Photo credit: Andy Arthur
For elected officials, there are few votes that can be more difficult to take than one imposing a new type of tax. So, the sheer number of local governments that have put so-called “wheel taxes” in place in recent years is a sign in itself of how desperate officeholders throughout the state have become to find new money for roads. According to the Wisconsin Policy Forum (WPF), only four local governments had wheel taxes in 2011; six years later, the number had increased to 27.
And it has only continued to go up. Local officials in Eau Claire County became the latest to adopt a wheel tax when they voted on Tuesday, July 17, to impose an additional $30 per year fee on vehicle owners. Across the state, their counterparts in Green Bay are well on their way toward adopting their own $20 per year wheel tax.
Wheel taxes are annual fees that are tacked onto the $75 registration fees vehicle owners already have to pay once a year to the state. The money they raise is usually, though not always, set aside for the construction, maintenance and repair of roads. Eau Claire County’s new $30 wheel tax is projected to begin raising about $2.4 million a year after it takes effect Tuesday, Jan. 1, 2019.
In explaining their reasons for adopting a wheel tax, local officials invariably tick off the same list of complaints. Despite the boost they received for local roads in the latest state budget, they’ve generally seen such aid stagnate in recent years. When the rising cost of construction materials is considered, the money put toward these sorts of projects has actually dwindled in real terms. Adjusted for inflation, state aid for local projects decreased by $39.4 million from 2007 to 2017, according to the WPF. That’s true even though the nominal amount of money set aside for that purpose increased from $412 million to $447.7 million over the course of the same decade.
Gas Tax Stuck in Low Gear
The backdrop to all this is the state’s gas tax. It has remained at 30.9 cents a gallon since 2006, and the Republicans who control the state legislature have, for the most part, refused to even consider raising it. In addition, local officials are further hamstrung by the state’s caps on property taxes, which have been in place since 2005. The caps bar many local governments from increasing their property tax collections by a meaningful amount in any given year.
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Attempts to go outside those limits have landed local governments in legal trouble. Brown County is now in court after being sued by a local taxpayers group and the conservative legal organization Wisconsin Institute for Law and Liberty over public officials’ decision to adopt a half-cent sales tax to pay for priorities that might normally be covered by property taxes, including road and bridge work. When such uses of local sales taxes are set aside, about the only option local governments have left is the wheel tax. Of the officials who have recently voted to adopt such a tax, it’s safe to say none has taken the decision lightly.
Eau Claire County Supervisor Gerald Wilkie said he has tried for years to overcome the public’s and his fellow officeholders’ understandable skepticism about a new wheel tax. His success in his push for a $30 per year wheel tax was far from a cause for celebration, he said, but it was a chance to remind the public that the alternatives were even less palatable. “You have the option to continue to have your roads deteriorate to the point that, in the long term, you are going to have to tear up all the roads and do a full reconstruction,” Wilkie said, “and that ends up costing the taxpayer more money, and you are living with extremely poor roads. Another option is to essentially gut the valued and important services in your community to come up with sufficient funds.”
Less Money, More Potholes
Local officials are not the only ones who are feeling anxiety about the condition of in-state roads. In the latest opinion poll conducted by the Marquette University Law School, 52% of the respondents living in southern and southeastern Wisconsin deemed roads near them to be in either a “fair” or “poor” condition; the percentage was even higher among those living in other places. Of the respondents in western and northern Wisconsin, 66% said they believed nearby roads to be in these conditions.
Eau Claire officials’ justifications for adopting a wheel tax are almost identical to those cited in other parts of the state where such a tax has been adopted. When Milwaukee County Executive Chris Abele pushed last year for a doubling of Milwaukee County’s $30 wheel tax, he contended: “This is the only new revenue stream legally available to the county that can prevent drastic service cuts and allow us to make investments in areas that cannot be ignored, like the opioid epidemic.”
In Green Bay, the arguments in favor of a new wheel tax have been similar, although they've come with a slight wrinkle. Alderwoman Barbara Dorff said Green Bay has for years been using a highly unusual method of paying for road work. Most cities rely on general revenues for public works projects. That ensures the costs are spread over a wide swath of taxpayers.
In Green Bay, though, the cost of such work is often charged directly to people whose properties lie immediately next to whatever stretch of road is being rebuilt. The charges are tacked onto those property owners’ property tax bills, and the resulting costs can be enormous, Dorff said. One of her constituents, a farmer, was billed $122,000 for work to a road running along his property and given five years to pay the total off.
Aside from her desire to get rid of that unorthodox system, though, Dorff generally has the same reasons for adopting a wheel tax as local officials elsewhere: “I think things are getting dire. I believe we have to find a way to do this because we aren’t getting the state and federal revenue we once were.”
Even with local officials having so few options, attempts have been made to impose further restrictions. Last year, a pair of Republican state lawmakers—Rep. Joe Sanfelippo and Sen. Chris Kapenga—introduced legislation that would have prevented local officials from adopting a new wheel tax without first using a referendum to seek voters’ permission. In the end, the lawmakers did not get their way; but, had they succeeded, they would have put up yet another obstacle to raising additional money for local roads.
As long as Gov. Walker and the Republican-controlled state legislature aren’t going to support local road projects, the trend toward the adoption of wheel taxes by local officials will likely continue. Wilkie said his constituents are naturally skeptical when he talks to them about the county’s new wheel tax. Then he explains the alternatives. After that, Wilkie said, they might still not be thrilled, “But they recognize, ‘Yeah, I get why you have to do it.’”
