Another week, another Dark Store defeat

While the Wisconsin Legislature can’t seem to grasp it, members of the State Bar are beginning to get the idea: the Dark Store Loophole is a loser. This week the City of West Bend declared victory over a Dark Store play by Menards. The home improvement chain withdrew three year’s worth of Dark Store-based claims that it was being taxed too much. In a news release, City Administrator Jay Shambeau said the decision proves that his assessors, like many others in Wisconsin who face Dark Store claims, were doing it right all along.

“Our City Assessors take great pride in their work and establish fair and equitable assessed values,” stated City of West Bend Administrator, Jay Shambeau. The cancellation of this lawsuit affirms the fact that the City of West Bend assessments were proper and fair all along.  Shambeau also states, “The residents and property owners in West Bend should find peace in knowing that our city staff work hard to establish uniform and law-based assessments on all property assessments.”

We don’t have the exact numbers involved in this case, but similar claims from big box stores have called for cuts as large as half their tax bill, shifting tens of thousands of dollars in taxes onto homeowners, small independent businesses and manufacturers every year. In addition to shifting the tax burden to others, the cost of defending an assessment decision can easily exceed $50,000, forcing many cities and villages to make the hard choice and agree to a settlement. The Mayor of West Bend, Kraig Sadownikow, is pleased the city stuck to its guns and didn’t negotiate a settlement.

“West Bend has been a leader in combating the dark store theory,” states City of West Bend Mayor Kraig Sadownikow.  “I am proud of our city council and staff for their resistance to buckle to the big box pressure to accept a settlement offer. Any type of settlement would have caused a tax shift to other city property taxpayers. This was unacceptable in my opinion.”

Governor Tony Evers included language in his state budget bill that would have closed the Dark Store and Walgreens loopholes once and for all. On a party-line vote, Republican leaders in the Legislature removed that language from the bill. While the future of Dark Store legislation may be uncertain, the future of dark store arguments winning in Wisconsin court rooms looks even shakier. The good news is that, despite the significant legal costs, cities and villages that have stood up to the tax-shifting strategy have been succeeding lately. If this discourages enterprising tax lawyers for big box stores from using dark store strategies, it’s good news for taxpayers.

Way to go, West Bend!

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Another assessment win

If you tell a bank that your property is worth $450 million, chances are you won’t win an argument claiming your property tax assessment of $400 million is too high. That’s one of the morals of this most recent property assessment story. On May 9 the City of Wauwatosa won the largest, most complicated retail property assessment challenges to date. By order of a judge, super-regional Mayfair Mall is worth what the assessor said it’s worth (and probably more), not what 20 less attractive malls are worth.

The Mayfair Mall property tax saga began in 2013 when the city of Wauwatosa pegged the property’s value at $400 million. The city’s data suggested the property was worth about ten-percent more than that amount, but the assessor went with the more conservative figure in part because he didn’t have access to income information that had been repeatedly requested from the owner. The assessment was the same for 2014 and raised by roughly 5-percent for 2015. The real estate investment trust that owned Mayfair sued, claiming the city assessments were in error.

A four-year court battle ensued. A year ago, both sides met in Milwaukee County Circuit Court for a six-week trial. The trial became a dense and complicated contest of competing experts. Milwaukee County Circuit Judge Marshall B. Murray issued his written decision in favor of the city this month. His 34-page written decision carefully details how Wauwatosa Assessors Steve Miner and (later) Shannon Krause repeatedly used correct data, scrupulously-followed the Wisconsin Property Assessment Manual and assigned values that were conservatively-beneath the actual value of the property.

On the other side, the experts hired by Mayfair to justify its claim that the assessment was wrong were repeatedly found to be “inconsistent and not credible” by the judge. In some instances, the judge’s decision points out that the owner’s experts contradicted their own previous work. Mayfair had an appraisal done to finance the mall, putting its value at about $460 million. One of the experts who challenged the $400 million assessment worked for the firm that had done the appraisal. (Just one of the facts that Judge Murray pointed out in his “inconsistent and not credible” finding.)

