The Wisconsin Taxpayers Alliance was commissioned by the League of Municipalities to review the state of Wisconsin’s cities and villages. The report, released today, is the first in what both the League and WISTAX say will now become an annual report. This report focused on reviewing the fiscal health, service levels, and employment conditions. According to the report:
- Property Tax Dependence: Of $4.8 billion in city-village revenue, 57% came from property taxes, state aids 21%, and another 13% from local fees.
- Revenue Reductions: Shared revenue payments have been reduced on multiple occasions starting in 2001, local transportation aids were reduced after the gas tax was repealed, and recycling grants were cut. Municipal revenues rose a total of 2.1% during 2011-14, but state general fund revenues increased at 8.0%.
- Levy Limits: Levy limits imposed on property taxes began in 2006, and growth was capped at new development in 2011.
- Expenditures: Act 10 gave municipalities flexibility and cost-savings in employee benefits, but police and fire and some transit workers were exempt from Act 10. Act 10 reduced municipal benefit costs by $90 million, but that only accounted for 1.5% of all municipal spending.
- Recession Impact: Wisconsin is recovering from the 2007-09 recession but slowly.
- Demographic Impact: An aging population is putting an increased demand on municipal services.
- Roads: Roads rated as “good” or better dropped from 70% in 2009-11 to 68% in 2015. Roads rated “fair” or worse rose from 29% in 2009 to 32% in 2015. The cost of repairing roads increases as maintenance is delayed.
- Public Engagement: More than half of the survey respondents reported the average number of candidates for a board seat was one or less; incumbents often were uncontested or open seats had no candidates.
LEAGUE OF MUNICIPALITIES EXECUTIVE DIRECTOR DESCHANE RESPONDS TO REPORT
League of Municipalities Executive Director Jerry Deschane spoke with The Wheeler Report regarding the results of the WISTAX report.
Deschane said the League approached WISTAX about two years ago asking for an annual review of data on cities and villages. The 2016 report, Deschane said, will now be able to be used as a baseline. Deschane said it was important that the report include data analysis and surveys because it shows how local leaders are reacting to the numbers. Deschane said Minnesota does an internal survey of its municipalities but he is uncertain of whether other states complete reports similar to WISTAX report, or how the Wisconsin report would compare to other states. Deschane emphasized that Wisconsin relies heavily on property taxes in comparison to other states.
Deschane said the report highlights that the state has inflationary-proof funding and local governments don’t. The report says local government revenues have gone up 2% (without inflationary adjustments) and state revenues have gone up 8%. Deschane says that is a function of being heavily dependent on the property tax. “Not only is it essentially the local government’s only source of revenue, the terms are set by the state. Because everyone hates the property tax, the state has effectively capped growth in property taxes.” Deschane said. When asked to compare Wisconsin to other states, Deschane said other states use local option sales tax. Wisconsin Counties can tax up to 0.5% for local needs, but municipalities are not given sales tax authority.
Deschane said the WISTAX study shows that local governments have done a terrific job of managing with less. Deschane said local governments have learned to be more efficient. “They have done a great job. They have focused on police, fire and ambulance services. The study shows that response times have not slowed at all. Act 10 helped, but it did not go far enough because it did not cover police and fire. Act 10 did not make up for all the shared revenue lost. Changes in services are unavoidable unless the revenue changes. The report shows there is a slowdown in snow plowing response times. The streets are good, but the percentage of streets that are in really good shape is smaller, and the percentage of streets that are in poor shape is getting larger. That’s a danger signal.”
Deschane was asked about the ability of communities to share or combine services. “It’s not easy. It is done more than people realize, particularly if you go to smaller communities. Fire department and ambulance services are routinely shared services. This is an area where the metro areas could learn some from the smaller communities. There are opportunities there, but it is very difficult. If you look at what Paul Farrow is trying to do in Waukesha County, bringing those communities together to explore shared fire services. It’s a good idea, and there is potential cost savings there. Dane County could do something similar. It is hard to do.”
The report shows an increase in the number of roads that are rated as “fair” or “poor” and a decrease in the number of roads rated as “good.” Deschane said that’s a “big yellow caution sign.” Deschane emphasized that maintenance on roads cost less than reconstruction of roads. “Maintenance on roads generally runs about $600,000 per mile, while reconstruction can cost $2.6 million per mile. We can pay now, or we can pay four times more later. The Wisconsin road system is one of the state’s best assets. We have more roads in our state because of the efforts of the dairy industry. We don’t want to see that go to waste, and we are starting to see signs.” Deschane said.
The final portion of the report Deschane discussed was civic involvement and leadership. Deschane said local governments are seeing a decline in the number of people running for office and he believes it is the responsibility of the League to work with members to promote civic engagement. Deschane said, “It is supposed to be ‘WE’ the government and too many have lost track of that. Education is part of it, and that’s a long-term solution, but local governments are challenged. We need to talk to the families in communities and encourage them to get involved. It starts with leadership. We need energetic leadership that has a vision for the future of the community.”
When asked for his final thoughts, Deschane said, “Local governments are doing a good job. They have been able to maintain and sustain great communities on tighter budgets. This is a good first report. We are pleased with the report, and there were no real shockers in the report. It affirmed the good news, but it also confirmed our worries.”