A brutal budget season
re citizens in northern Wisconsin not important? Are school children in northern Wisconsin not important? We say, yes, they are important. That’s why Gov. Tony Evers and the state legislature have to ditch both levy limits on counties and municipalities, as well as revenue caps on school districts.
Back in the 1990’s, state government, responding to a public outcry over property taxes, imposed tax restrictions on local government. One-size fits all tax caps were imposed to control property taxes. The state told schools they could spend money based on how many students were enrolled. If a school had more students, it could spend more. If it had less pupils, then it had to cut budgets. Counties and municipalities were likewise forbidden from raising their property tax levies–except by the percent of new construction in their jurisdiction.
These state-imposed tax caps have been in place for nearly two decades. The result, as we have slowly seen, is that northern Wisconsin schools and communities suffer disproportionately under these “top-down” restrictions.
The reason is simple. The tax cap formulas favor population growth and community development. That’s not northern Wisconsin.
Use STH 29 as a dividing line across Wisconsin, separating the north from the south. Then check out 2019 net new construction percentages in Wisconsin’s 72 counties. The southern 47 counties had an average net new construction percentage of 1.46. The 25 northern counties, including Marathon County, had an average net new construction percentage of 0.98 percent. What does this mean? It means that southern Wisconsin counties and municipalities can raise their taxes half as much more as northern Wisconsin counties and municipalities. Every county, city council and village board wants and needs money to pave streets, pay police and improve their communities. Under state rules, however, you can do that better if you live in the south.
More state rules add insult to injury. The more development a community has, the more state aid it receives. Thus low-growth municipalities, like those in northern Wisconsin, get fewer state dollars. This impacts local budgets. The Wisconsin Policy Forum reports high growth municipalities increased total spending by over 18 percent in 2011-16, six times the percentage of low growth communities during the same time period.
Schools are subject to similar discrimination. Sixty-five percent of all Wisconsin school districts have experienced declining enrollment since their implementation in 1993, but, if you look at a map of school districts, it is easy to see that revenue caps have hit the state’s northern tier hardest. Most northern school districts have seen more than a 10 percent decrease in students between 2006 and 2018. There are some growth pockets, of course, mostly in the districts east of the Twin Cities, but, generally, northern counties have seen a loss of pupils. Go south, the story changes, especially in Dane County and in the Milwaukee suburbs. Many school districts there have seen double digit student increases in the 2006 to 2018 period.
We no longer see the justification for unfair tax restrictions on local government. Maybe there was a need two decades ago, but no longer.
The Wisconsin Policy Forum reports that Wisconsin’s state and local taxes in 2018 have fallen to the lowest percentage of personal income in nearly 50 years. These taxes now account for 10.5 percent of income, down from 10.6 in 2017.
We say it’s time to take a break. This past month, we witnessed a brutal budget season, where Marathon County and local school districts, all under pressure from tax caps, ran deficit budgets, borrowed money and skipped normal maintenance. None of this should happen when the economy is at the peak of the business cycle. These local governments should be able to pay for standard services that people expect.
Northern Wisconsin communities have unique challenges as traditional industries, including logging, paper and dairy, are fading and populations thin across the state’s top tier.
The state should be a partner to help these Up North communities transition to new industries, new ways of life. Let the tax restrictions go.