Local governments facing a grim future of postponed roadwork and delayed capital projects are hailing a bill that would force the state to return more money.
But standing between the bill’s proposal and passage is the equally grim reality that the state doesn’t have any more money to return.
“This sounds kind of gimmicky,” said state Sen. Scott Fitzgerald, R-Juneau. “Even if municipalities agree to this, it’s so difficult right now to predict when the state will be generating new revenue. I’m not sure where they’re coming from here.”
The shared-revenue bill, proposed by state Sen. Jeff Plale, D-South Milwaukee, anticipates the state’s difficulty coming up with the money and would delay the increase in payments until 2014. At that time, according to the bill, the state would create two formulas for shared-revenue payments — one based on a municipality’s population in proportion to its geographic area, and another based on population in proportion to that of all other municipalities.
“As the state’s financial difficulties have increased, municipalities have not seen a nickel increase in shared revenue payments since 2004,” said Watertown Mayor Ron Krueger. “If the state wants us to be a partner in the bad times, well, we want a fair increase when times get better.”
Plale was unavailable to comment on the bill.
Until 2003, shared revenue, which is generated by the state income tax and local sales taxes, was distributed to counties and municipalities based on the amount of money they contributed to the shared-revenue budget. But the budget was not protected, and the formula has fallen apart as the state shifts more of the tax revenue to the general budget. That means payments to local governments have decreased.
The League of Wisconsin Municipalities spurred the bill to reverse that six-year trend, said Dan Thompson, the league’s executive director. But he pointed out two immediate challenges: There is no identified way of generating more money for increased state payments, and, by extension, there is no idea when that money will be available.
Most municipalities use the shared-revenue payments to help cover operating budget expenses, said Ed Huck, executive director of the Wisconsin Alliance of Cities. But there are few other revenue sources for capital and operating budgets outside of property taxes.
The heavy reliance on property taxes, Huck said, means local governments have less money to leverage debt for larger projects such as major road repairs. If the state increases shared-revenue payments, Huck said, local governments would be able to free up property tax money for larger construction projects.
“Cities’ ability to do more has been reduced for a long time,” he said. “You’ve got flat or declining state revenue and levy limits. You have municipalities, as a result, doing 50 percent less roadwork than they were 20 years ago.”
But if the state does not have the cash to start increasing payments in 2014, Thompson said, the bill won’t mean much. He said local governments have lobbied unsuccessfully for shared revenue increases for too long, and this is a new way to get their voices heard.
But hamstringing future lawmakers is the wrong way to solve the problem, Fitzgerald said.
“All I can tell you is the next budget is going to be brutal,” he said. “That might spark some reform and change at the local level, which isn’t a bad thing.”