Although Mayfair’s challenge did not turn on the “dark store” theory directly, the decision is an important element in the ongoing legislative debate. It is unquestionably the largest, most complicated retail assessment challenge in the recent string of property tax decisions. Two of Wisconsin’s best municipal assessors, Miner and Krause, were central figures in assigning the values to the property and the case was defended by expert municipal tax attorneys Amy Seibel and Ryan Braithwaite. The other side brought its legal A-team as well, and both sides relied on leading national experts in assessment and appraisal. The case was as expertly-argued as an assessment case can be…and the municipal side won on all points.

Despite the importance of this win, the fight continues. In Wauwatosa, there are related cases from more recent tax years still under appeal, and this decision may be appealed to a higher court. Wauwatosa Mayor Kathy Ehley has said her city budgets more for assessment-related legal fees annually than it receives in shared revenue payments; more than a quarter of a million per year.

Ironically, the same week Judge Murray rejected Mayfair’s appeal the Wisconsin Legislature’s budget-writing committee rejected a proposal to clarify the law. The Joint Committee on Finance voted 11-3 against League-supported Dark Store language in the state budget. Apparently, legislation that would help Wauwatosa and other Wisconsin municipalities not spend $250,000 per year on legal fees is not “fiscal policy” suitable for a state budget.

Stay tuned.

212 Roads to Somewhere

The Wisconsin Legislature is deciding this spring whether or not to delay main street in 212 Wisconsin Cities, Villages and Towns. There are 212 state highway rehabilitation projects included in a $320 million state highway rehabilitation program budget request. The request is being considered this month by the Legislature’s Joint Committee on Finance. Each of those projects is a vital piece of a community’s economic success. We hope the vote is “Green” for go.

We admit that the “State Highway Rehabilitation Program” is a name only a bureaucratic mother could love. And $320 million is a lot of money, even within a multi-billion dollar state budget. What’s the connection to downtown Wisconsin? It’s not local transportation aids. Why should we care?

We do care, because all roads in Wisconsin lead somewhere. For example, one of those 212 projects would resurface Highway 172 in the Green Bay Area; the highway that leads to the Brown County Airport. Another project would replace a critical bridge on Highways 59 and 18 in the City of Waukesha. One more resurfaces the road that runs through the Village of Athens in Marathon County. Project after project affects city after city, village after village and town after town. It’s all connected; connected to you and I.

State highways are the links between Wisconsin’s 602 cities and villages; they are also often the main thoroughfares through those communities. They carry farm products, manufacturing equipment, school buses, ambulances and the tens of thousands of family vehicles traveling back and forth every day. Without a quality network of these roads linking local roads and the highway system, it gets harder to get to work, to get to school, and to get emergency services to people who need them.

A few days ago, the Wisconsin DOT released the list of road rehabilitation projects that would be delayed or deferred (deferred is bureaucratic word that means something worse than delayed) if we cannot find consensus on how to pay for them. Take a look at the list; it’s long but organized by county. Chances are you’ll find a road that you drive on listed there. Think about that particular stretch of road. What happens to your village if that project doesn’t get done next year; or the year after; or maybe just doesn’t get done? Whose job is affected; whose school is affected; which ambulance has to be rerouted?

Think about that. Then call your area legislator. It’s all connected.

They were listening, but did they hear?

Over the last few weeks, the Legislature’s budget-writing Joint Committee on Finance held hearings in Oak Creek, Janesville, River Falls and Green Bay.  At each location local leaders welcomed the committee and offered comments about the challenges municipalities face in dealing with the triple-whammy of sub-inflationary levy limits, declining shared revenue and increasing costs for infrastructure and essential services. Or, as Oak Creek City Administrator Andrew Vickers put it, the parent state demanding that its local children do more chores with less allowance.

The hearings were recorded by WisconsinEye, a nonprofit public-service digital television channel. For a “Local Perspective” on the state budget, follow the link embedded in each local leader’s name below.

One week into his job as the new Mayor of Green Bay, former state legislator Eric Genrich (comments begin at 5:40) told his former colleagues, “I can’t tell you I have everything figured out, but I know this much: our community is incredibly strong, but our city’s fiscal foundation could be stronger. We have significant infrastructural needs, and the tools we have at our disposal are not adequate to meet the challenges we face.” Genrich urged the committee to support Governor Evers proposals to increase shared revenue and transportation aids and to restore an inflationary “floor” for levy limits. Genrich also told them it’s time to look at diversifying local government revenue sources.

