Shared revenue to cities becomes forgotten orphan of state policy

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Friday, December 7, 2007

When property-tax time meets our modern impulse toward gotcha politics, it’s understandable that finger-pointing occurs. Homeowners who compare their bills with those of past years might find that city property taxes have increased faster than school property taxes over a decade, and point a finger at someone.

They might even declare that former Gov. Scott McCallum was right when he labeled local governments “Big Spenders.” But City Hall isn’t responsible for the size of property tax bills arriving in the mail. It doesn’t even determine the city’s share of the bill. Both are the product of conscious choices by state government and a mind-boggling slew of state policies.

First, property taxes pay only a fraction of the costs of operating schools and local governments, a significant fraction to be sure. Using the income and sales tax dollars it collects from all of us, state government throws in a hefty chunk. For the Janesville School District, that chunk is about $70 million. For Janesville’s city government, about $6 million comes in the form of state shared revenues, the no-strings-attached general aid programs designed to hold down property taxes.

Since 1995, state government has made a conscious decision to direct more state aid—more of the income and sales tax revenue it collects from you and me—to schools. The result has been profound.

The squeaky wheel got the grease: school aids to Janesville’s schools more than doubled from 1995-96 to 2005-2006. That period includes the budget in which former Gov. Tommy Thompson and lawmakers agreed to two-thirds state funding of public schools—nearly a billion dollar boost to school budgets statewide.

Shared revenues to the city of Janesville fell almost 28 percent in the same period. Inflation measured by the Consumer Price Index ran 26.9 percent.

The state’s decision to emphasize schools at the expense of municipal services was a legitimate public-policy choice. It was the kind of choice we pay state legislators and the governor to make. It’s a choice that continues to be reflected in the state budget the Legislature and governor crank out every two years. In the latest one, school aids rose $213.9 million. Gov. Jim Doyle recommended increasing shared revenues $15 million. The budget conference committee agreed to a zero increase.

Statewide, school aids rose 95.7 percent, from $2.7 billion in 1995-96 to $5.29 billion last year. Statewide, shared revenues fell 5.5 percent, from $950.6 million to $897.9 million. The impact on each community differs.

Thirty years ago, when shared revenues were known as shared taxes, the program was indexed to significant state revenue sources. Since then, shared revenue has become the forgotten orphan of state policy.

At the Alliance of Cities, we believe it’s time to index state shared revenues to state revenue growth, to provide non-property-tax dollars to contribute to the health and welfare of Wisconsin communities. Until that happens, the disparity between the growth of aids to schools and the growth of shared revenues to municipalities will only increase.

Ed Huck is executive director of the Wisconsin Alliance of Cities, a coalition of 40 cities in Wisconsin that includes Janesville. Address 14 W. Mifflin St. #206, Madison, WI 53703; (608) 257-5881; Web site www.wiscities.org.

Last updated: 11:44 am Thursday, December 13, 2012

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