Ask Milton City Administrator Al Hulick about a bill proposing a wheel tax referendum, and he’ll point to the Milwaukee Bucks’ new arena.
The state Legislature never asked voters before it passed lucrative funding packages for the Bucks’ soon-to-be-completed arena or for Foxconn’s mega manufacturing project in Mount Pleasant, he notes.
So why is the Legislature trying to impose referendums on local municipalities’ ability to enact wheel taxes, one of the last available funding tools for communities to fix their roads?
“Why is it so directly punitive toward local communities?” Hulick asked.
Wheel taxes are flat fees imposed on vehicles registered within a municipality. All money collected is used for road maintenance. Milton, Janesville, Beloit and Evansville are the four Rock County communities with wheel taxes.
Sen. Steve Nass, R-La Grange, has proposed a bill that would require any municipality wishing to implement a wheel tax to first get voter approval via a referendum. Communities such as Milton and Janesville would have to put their wheel taxes on the ballot within 18 months of the bill becoming law.
The referendums would have to be part of a regular election. But the municipality would have to pay the prorated cost of adding the question to the ballot, according to the bill’s fiscal estimate from the state Department of Administration.
If voters reject the referendum, no more wheel tax.
In a statement emailed to The Gazette, Nass defended his proposal and said it gives control to the people.
“This legislation does not take away the ability of a local municipality or county to propose a wheel tax. It simply gives voters and taxpayers the final say on whether a wheel tax is imposed in their communities,” Nass wrote in the statement.
“Holding a referendum requires municipalities to make the case to local residents that this new fee is necessary and will be used for its intended purpose of improving roads.”
However, having quality roads tends to be an expectation for most drivers, especially in a state where brutal winters routinely crack pavement and cause potholes.
And getting people to tax themselves is a tough sell, said Maggie Darr, assistant to Janesville’s city manager.
Janesville enacted a $10 wheel tax in 2012, but it didn’t generate enough money to keep up with road repairs. The city went to referendum in 2014, asking voters for permission to exceed the state-imposed tax levy limit—by up to $1.2 million annually for five years—and put the extra money toward street repairs.
It failed overwhelmingly, despite residents saying road improvements were one of their biggest priorities as the city began a strategic planning process, Darr said.
“That is why we have a system where you elect a city council, and they hear what your priorities are, and the council determines how to balance those priorities with the funding that’s available to us,” she said. “I tend to think that every April, we have a referendum on whether or not the city is doing the right things.
“If we enacted a wheel tax and the citizens don’t like it, they have the opportunity to vote out those city council members that voted in favor of the wheel tax.”
Janesville later doubled its wheel tax to $20 per vehicle, the same amount as Beloit and Evansville. Milton has a $30 fee.
Janesville receives roughly $1.1 million annually wheel tax revenue. Milton, which has not yet collected a full year of fees, estimates it will generate $120,000 to $160,000 per year, Hulick said.
Without a wheel tax, Darr, Hulick and Beloit Finance Director Eric Miller said their cities would have to borrow more money—which Darr said was a poor long-term decision—or cut spending from other areas to maintain roads.
None wanted to speculate on a wheel tax referendum’s likelihood of passing.
Hulick said Milton residents have come to expect a certain level of services. Reducing one area has a ripple effect on other sectors, he said.
Road repairs become more expensive per linear foot as a street’s condition worsens. Cutting a wheel tax would restrict Milton’s ability to do preventative maintenance and would be less cost-effective in the long term, he said.
As those costs increase, the city would have to take drastic measures to keep up with roadwork, Hulick said.
Beloit has had a wheel tax since 1986. Wheel tax revenue comprises 41 percent of the city’s street operations budget, spokeswoman Sarah Millard wrote in an email to The Gazette.
Miller, the city’s finance director, said laying off employees or reducing spending elsewhere are options, but they are last resorts.
“We’d rather keep people employed. No one wants to cut positions,” he said. “We want to maintain the number of services and services we currently provide, same as every other municipality does. We don’t want to cut services and offer less just to rob Peter and pay Paul.”
Nass’ bill is not the only one circulating that would affect wheel taxes.
Rep. David Bowen, D-Milwaukee, has proposed modifying wheel taxes to give municipalities more flexibility in the tax’s implementation.
The state currently requires wheel taxes to be flat fees. Bowen’s proposal would preserve that option, but it adds options for variable fees based on vehicle weight or value or the income level of the vehicle owner.
Hulick said it’s worth discussing Bowen’s legislation to shore up certain flaws in the current wheel tax structure.
But Hulick has a problem with the state trying to influence local government through a state-imposed referendum, which he called “unprecedented.”
Only 25 of nearly 1,900 Wisconsin communities have wheel taxes. He was certain other places had considered such a tax but decided against it, which is the right of local government.
In his statement to The Gazette, Nass said if voters think the wheel tax is a smart use of public money, they will approve it at the polls.
Hulick called that logic “flawed and shortsighted.” The government is a representative democracy, and governing bodies have the power to prioritize issues and spend money accordingly, he said.
“What I say to those legislators who say, ‘You don’t trust the people,’” Hulick said, “I say, ‘You don’t trust the elected officials.’”