“Wisconsin’s municipalities are overly reliant on property taxes and we’ve seen a dramatic reduction in state aids over the last twenty to thirty years. Adjusting for inflation, the city of Green Bay receives about $20 million on an annual basis less than we did in the year 2000. That’s nearly 1/5th of our city budget. We are doing less with less, and the most glaring example of that is the condition of our streets.”

At the Oak Creek hearing, City Administrator Andrew Vickers (comments begin at 6:18) spoke up for diversifying the resource base for cities, but also for keeping property taxes fair. Oak Creek has a robust retail economy, including a greater than average number of medium- and big-box retailers. Like many communities, Oak Creek is beginning to be challenged by “dark store” loophole arguments from some of those retailers and Vickers urged the committee to close those loopholes via the budget bill.  He said, ”If we are asked to rely on property taxes, loopholes allowing [certain] segments to avoid paying their fair share should not stand.  The burden should not be shifted to residential property owners.”

Also in Oak Creek, the President of the Milwaukee Common Council, Ashanti Hamilton, (comments begin at 19:55) reported that the decline of shared revenue and imposition of levy limits that do not keep up with inflation has put his city in a situation where the police department’s budget alone exceeds the total amount of property taxes the city will receive.

South Milwaukee lies between Oak Creek and Milwaukee. South Milwaukee Mayor Erik Brooks (no video link available) said his small city of 21,000 is long past the point of “cutting the fat. He walked through some sobering numbers for the committee. “For 11 straight years, our “net new construction” figure – used to calculate how much we can increase our base levy, our largest source of revenue – has measured less than 1%. For 2019, it was 0.3%, meaning we were only able to increase our levy by approximately $22,000, on a $19 million budget. And it was worse in previous years. This is not sustainable. Costs go up, and we’re not allowed to reflect that in our budgets because the state has hamstrung us on revenue. And what if we want to give our people a raise, or if we want to add services? What do we do then? I’ll tell you one thing we can’t do: Cut fat. We did that long ago. Cuts now are cuts to people, and services. The days of Cadillac benefits are long gone too. We certainly seek ways to do things better through efficiencies and partnerships, but those only go so far.”

South Milwaukee went to referendum in 2017, to ensure it could adequately fund paramedic services and add two new police officers. The referendum passed 2-to-1. Brook said, that was a success, but “One-off” solutions like this don’t solve the problem.

In River Falls, City Administrator Scot Simpson (comments begin at 12:27) said the current revenue system is simply “unsustainable.” Simpson pointed out that the state needs to partner with local emergency services providers to meet a growing need for emergency detention beds for persons experiencing mental health crises. Under current rules and funding, police and sheriff’s departments have no choice but to transport such a person all the way across the state to a facility in Oshkosh. The Administrator said a facility in the western part of the state is needed to reduce skyrocketing transportation costs; costs that cannot be paid under the existing levy limits.

Janesville City Administrator Mark Freitag (comments begin at 7:48) offered thanks to the committee. The last state budget created a five-year added Expenditure Restraint payment for Janesville, to partially address an anomaly that put Janesville on the low end of both levy capacity and shared revenue payments. With the payment, Janesville was able to hire badly-needed first responders, double its street repair budget and reduce bus fares, in addition to implementing a number of internal operating efficiency programs.

This month the Joint Finance Committee will start the long process of working through the state budget agency by agency and program by program. It will vote on everything from base funding for prisons to local shared revenue and levy limits. The state budget document is typically around 1,000 pages long and lays out how the state will raise and spend roughly $83 billion in state income, sales and corporate taxes and federal funds. The budget also dictates to local governments how much they may raise in local resources. The city and village leaders who spoke up asked the committee to remember; they serve the same public. In Andrew Vicker’s words:

“We have a shared constituency.  There is not a single state resident that is not also a resident of a local government entity.  What’s good for the state is good for local government, and what’s good for local government should be considered good for the state.”

That’s not your job

If you have the chance to see Michigan State professor Dave Ivan speak, take advantage of it. I’ve heard him give four different talks in the past year and have come away with pages of new ideas each time. He’s “that guy;” the one who inspires, challenges and engages people who work in local government. I crossed paths with Dr. Ivan in Rice Lake this week, at the annual Wisconsin Rural Summit.

The Rural Summit is a gathering hosted by Wisconsin Rural Partners. The League is one of several sponsors for this event. The summit attracts about one hundred or so city, village, town and county leaders, economic development directors and private citizens who are interested in sustaining small town living in this state. At this particular Rural Summit, Dr. Ivan challenged my notion of what is, and what is not, the job of local government.

