Council supports resolution to fix the broken system of funding local services
DATE: December 22, 2022
TO: Local Media Outlets
FROM: Rebecca Houseman LeMire, City Manager
RE: Council supports resolution to fix the broken system of funding local services
The Fort Atkinson City Council showed its support for a resolution, Tuesday, urging the Wisconsin legislature and governor to fix the broken system of funding critical local services in the state of Wisconsin.
In November, Wisconsin voters considered more than 250 referendum questions, approving some of them in record numbers and changing the course for their local governments for years to come, according to the Wisconsin Policy Forum. They also reported, 104 of the referenda asked voters to allow a school district, town, city, village, or county to exceed state limits on local property taxes. In unofficial vote tallies, 82 of them, or 78.8%, passed. In approving them, voters authorized at least an additional $11.4 million in municipal and county property taxes for services such as public safety, as well as up to $299.6 million to operate K-12 schools and up to $1.4 billion in new debt for school buildings and other projects.
The City of Fort Atkinson asked voters to make the tough decision to increase taxes to fund a full time Fire/EMS department and two additional police officers to keep the City safe in April 2022. Some of those new public servants have already started working and the rest will begin their jobs next week.
“We are grateful the voters in the City of Fort Atkinson stepped up to support our emergency services, but that’s not the way local government services should be funded,” said Rebecca Houseman LeMire, City Manager. “Over the last 20 years, state aid for police, fire and other critical services has steadily declined in real dollars, while inflation has caused average prices to increase by 51 percent.”
Currently, local governments are primarily funded through property tax revenue and intergovernmental revenue (state shared revenue). Wisconsin is the only state in the country that funds critical first responder services largely from property taxes. The chart below shows the sources of funding for the City of Fort Atkinson’s General Fund for 2023. Sixty-eight percent of the City’s budgeted revenue comes from property taxes and 19% comes from intergovernmental revenue, for a total of 84%.
Property tax revenue is limited by “levy limits” imposed by state law. This law limits the local government’s ability to increase property tax revenue to the percentage of net new construction for the prior year. In 2022, the City’s net new construction number was .34%, which equated to an allowable levy increase of $22,067.58. Several of the City’s contracted services, such as garbage and recycling collection, are tied to the increase in the Consumer Price Index (CPI) and increased more than the City’s allowable levy increase.
The statutes allow for local governments to borrow funds outside of the levy limit and to seek voter approval for an increase in property taxes through the referendum process. The City of Fort Atkinson took both of these steps in 2022, which are reflected in the 2022 tax bills mailed out on December 15th and due in 2023. However, borrowing is not an appropriate way to fund annual operations; and the approved public safety referendum amount of $769,335, will never increase.
“These are not growing or sustainable funding sources,” LeMire stated.
The other major source of revenue for local governments is state shared revenue, which has decreased substantially over the last 20 years statewide. Seen in the chart below.
For the City of Fort Atkinson, municipal aid has been stagnant over the past ten years. The maximum differentiation from 2013 to 2022 is just over $4,000. The funding for county and municipal aid in 2003 was $938,529,507 and today it is $753,032,613. County and municipal aid payments to the City of Fort Atkinson has dropped from $956,453 in 2013 to $954,318 in 2022, while inflation continues to increase.
The chart below shows the increase in income and sales tax collections by the state compared to the state support of critical local services through shared revenue. Over the last 30 years, the yellow line representing shared revenue has decreased while the blue line representing state taxes continues to increase. The state is projecting a $6.6 billion state budget surplus as of November 21, 2022.
“Over reliance on property taxes to pay for critical local services must end,” LeMire said. “Local governments need reliable, growing, sustainable and diverse sources of revenue to continue to deliver top notch police, fire protection, ambulance services and safe streets now and into the future.”
To learn more about the City of Fort Atkinson budget go to www.fortatkinsonwi.gov and click on the Forms and Documents section.