Wisconsin Council 40
LEGISLATIVE ALERT
AFSCME Green Sheet
Levy Limits


www.afscmecouncil40.org
 

July 3, 2008                                                                      Volume #30, Issue #20

Counties and municipalities are buckling under increasing budget constraints and limited cash, while the demand for services is growing due to difficult economic times, Wisconsin’s most challenging winter in three decades, and a spring marked by flooding that has decimated many areas of our state.

The last two state budgets have implemented levy limits, also known as property tax freezes, on local governments.  Depending on the year, these limits have ranged from between 2 and 3.86 percent.  The limits have been put into place in response to public outcry over residential property tax levels in Wisconsin.

Over the last four decades, a shift has occurred in who pays Wisconsin’s property taxes.  Since 1970, the share of property taxes paid by residential property owners has increased from 50.6% of all property tax revenue to over 70% today.  It used to be that property taxes were shared among manufacturers, farmers and homeowners. Over time, property tax breaks have been granted to corporations and farmers, while homeowners began to shoulder more of the tax.

Levy limits, introduced in response to the public outcry from rising property taxes, have taken a bad situation and only made it worse.  Not only have levy limits distracted the state from addressing the imbalance over who pays property taxes, they have crippled local government budgets.

The property tax is the major source of revenue for local governments in Wisconsin, accounting for over 35% of the dollars used to fund municipal and county budgets.  When local governments are prevented from tapping into that source of revenue to keep up with escalating costs, another revenue source must take its place or public services will suffer.  Amazingly, since 1997, the primary aid to local governments from the state, in the form of Shared Revenue, has actually been cut by 5.5%.  Essentially, while the state is cutting aid to local governments, and increasing mandated services, it is also taking away the one tool local governments have to raise sufficient revenue to maintain services.

The consequences of these policies are just being realized.  Some examples of impacts from around the state include: 

New Berlin officials were forced to shift funds from building maintenance and postpone debt service, among other measures, to cover the cost of public safety needs.

Eau Claire is facing a $2 million budget shortfall for 2009, even after taking numerous steps to reduce costs in recent years.

Dover cut nearly $75,000 from their road budget last fall, prior to this winter’s record snow fall, as well as $21,000 from their fire department’s equipment budget, to deal with rising budget deficits.

Richland County transferred $250,000 from the highway department to the general fund in 2007 to balance their budget.  The county has cut back programs for 2008, including children’s summer programs and a long term support unit, while looking to make deeper cuts in 2009.

These are just a handful of impacts seen in communities around the state.  Across Wisconsin, local governments are being forced to look at either making cuts to parks, libraries, public safety and road maintenance or borrowing funds simply to fund their operating costs.

While levy limits have become politically popular, it has become an unworkable solution to Wisconsin’s property taxes.  It is time for state officials to realize that the practice of eliminating local control of revenue from counties and municipalities, without providing adequate state revenue to replace it, must become a thing of the past.  If state leaders want to control property taxes, they should consider alternative solutions that get to the heart of the problem.  Among them:

Rewrite Wisconsin’s tax laws to ensure that corporations in Wisconsin pay local taxes at a rate equal to the national average.  This measure alone would yield $520 million annually for schools, counties and municipalities.

Restore Shared Revenue to its 1997 buying power and index the program to CPI on a forward going basis.  Adequate funding of Shared Revenue is a time proven method of reducing the reliance on property taxes.

Increase funding for state highway maintenance and state highway rehabilitation in the Department of Transportation budget.  The job of maintaining Wisconsin’s infrastructure falls to local governments, but the State must increase its commitment to fund those projects.

AFSCME encourages members to talk to candidates for state office this summer and fall and secure their commitment to end punitive levy limits on local governments and provide adequate state aid to counties and municipalities.