Should local governments be in the job of negotiating commercial building leases? Most of us would say, “Of course not,” but that’s exactly what city leaders in Jonesville, Michigan are doing. Jonesville is a typical older small Midwestern city; established in the 1800’s with a current population in the neighborhood of 2,200. If you go to the Jonesville.org web site you’ll see the usual tabs for city meetings, schedules for brush pickup and photos of a downtown streetscape. You’ll also find commercial real estate listings. According to Dave Ivan, the city is an active participant in bringing small businesses together with downtown real estate opportunities.

Like many of our older cities and villages, Jonesville struggles to keep its downtown vibrant. But unlike many places, the city doesn’t sit back and wait for commerce to happen. City leaders take an active role. And the result? Jonesville has an old-fashioned-looking, but modern and vibrant downtown with a growing business base.

Dr. Ivan rattled off other communities that went off the usual track to get things done, including a small town in Kansas where the city built and owns the one and only grocery/convenience store, as well as builds and sells housing (at cost) to attract young people.

The role of local government isn’t limited to snow plowing and brush pickup. In a representative democracy, the role of local government is whatever your citizens need it to be. Does your community need housing, but can’t attract a developer? Consider the village being the developer. Are you a “food desert,” without a grocery, or even a convenience store? Build one. Don’t wait around for an entrepreneur in shining armor or a state politician waving a grant application; take the initiative and do it.

I’d like to propose a simple four-step process for you as a village leader when faced with a problem no one seems to be solving: 1) Does this thing need to be done; would it help your community remain viable? 2) Is someone already doing it? 3) Is there community consensus that it needs to be done (consensus does not mean unanimity)? 4) Can it be done from a legal and financial perspective? If the answer to questions 1, 3 and 4 is yes and the answer to question 2 is no, then do it!

Stop waiting for someone outside your community to come to your rescue; they’re either busy rescuing someone else, or they’re just not interested in your particular village. There are resources available to Wisconsin communities through state and federal agencies, regional economic development organizations and the powerful private marketplace. But those resources don’t come to you; you have to go after them. And don’t sell yourself short; you have resources too. The most important resources you have are your sense of your community and your concern for the people who live there today and tomorrow. Those people are expecting you to lead them. Lead!

I attend a lot of meetings and conferences where big problems are discussed and a variety of solutions are displayed. There’s a common element to the solutions. What I hear over and over again are not success stories that came to the community from without; they are success stories that started from within. They were started by a village president who kept asking questions until someone said yes. A city administrator who wouldn’t accept the “fact” that “we just don’t do that here.” Or a mayor who wouldn’t quit when told, “businesses aren’t interested in downtowns anymore.”

Successful municipal leadership isn’t magic, genius, luck or a gift from the State Legislature. It’s persistence. It’s hard work. It’s an unspoken vision of a community handed to your grandchildren in better shape than it was when you took office. That’s your job.

Another Dark Store Attempt Fails

Once again, the traveling troupe of Dark Store tax attorneys and appraisers-for-hire has failed to persuade a local judge. On April 4, 2019, Portage County Circuit Judge Thomas Flugaur dismissed a national chain store’s attempt to have its property tax bill cut in half. Lowe’s Home Centers, LLC claimed that the Village of Plover was charging them property taxes based on twice the actual value of their property. Judge Flugaur wouldn’t bite. The Judge’s decision is here.

Although the village “won” this case, it wasn’t free nor was it easy. It cost the village more than $80,000 to hire the expert attorneys and appraisal specialists that were needed to win a four-day trial. As with other Wisconsin Dark Store challenges, the cost of defending the assessment plays a practical and significant role in deciding whether or not to negotiate a settlement. Many times the municipality chooses to settle, rather than incur the cost and risk of a trial. Other Dark Store appeals have cost even more than Plover’s to defend against.

The Plover case played out similarly to other Dark Store road show performances. The property owner offered up a smorgasbord of vacant, boarded-up properties as “comparables,” including one former department store that had been vacant for four years. The Village countered that the property in question was in the middle of a popular shopping district that had a very low vacancy rate; by no means was it comparable to a dark property. In the end, the judge decreed that none of the properties offered by the paid experts were truly comparable. Under Wisconsin law, that finding next leads to an assessment of the cost of the property; what it would cost to build a comparable store.

