergovernmental
Revenues
14.8%
Intergovernmental
Charges
6.2%
Public Charges
for Services
15.3%
Fines &
Forfeitures
1%
Licenses & Permits
1.4%
Source: Informational Paper 16, Municipal and County Finance, Wisconsin Legislative Fiscal Bureau, January 2017.
Property Tax
•
Property tax largest source of revenue for cities and villages. Of the
$4.8 billion in city-village revenue in 2014, 57% came from property
taxes, averaging 29% of total for cities and 38% of total for villages.
•
Levy limits in place since 2005. Limits became severely restrictive in
2011, allowing levies to increase annually by net new construction
only. Statewide net new construction number in 2015 was 1.43%, the
highest it’s been since 2011.
Property Tax
•
Since levy limits went into effect in 2006, only 35 cities, villages,
counties and towns have passed referendums allowing the
community to exceed its allowable levy. (21 towns, 13 cities and
villages, and 1 county.)
•
Residential sector pays 68% of levy.
•
Uniformity clause disallows differential treatment between classes.
Property Tax
Wisconsin’s property tax burden currently
stands at 3.6% of personal income, the lowest
since 1946. It was 4.2% of income in 2010-11.
Source: Wisconsin Taxpayers Alliance
State Aids as a Municipal Source of Revenue
Wisconsin provides more dollars to
municipalities through programs like shared
revenue, general transportation aids, ERP,
PMS, recycling grants, than most other states
do for their local governments.
State Aids as a Municipal Source of Revenue
• Shared revenue funding cut three times in the last
14 years. Funding level today is $197 million less
than it was in 2003. A 21% reduction.
• Shared revenue distribution formula shut off since
2000.
• ERP Funding stagnant for 15 years.
• PMS funding less today than six years ago.
Payments cover less than 38% of costs.
State Aids as a Municipal Source of Revenue
• General Transportation Aids funding for cities
and villages was cut by $20 million in 2012.
None of that cut has been restored.
• Urban Transit Operating Assistance was cut by
10% in 2012. Some of that cut was restored in
the next budget.
• Recycling grant program cut in half in 2012.
Local Option Taxes Used by Municipalities
Room tax
• 282 local governments impose
• 70% of revenue must be used for tourism
promotion and development
• Prior to 1994 no limits on tax rate or use of
revenue
Local Option Taxes Used by Municipalities
Local Vehicle Registration Fee (Wheel Tax)
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21 local governments currently impose
18 adopted within last two years
Fees range from $10 - $30
Legislation pending to require referendum
Local Option Taxes Used by Municipalities
Premier Resort Area Sales Tax
• Only available if 40% of equalized value of
taxable property is used by tourism related
retailers.
• Lake Delton, Wisconsin Dells, Eagle River,
Stockholm, Bayfield (Sister Bay and Ephraim
allowed, but haven’t enacted)
User Fees and Special Charges
• Municipalities have broad authority to levy special
charges for current services, but service must
actually be provided and fees may not exceed cost of
service or administration of program.
• In 2013 Legislature added service fees to levy limits
for 5 services – snow plowing, stormwater, garbage
collection, fire protection, and street sweeping.
Less Common Fees
• Snow Plow Fee –Eau Claire and other
communities have considered in the past
• Street Light Fees – Rice Lake has a street light
fee. River Falls has considered in the past.
• Urban Forestry Fee – Madison
Less Common Utilities
• Stormwater Utilities – over 85 communities
have created
• Transportation Utilities – At least one
community has used – Village of Weston
Trends: Revenues Increase Little
With state aids flat or falling and strict levy
limits in place, municipal revenues rose only a
total of 2.1% during 2011-2014. Meanwhile,
state general fund revenues increased four
times faster (8.0%) during same time period.