Janesville City Council floats referendum to exceed levy limits
JANESVILLE--Pay as you go or pay as you use?
That's how Janesville City Councilman Douglas Marklein suggests the city frame a referendum question asking residents to allow it to exceed state levy limits to fund street maintenance.
The council has not put a referendum question on a ballot in many years.
But the city only can raise an additional $200,000 in taxes because of levy limits, and it must find millions more than currently are budgeted to bring streets to acceptable levels, staff has said.
If residents don't allow the council to exceed levy limits, it simply would borrow all the money, about $6 million over the next three years, Marklein said. Paying immediately via property taxes, though, saves money on interest.
Marklein said he expects some residents to complain the city would have the money to spend if it didn't build a bus garage or fire station, he said.
“But that's a separate question,” Marklein said.
The council debated how to fund needed street maintenance at a Tuesday study session, and most members supported a mix of additional borrowing and taxing.
The council will meet soon to decide on what combination it would approve.
A referendum likely would be held in August, depending on whether the city could meet the notice deadline required by state statutes.
Every council member elected in the last 13 months has heard concerns from residents about the city's infrastructure, Marklein said.
Other options that remain in the mix include using reserve funds and even assessing residents a portion of the cost to resurface streets in front of their homes. Those options did not have the same support as borrowing and tax increases.
Director of Public Works Carl Weber has warned for several years that the city is falling behind in street repair. The city should be fixing 12 miles a year, but this year it has budgeted only 6.5 miles.
Weber suggests fixing 9 miles in 2015, then 12 miles in 2016 and each year going forward.
Total cost of the catch-up program is estimated at $4 million this year—or a $500,000 increase from what is budgeted—$5.6 million in 2015, and $6.7 million a year in 2016. That marks a $3.2 million increase from current spending.
Of these amounts, about two-thirds would be paid for through the general fund.
Several different fundraising options were presented to the council Tuesday.
One option increases the wheel tax by $10 per vehicle in addition to borrowing. A Janesville resident owning the average assessed home of $120,000 would pay an additional $5.60 in 2014, $23.55 in 2015 and an average $74.42 from 2016-26. Costs would peak in 2026 and stay there as long as the program continues.
Councilman Mark Bobzien said his first preference is borrowing. A referendum would be ideal in a perfect world, he said, but a small percentage of people vote, so they would make the decision for everyone.
“I think you'd be surprised that our educated electorate is paying attention to this issue,” council member Sam Liebert said.
Council President DuWayne Severson said he is not excited about borrowing, but the rationale of requiring people to pay as they use the roads over time make sense.
Increasing the wheel tax appeared to be off the table. In fact, at least three council members said they want to see the tax, which is $10 per vehicle and brings in $525,000 annually for street maintenance, eliminated.
Liebert, Severson and Marklein all suggested eliminating the fee.
“To me, it's a hidden tax that folks don't think about until they get their renewal from the state,” Severson said.
Said Liebert: “I guess it takes a big person to admit he was wrong, (but approving the wheel tax) is the one regret I've had.”
“The wheel tax is very unpopular,” Marklein added. “If we go to referendum, we need to keep the wheel tax out of the discussion.”
The wheel tax is regressive because it is not tied to the value of a vehicle, Bobzien agreed.
Councilman Matt Kealy, though, said the tax at least falls on those who use the roads.
“If you decide to have five cars in the house, you use it (roads) five times more than the person with only one car,” he said.
Several council members appeared reluctant to use reserve funds for what they see as an ongoing program.
In addition, the city's credit rating is determined in part by its reserves. Council policy requires reserves remain between 16 to 25 percent of the general fund. The $8.7 million is currently at 24 percent, but the council is considering using $1 million for the new fire station and has already used $675,000 to reduce the 2014 tax levy.
Borrowing also would affect the city's credit rating.