Under the cost approach, it seemed that the two sides were in agreement. The Village’s cost-approach figure was $8.5 million; the property owner’s expert came up with $8.9 million. (Both figures exceed the building’s actual assessment value.) But then, the property owner’s hired expert took his estimate one step further, claiming that the property had to be devalued by 50% due to “functional depreciation” of the property. The judge tossed that discount out, pointing out that the $8.5 million and $8.9 million figures both already accounted for depreciation. (The Lowe’s building has been standing for 10 years.)

In his decision, Judge Flugaur repeatedly quoted from the Wisconsin Property Assessment Manual, which states, among other things, that “The assessor should avoid using sales of improved properties that are vacant (‘dark’) or distressed as comparable sales unless the subject property is similarly dark or distressed.” So, once again, despite a local tax assessment that was done “by the book,” treating the property owner fairly, a major retailer sued the village, forcing it to incur tens of thousands of dollars to defend other taxpayers from a tax shift. On behalf of taxpayers in Plover and dozens of other cities, villages and towns that are under similar assault, we respectfully but urgently ask that the Wisconsin Legislature take up and pass the Dark Store legislation to make it clear once and for all that the Dark Store Road Show is over.

Wisconsin is Over-Reliant on the Property Tax

This week’s Local Perspective blog post is by Sharon Eveland, City Administrator, City of Clintonville

If you ask someone in my community what they think about their local government, one of the first things they will likely say is “our property taxes are too high” and they would be right. When I first moved here from Georgia, I was shocked by how high property taxes were here, and by here, I mean all over the state.  The house I currently live in is assessed at about $10,000 higher than the house I owned in Georgia and yet my property tax is twice as high!  I got curious and started looking in to why that might be and I quickly realized how local governments in Wisconsin are forced to rely almost exclusively on the property tax for raising revenue.  Well of course our property taxes are high! When you throw in the fact that the second largest portion of many municipalities’ revenue is state aid and consider that municipalities have no control over that revenue stream, it’s a recipe for disaster.  If the State decides to decrease what it gives us, we are left with one of two options: reduce services or increase our property tax levy.

And let’s be clear.  Increasing our levy is not as easy as it sounds because the State restricts our ability to do that as well.  Under current State law, we can only increase our levy be the rate at which we experience new development, specifically our net new construction rate.  What this means is that if you are a municipality that doesn’t experience growth, as is the case in Clintonville, you cannot increase your levy unless you meet one of the allowance requirements.  The most common of those allowances is for debt, which allows a municipality to increase its levy by the amount it needs for its debt payment.  Seems legit, right?  Wrong.  What this structure has done is forced municipalities to rely on borrowing for its major capital projects, rather than levy for them year to year.  As Appleton Mayor Tim Hanna has said, “Levy limits are making us debt junkies.”  It’s great for the banks and investors, but not so much for the taxpayers.  We are making future generations pay for the purchases of today, and even worse, making them pay more for it because of interest.  And to cap it all off, the State limits a municipality’s ability to borrow by restricting its debt capacity to five percent of its assessed value.  For the City of Clintonville, that’s roughly $10 million and we are currently at approximately $6 million.  Now, I want our taxpayers to know that the Council is firmly committed to reducing its debt and we have been working very hard to secure grant funds and find creative ways to make do with what we have, but it is a long process and one that is constrained in many ways by the State.

Recently, the Wisconsin Policy Forum, a non-profit engaged in nonpartisan, independent research on fiscal and policy issues affecting governments in Wisconsin, issued a report called Dollars and Sense: Is it time for a new municipal financing framework in Wisconsin?, which was funded by the League of Wisconsin Municipalities, Wisconsin REALTORS Association, and Greater Milwaukee Committee, to look at Wisconsin’s reliance on the property tax and whether a different revenue generation structure was needed.  The report found that of the twelve states in the Midwest region, Wisconsin had the highest reliance on the property tax of all twelve states and was ranked seventh nationally.  Wisconsin also has the lowest sales tax average of all twelve Midwest region states.  In Georgia, I lived in a county with a sales tax rate of 8% and according to the Georgia Department of Revenue, only two counties in the entire state have a rate of less than 7% as of April 1, 2019 and a couple were just shy of 9%.  The State sales and use tax is only 4%, meaning anything above that stayed in the county where the purchase was made and is apportioned between the municipalities and the county government based on an agreed upon formula.  So the money stayed where it was spent.  More importantly, the residents have to vote to approve these sale tax increases so it’s not forced upon them.  In addition, the sales tax is able to help offset the cost providing services to visitors and commuters who do not reside in a particular municipality but utilizes its services.

