Last updated on May 13th, 2019 at 02:36 pm
Well, here we go again. TABOR, or some form of it, is back on the table in the Wisconsin legislature. While I have serious problems with such legislation in general and am sure that it will have negative consequences for both taxpayers and state/local government, I am most frustrated with the narrow scope of the discussion surrounding the TABOR debate.
TABOR, of course is the Taxpayers Bill of Rights. As both a member of Wauwatosa’s Common Council and an academic who writes about and teaches fiscal policy in the Masters of Public Administration Program at the University of Wisconsin-Oshkosh, I would encourage a broader discussion about local fiscal policy change in Wisconsin. Included in the discussion should be the relationship between state and local fiscal policy (remember the Kettl Commission?), as well as current local government budgeting practices.
Key to the discussion about state and local fiscal policy is the shared revenues program. Much of my research over the past six years has been on the impact of Wisconsin’s shared revenues program on local spending. It is important to understand that both in terms of the amount (nearly $1 billion annually) and the lack of strings attached to this aid (local governments can spend the money on whatever they see fit), Wisconsin is unique when compared with other states.
There has been a tendency over the past years to treat property tax limits separately from shared revenue payments. This is not practical in Wisconsin for the simple reason that local governments have limited revenue options. So, when state lawmakers freeze shared revenues, as they essentially have done since the mid-1990s, it should not be surprising that property taxes rise at a faster rate.
Given past behavior, what can we expect from more property tax restrictions, no increase in shared revenues and, if the current proposal moves forward, limit on growth in fees and debt service? At least in the short run, I predict that funding for services such as culture, education parks and recreation will be reduced. Now, since this has already been occurring since the mid 1990s due to the shared revenue freeze, cuts in protective services will probably follow.
From a local perspective, one of the frustrations is that while state lawmakers continue to put pressure on us, our decision-making is usurped. One alternative, albeit a bit more radical, is for Wisconsin lawmakers to instead of getting more involved in local governance through revenue limitations and aid payments, to limit its role by giving communities greater authority over its budgeting practices by giving municipalities more revenue options. The most common in other states is a sales tax.
A local tax for municipalities would enable the state to address some of its fiscal woes by reducing shared revenues and simultaneously provide property tax relief. In addition, it would force local policy makers (including myself) to be more accountable for their budgeting practices in two ways: 1) they would no longer be able to blame the state for the lack of growth in aid payments and; 2) given that sales taxes are sensitive to economic cycles, communities would be forced to budget accordingly.
Where does this leave us? I am convinced that a broader discussion needs to occur in this state about the fiscal relationship between state and local governments.