No one is proposing a referendum for Janesville, but city officials certainly have been thinking about one.
The idea was presented as a possible scenario during the city’s annual meeting with state legislators Friday at City Hall.
City Finance Director Max Gagin showed the legislators how a quirk in state law would make a referendum difficult to pass.
Listening were Rep. Debra Kolste, D-Janesville; Rep. Amy Loudenbeck, R-Clinton; Sen. Janis Ringhand, D-Evansville; and Mike Mikalsen, an aide to Sen. Steve Nass, R-La Grange.
The state’s Expenditure Restraint Program gives the city $1.52 million a year if the city restricts its tax levy growth, Gagin said.
But if the city, for example, passed a referendum to exceed state revenue limits to increase street maintenance, that state payment would go away, Gagin said.
To get $2 million in new revenue, the referendum would have to ask taxpayers to increase the tax levy by $3.5 million to cover the loss of the state money, Gagin said.
A simple $2 million referendum would cost the average homeowner $60 a year, Gagin said, but because of the Expenditure Restraint Program, the cost would be $106.
The Expenditure Restraint Program, or ERP, was put in place many years ago to hold down property taxes, Gagin said, but it can work against the will of voters.
Gagin said after the meeting that it seems like common sense “that if the will of the people is to spend X number of dollars on a certain program or service in a voter-approved referendum, that the city or any municipality shouldn’t be penalized and potentially jeopardize their Expenditure Restraint Payment aid.”
Loudenbeck agreed after the meeting.
“I think we can make the case to fix it,” Loudenbeck said.
Kolste was not so sure.
“(Assembly Speaker) Robin Vos’ mantra is, there will be no new taxes, and I think he thinks the ERP is a way to keep expenditures down and taxes down,” Kolste said.
Council member Sue Conley said she has no idea if the council would consider a referendum if the law was fixed. But Conley expressed frustration:
“We’re borrowing $6 million to pave 12 miles of road every year. We can’t keep doing that. That’s not sustainable,” Conley said.
“And that is the biggest issue, for little towns, for cities, is that there’s not enough money to do the roads,” Kolste added.
“Now, if the shared-revenue formula was more equitable, we wouldn’t have to borrow so much money to do our roads,” Conley said.
“That’s not happening,” Kolste said, echoing sentiments expressed at the meeting, that increasing Janesville’s shared revenues would take money away from other cities, which would fight hard against a change.
Gagin discussed state shared revenues at the meeting. The legislators have heard this complaint every year:
The state froze shared revenues in 2004, when Janesville was getting a lot less per capita than cities of similar size.
Gagin had a chart that showed Janesville’s shared revenues are now less than $100 per capita, while Racine gets $350 and Beloit more than $450.
City Manager Mark Freitag said Janesville has been in this situation for nearly 15 years, “and how long do the citizens of Janesville pay the price so that the rest of the state can still be winners? How long? Does that go on forever? … At some point we’ve got to come up with a solution.”
Freitag suggested that those cities getting larger amounts could be frozen, and those that get below-average payments could be increased.
Among the effects of the shared-revenue pickle is that Janesville has the second-lowest per-capita spending on police among its peer cities and the second-lowest street-maintenance spending per mile, Gagin said.
“There’s not a lot of good options” for cash-strapped municipalities, council member Doug Marklein told the legislators.
But Marklein seemed to question whether a referendum would pass.
“People are feeling positive about the future, positive about where we’re going, but not that comfortable in their own pocketbooks, in their own budgets, that they could come up with that (tax) levy limit and pay for it,” Marklein said, “especially when they see … how much they’re really getting the short stick with money they pay to Madison coming back to them.”
Gagin also floated the idea of allowing municipalities to levy a 0.5 percent sales tax, as counties are allowed to do, or a local gasoline tax, as is done in some other states. But that would take a change in state law.
Gagin said a special committee is now looking into financing of local governments, and he encouraged that group to look at alternative revenue sources.