1. League of Wisconsin Municipalities Urban Policy Forum June 8, 2017
State and Local Government Finances in Wisconsin Background and Perspectives
League of Wisconsin Municipalities Urban Policy Forum
June 8, 2017

2. Reliance on Fees Varies by State

3. Wisconsin Experience Lower Reliance on User Fees

4. Variation between Two Largest Cities
Madison
Milwaukee

5. Key Revenue and Spending Facts (2017)
Net Taxable Property = $23.1 billion
Net Taxable Property with TIF = $23.9 billion
City Tax Rate = % of assessed value (9.495 mills)
Total tax rate = 24 mills
Average Value Home (2016/2017) = $254,693
City Taxes on Average Value Home = $2,418
City Tax Levy = $ million
General Fund Revenues = $80.1 million
State Aid (excludes transit) = $35.8 million
General Fund Expenditures = $284 million
Library Fund Expenditures = $17 million

6. Key Financial Condition Facts (through 2015)
Highest rated bonds possible (Moody’s – Aaa)
Rapidly retire debt (typically 10 years)
Solid reserves ($38.4 million / 14% of expenditures)
General obligation debt = $382 million – 32.3% of constitutional limit.
Total debt = $596 million
Total debt per capita = $2,589 (up 88% since 2004)

7. Calculating Property Tax Impacts
Levy = Expenditures less Revenues (e.g., State aid)
Taxable value = value of all property that can be taxed in the City, less amount of property value in tax increment districts (TIDs).
Tax Rate / Levy Rate / Mill Rate = Levy divided by Taxable Value
Average value home = value of residential property divided by number of parcels
Taxes on average value home = tax rate multiplied by average value home

8. Wisconsin Local Government Finance: Comparative View
Limited “home rule” revenue authority => local finance a matter of “statewide concern”
WI local governments: disproportionate reliance on property taxes and state aids
WI uniformity clause allows virtually no differential treatment based on property class
Total per capita revenue is ~ 38% less than US average (2007 US Census Bureau)
WI local per capita taxes & state aids combined total is ~ 31% less than US average
State Shared Revenue program
Established 1976: redistributes state revenues in equalizing fashion to municipal and county governments
Serves as “offset” to absence of local revenue options
Steady growth:
: frozen most years
: Municipal aid component has declined 14.5% in nominal terms

9. Broad-based Revenue Options for Wisconsin Cities
Motor vehicle registration fee (“wheel tax”)
Room Tax
Exposition District – room, food and beverage, and car rental taxes
Stadium-related sales taxes – Milwaukee and Green Bay
Premier Resort Area Tax – 40% or more of property value related to tourism

10. User Fees and Special Charges
Municipalities have broad authority to levy special charges for current services.
Services include, but are not limited to:
Snow and ice removal
Weed elimination
Street sprinkling, oiling and tarring
Repair of sidewalks, curb and gutter
Garbage and refuse disposal
Recycling
Storm water management
Tree care
Snow removal on private roads and driveways
Fees must bear a reasonable relationship to the cost of the service.
A service must actually be provided.

11. Madison Revenue Sources
Room tax – rate of 9% (highest in state due to state law provisions regarding convention centers)
Ambulance fee – rates increased 50% in proposed 2013 budget; much of the cost paid by private insurers and Medicaid/Medicare.
Utility PILOTs -- Water and Parking Utilities
Special Charges – Urban Forestry Special Charge -- $5 million in 2017
Municipal Services Fee (based on fixed cost allocation and usage) – revenues estimated to be collected in 2017:
Water -- $42 million
Sewer -- $35 million
Stormwater -- $16 million

14. City General Fund Revenues -- $300 million

15. Trends – City Property Tax Levy

16. Trends – Taxes on Average Value Home

17. Greater Reliance on Property Taxes and Other Local Revenue (e. g
Greater Reliance on Property Taxes and Other Local Revenue (e.g., Room Tax) as State Aid has Not Kept Pace with Costs

18. History of State Aid

19. Shared Revenue and Expenditure Restraint Payments Have Not Kept Pace with Inflation

20. Residential Sector Share of Property Tax Burden

21. State-Mandated Levy Limits
Municipalities and counties cannot increase local property tax levy, excluding debt service on general obligations, by more than the amount of net new construction in the community.
Increases in fees for “covered services” (snow plowing, refuse collection, stormwater management, fire protection, and street sweeping) for costs currently covered by the General Fund result in a reduction in the levy limit.
50% of closed TID value as share of equalized value added to allowable rate of growth in levy.
Net new construction = new construction less property removed due to destruction or replacement.
Net new construction does not include property value appreciation due to market changes.
Madison net new construction for 2014/15 levy = 1.7%
Highest share of net new construction in last 15 years = 3.7%
Limits can be exceeded through voter referendum.

22. Expenditure Restraint Payment
Communities with tax rates of 5 mills or higher are eligible.
Qualify for payment if increase in general fund expenditures, excluding debt service, is less than inflation plus 60% of net new construction.
Madison receives $6.5 million annually.