On average, Wisconsin municipalities receive about 42% of their revenue from the property tax and in Georgia it’s about 27%.  This is why my property tax bill in Georgia was significantly less than my tax bill here for a home of roughly the same assessed value.  While some would argue that the State should just increase its state aid, which, by the way, when it was originally implemented was supposed to have 90% disbursement to local governments, I don’t believe that’s the right move.  Yes, I think there should be more distribution to local governments but I don’t want Clintonville to be any more reliant on the what the State decides to dole out than it has to be.  And just like an investment advisor would say, we need to diversify.  Municipalities and county governments shouldn’t be forced to put all their eggs in one proverbial basket.  The voters should have a say and by not even allowing that option, the State is telling the people it doesn’t matter if you want this, we’re not going to let you decide for yourselves.

Waupaca County, which has the half percent sales tax, collected a little more than $3.7 million in sales tax revenue in 2018 and has averaged $3.5 million over the last five years.  Just half a percent!  Assuming the sales tax revenue trends here continue, an 8% sales tax would generate about $22 million a year.  I’m not saying we should jump straight to that rate but I think it’s important to understand the potential financial benefit that could be derived from a sales tax, which could include property tax relief.  The total 2018 tax rate for a parcel in Clintonville is $27.13 and the City’s portion of that is $10.08, but we’re not alone.  What we are doing to raise revenue at the local level clearly isn’t working and we can’t continue.  Wouldn’t it be nice if we could finally find a way forward that doesn’t put so much emphasis on the property tax and puts more control in the hands of the voters?

 

Sharon Eveland
Clintonville City Administrator

Budgeting in Eden is No Paradise

Imagine being faced with a $460,000 tab for street repairs knowing your tax levy will total just $34,000? Welcome to budgeting in the Village of Eden.

Wisconsin’s small villages are often caught in this financial trap, with levy limits on one side and old infrastructure on the other. Communities that for years prided themselves on keeping property taxes low now find that when it’s time to replace main street or a sewer main, the levy limit law is a barrier. The only way around the barrier is to borrow money; effectively putting today’s problems in the laps of tomorrow’s residents.

The Village of Eden is a small community just Southeast of Fond du Lac with a population of around 900. According to Census bureau estimates, it’s growing, which is unusual for a small village in rural Wisconsin. In fact, the village’s slogan is “A place to grow.” Unfortunately, that “growth” doesn’t extend to the village budget. Under Wisconsin levy limits, Eden will see an allowable levy increase in 2019 of zero. According to the Wisconsin Department of Revenue, Eden’s “net new construction” growth in 2018 was a negative 0.26-percent, meaning it would not be allowed to increase its tax levy in 2019. The village will rely on borrowing and a small wheel tax for any funding increases. Efforts to attract grants have failed, due in significant part to the village’s small population.

Unfortunately for Eden, costs will not remain at zero. The state is rebuilding Highway 45 and village must pay $460,000 for its share of the work (Highway 45 is one of Eden’s main streets). In addition, for the past two years, Eden has been forced to borrow money to operate. The village has over $1.7 million in outstanding debt and will be required to pay for the replacement of a seventy-year-old water main. There is no money to pay for new hiring or other costs. The village’s sole computer was ten years old before it finally acted up once too often and had to be replaced.

Eden is a typical small Wisconsin community. It serves an area that is primarily agricultural, with some suburban influences owing to the short 20-minute drive to Fond du Lac or 30-minute drive to West Bend. You can rent the village park for a family reunion and the village president has been known to shovel sidewalks in the winter when needed. It embodies the values that Wisconsin points to with pride: small town, strong work ethic, conservative when it comes to spending. But there are limits.

In a report submitted to the League and posted on our website, the village pleads with state policy makers to, “PLEASE FIND A WAY TO HELP THE SMALL COMMUNITIES THAT HAVE BEEN TRYING TO KEEP TAXES LOW.”

