Perspectives on City Budgets and the Role of the State

On June 8, I had the opportunity to share the podium with Milwaukee Mayor Tom Barrett at a WI Urban Alliance meeting in Madison on “A 21st Century Fiscal Structure for Local Government in Wisconsin.”

Our presentation focused the impact that reduced State funding for local governments, along with State-imposed tax, revenue and spending caps for local units have had on Wisconsin cities, large and small.

A few numbers to consider from my presentation:

  • Over the past ten years, the City of Two Rivers’ General Fund budget—the budget that funds, police, fire, public works, parks and rec and various administrative services—has grown by only 1.7 percent, from $9,661,981 in 2007 to $9,824,443 in 2017.  That’s without playing any “budget games,” like shifting activities out of the General Fund.
  • Over that same decade, State funding to the City for operations—Shared Revenues, Major and Local Street Aids, and Expenditure Restraint payments—have declined by 3.0 percent, from $4,806,015 to $4,660,650.
  • In order to just “tread water” on General Funds spending, the City has had to increase property taxes for operations by 30.0 percent, from $1,562,998 to $2,032,303.  That sounds like a big increase, and it IS bigger than I would like, but consider that, on average, that’s about 2.5 percent per year.

 

To be certain, State-source revenues are still the single biggest revenue source for TR’s General Fund.  But the State is sharing less dollars with our city than it did a decade ago (and only 6.8 percent more than it provided 20 years ago).

Over that same decade, State General Purpose spending has increased by 25 percent.

One of the big challenges in funding local government in Wisconsin is the legal/historic framework in State law.  Unlike in many other states, cities and villages have very few options for raising revenues.

When it comes to taxes, we are “stuck” with the property tax, probably the most unpopular of all forms of taxation.  We also have the ability to fund certain services with user fees—except that the 2013-15 State Budget lumped any new user fees for services like fire protection, street sweeping, or snow plowing into the formula for calculating local levy limits.

Wisconsin has limited the revenue mix for local governmental units for over a century.   That’s why the State adopted an income tax in 1911: to share funding from a state-wide source with local units, helping to “keep a lid” on local property taxes.

Not a bad concept—except when our state government does not see fit to increase funding for Shared Revenues.

(Counties DO have the option of implementing a half-percent local option sales tax, as has recently been discussed here in Manitowoc County—but that option is not available to individual cities and villages.)

The primary message out of the League Policy Forum was that Wisconsin needs a serious discussion—and action–about funding local government services and infrastructure. A discussion that respects cities and villages as important partners in meeting the service needs of Wisconsin’s residents and in moving economic development forward in our state.

Independence Day Events

Next Tuesday night, July 4, offers traditional Independence Day activities at Walsh Field in Two Rivers.

Events start with the flag-raising ceremony at 7:15 PM, followed by an evening of patriotic music and fireworks at dusk.

THANK YOU to the many local residents, businesses and organizations who contribute in support of this community-sponsored celebration of our nation’s independence!

First Council Meeting in July Rescheduled to Wednesday, July 5

With July 4 falling on a Tuesday this year, many people will be enjoying a four-day holiday weekend.

Accordingly, the City Council meeting that would normally be held on the first Monday in July has been rescheduled to Wednesday, July 5.

Remember that you can view TR City Council meetings live-streamed (or after-the fact) on the City’s website or the Two Rivers City Hall Facebook page.  (Or on Charter Cable channel 993.)

Two Rivers City Manager Greg Buckley can be contacted by calling 920-793-5532 or by e-mailing gbuckley@two-rivers.org.

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