Regional planners in southeast Wisconsin can place an $18 tax on car rentals to pay for the Kenosha-Racine-Milwaukee commuter rail line.
But authority is not enough to justify a tax that could further damage an already beleaguered industry, according to tax opponents.
“Car-rental business is down 30 percent compared to the same time a year ago,” said Brian Mitchell, spokesman for the Wisconsin Car Rental Alliance.
Mitchell said he was surprised to see the tax on the agenda for the Southeastern Wisconsin Regional Transit Authority’s Friday meeting. The prospect of such a tax has his members worried and asking that the RTA avoid a final decision Friday, he said.
A $2 fee on car rentals was in effect in Kenosha, Racine and Milwaukee counties between October 2006 and September, when the original legislation establishing the RTA expired. The state Legislature, in the 2009-11 budget, gave the RTA authority to reinstitute the tax to as high as $18 per rental.
The RTA on Friday will consider reviving the tax and setting the amount.
“It’s what the Legislature has approved,” said Karl Ostby, an RTA member. “So, sometimes you have to deal with what the Legislature has given you.”
But, he said, that does not mean car-rental businesses should brace for the maximum, nor does he expect a final decision Friday.
“I certainly don’t think we’ll be putting in place anywhere near the full amount,” Ostby said.
That does not mean the RTA will sidestep a tax on car rentals, he said. There is a precedent and a need, Ostby said.
“I just flew in from Seattle, and I paid some pretty hefty car-rental fees there,” he said. “So I think this is becoming really common.”
The existing RTA and the car-rental tax are temporary fixes to keep KRM planning on track as local governments work on a permanent solution to pay for transit.
Gov. Jim Doyle’s office has presented a draft bill that would allow for the creation of local transit authorities at the county or municipal levels in Racine, Kenosha and Milwaukee counties. The local authorities would pay for bus services with increases in sales taxes, vehicle registration fees or car-rental taxes. After six years, according to the draft bill, the local authorities must merge and pool their resources with the existing southeastern Wisconsin RTA.
Even as a temporary solution, the car-rental fee is not a good idea, said Chris Larson, Milwaukee County Board supervisor. The fees are too inconsistent compared with a more steady sales tax, he said.
Furthermore, he said, if the KRM succeeds in getting more vehicles off the roads, the car-rental fee would take in less money to support the rail system.
“It doesn’t work,” Larson said. “Sales tax is what’s needed. Outside of a sales tax, the next best thing is something Wisconsin does not do, and that is the payroll tax.”
Though planners likely will not immediately chase the full $18, Ostby said, the authority to go that high assures KRM planning can proceed.
A report to the RTA board prepared by the Southeastern Wisconsin Regional Planning Commission laid out options for what the RTA could afford with a car-rental tax. A $12.50 tax per rental could raise $5 million, which the regional authority could distribute as grants to the local authorities envisioned in Doyle’s proposal. A $4.50 tax per rental could pay for engineering for the estimated $207.5 million KRM project, a full-time transit authority executive director and a full-time engineering staff.
Ostby said he does not think the full-time executive director is needed. He promised to take a sharp pencil to the budget Friday.
“Even though I think there’s an ability to raise a really large car-rental fee,” Ostby said, “my feeling is it would be irresponsible at this point.”