Wisconsin Council 40
LEGISLATIVE ALERT
 AFSCME Green Sheet
Shared Revenue


 www.afscmecouncil40.org
 

June 27, 2008                                                                           Volume #30, Issue #19

SHARING REVENUE: A COMMITMENT TO THE STATE/LOCAL GOVERNMENT PARTNERSHIP - The concept of “Shared Revenue” goes back to the early 1900’s, when legislators recognized that state tax dollars ought to be shared with local governments to help pay for services that they provide. It is a commitment the state made to localities, decades ago, to acknowledge that local governments are partners in government.

Shared Revenue (SR) helps localities pay for services that the public and our economy depend upon, such as public safety, recreation, sanitation, libraries, courts, public health, transportation and more.

Shared Revenue is based on the idea that every community and citizen deserves a basic level of public services, regardless of ability to pay. SR is vital to keeping the public sector strong, and it is an important funding source for local budgets. The 2008 budget for the City of Eau Claire, for example, relies upon the $7.5 million the state sends in Shared Revenue. That is more than 14% of the city’s entire $51 million budget.

Wisconsin provides nearly $900 million per year in Shared Revenue for counties and municipalities. Shared Revenue is funded with general tax dollars (General Purpose Revenue or GPR) that come from the state’s General Fund. The GPR-portion of the state budget for 2008 is $13.8 billion. Our entire state budget for fiscal year 2008 is $28 billion (all funds).

While $900 million is no small change, the allocation for Shared Revenue has been faltering over time. Since 1997, funding for Shared Revenue has been cut by 5.5% – but when inflation is factored in, the reduction in the state funding for Shared Revenue actually is 26.7%! The following chart identifies the allocation for Shared Revenue made by the state Legislature since 1997:

   
    1997    $950.6 million     
    1998    $950.6 million      0%
    1999    $950.6 million      0%
    2000    $951.2 million      0.1% increase
    2001    $951.2 million      0%
    2002    $960 million         1% increase
 
 
   
    2003    $970.3 million      1% increase
    2004    $893.5 million      -7.9% cut
    2005    $893.5 million      0%
    2006    $898.3 million      0.5% increase
    2007    $899.2 million      0.1% increase
    2008    $899.6 million      0.1% increase

    (Source: Legislative Fiscal Bureau)

Another way to see the decline in funding for Shared Revenue is to look again at the budget for the City of Eau Claire for 2008 compared to 1995:

                                Revenue Sources of the Budget for the City of Eau Claire

                                                                                     1995                            2008
    Intergovernmental aid*                                          47.5%                          21.5%
    Property taxes                                                       26.0%                          49.3%
    Licenses, penalties, etc.                                         9.8%                          11.7%
    Charges for service                                                 6.7%                          10.6%
    Other taxes                                                             10.0%                            3.3%

    *This includes federal aid and other sources of aid, not only SR. 
    Source: City of Eau Claire Budget

Back in 2000, AFSCME analysts figured that Shared Revenue had the effect of reducing property taxes by an average of $455 on a $100,000 home. That, offset in today’s dollars, is a mere $220 on the same $100,000 home. Property taxes have replaced Shared Revenue as the main source of revenue for most local units of government. This is not a sustainable situation, especially when property tax levy limits are factored in. (We will discuss in a future edition of our AFSCME Green Sheet how levy limits on local governments are choking public services).

AFSCME and others are concerned about the future of the Shared Revenue promise and Wisconsin’s commitment to the state/local partnership.

This fall, we will be asking lawmakers to enact “indexing” for Shared Revenue – that is, a guaranteed increase in Shared Revenue based on the Consumer Price Index (which is now 3%). Had indexing been in effect in 2008, Shared Revenue would have been boosted by $26.97 million dollars (to $926.57 million, compared to $899.6 million).

Public employees have a strong reason to be engaged in this election season. We must elect candidates who will pledge to maintain and improve Shared Revenue in the next state budget. Wisconsin needs a state Legislature that recognizes the long-standing partnership between the state and local governments and the vital role that SR funding plays in supporting that partnership. The vitality of Wisconsin’s economy and the public sector depend on preserving Shared Revenue.

For more information, contact your AFSCME legislative representatives at 608-836-6666.