Columbus makes the levy limit case

The City of Columbus is a typical Wisconsin community. It’s an attractive, small-but-not-too-small city of 5,000 people straddling the Columbia-Dodge county line. They have an interesting downtown, a great library, an Amtrak station, the Christopher Columbus Museum, an aquatic center and a river (the Crawfish). They’re also being strangled slowly by state-imposed levy limits.

In 2018, the state granted Columbus permission to increase its levy by the percentage of “net new construction” that took place the year before. In this case, the allowable increase was 1.861 percent (inflation in 2018 was 2.44%). That translates into an additional $45,000 in spending authority for the City’s $4 million budget. Put another way, it’s almost enough to pay just about half of the increased health insurance premium for city staff and nothing more. And 2018 was a typical year.

Columbus, like most Wisconsin cities, villages and towns, has not seen a levy increase equal to inflation in over six years. As a result, the city has been slowly but surely reducing its long-term maintenance and services to residents. The changes have been subtle, but they’re starting to show.

“We are running our Public Works Department with equipment we purchased in the 1990’s,” says Kim Manley, the City’s Director of Finance and Treasurer. “It should be replaced, but there’s just no budget for that. We are, however, spending thousands of dollars each year on maintenance to keep that out-of-date equipment working.”

The city’s street repair budget is almost non-existent, and the roof over the Senior Center should have been replaced years ago. As for personnel, the city hasn’t been able to offer meaningful raises to its employees for years, and all of its salary ranges are lagging behind the already-competitive labor market.

“In the real world, we should be setting aside a little money each year so that larger purchases or projects can be funded, or at least partially funded without the city going deeper into debt. But with levy limits, I can’t set aside any dollars for needed new police squad cars, the roof or that old equipment. We scrimp and save every penny.”

Manley told us that the problem is building on itself. “Every year we have to say we can’t afford to do something or maintain something – then another year goes by and we are still trying to maintain the core services at our minimum levels. Our debt continues to grow and it’s concerning to me as a Finance Director to know that we’re putting our community in this type of situation.”

In the Governor’s proposed budget, cities, villages, towns and counties would be able to come closer to keeping up with inflation. The budget proposes restoring a 2% “floor” for property tax levies.  The League supports that change for the sake of cities like Columbus.

You can read more stories about the many communities in Wisconsin that are in Columbus’s shoes (or worse) on our web site https://www.lwm-info.org/1552/Levy-Limits-Time-for-a-Change.

#LWM2018 Comes to an End

Well that is a wrap. The 2018 League conference has come and gone. We wrapped up the day with some breakout sessions and we got to hear for the keynote speaker, Jason Kotecki. Jason’s inspired us to step out of our comfort zone and try new things. As local leader we need to enact change. However, that is easier said than done. That is why we need to tinker around when we have an idea, even if it just means starting small. Not all innovative changes have to be Earth-shattering. He also reminded us to not let the “adultitis” set in. In life we do not have to be serious and uptight all the time. If we take ourselves too seriously all the time, then we might miss out on a lot of opportunities in life. If we have a similar mentality when we are governing our municipalities and say things such as “we can’t do that, that’s too impossible,” then we are setting up ourselves to possibly passing up an opportunity. The saying that comes to my mind is, “you’ll never know until you try.”

After the keynote speaker, we had the Just Fix It, Turn Out for Transportation Luncheon. Thanks to the Transportation Development Association for allowing us to have this space to discuss what needs to be done to solve the State’s transportation funding challenges. It was great to hear from current assembly representatives when they reiterated that solving the transportation issues is a not a partisan issue. So, we will have to see what is in store for the future state budget after the November elections. Hopefully, the outcome will have a positive impact on our local communities.

I have done a lot of self-reflection over the past few days. I have been rejuvenated with new energy and I have a lot of new ideas that I want to share with my fellow council members and city staff. I hope that the ideas that I gained throughout the conference will make Sheboygan a better place. All of us that have a passion for our communities are making Wisconsin a better place, because we all share a common vision to move our communities forward.

I want to give Jerry Deschane a shot out and thank him for letting me take over his blog for the week. Also, I want to thank the League staff and all their hard work to make this conference a success.

I hope that you enjoyed this conference as much as I did. I know that next year will be just as great. We will see you in Green Bay in 2019.

-Ryan Sorenson, Sheboygan City Council