Wheel tax rolls closer to reality
Ordinance awaits council readings
By Scott Bellile
It appears likelier that city of New London residents will begin paying a wheel tax in 2018 to generate more dollars for municipal road repairs.
At its meeting on Aug. 2, the New London Finance and Personnel Committee recommended that a first reading for an ordinance establishing an annual $20 municipal vehicle registration fee appear on the New London City Council’s Tuesday, Aug. 8 agenda. The council meeting was scheduled to take place after press time.
The city council performs two readings of ordinances, so reading No. 2 would occur at the September council meeting. The wheel tax would then be approved and would go into effect Jan. 1, 2018.
Only vehicles registered to a city of New London address would be taxed. Excluded from taxation under state law are trucks more than 8,000 pounds, antique and collector vehicles, buses, farm trucks, mopeds, motorcycles and motor homes.
The city would receive its wheel tax revenue in quarterly installments from the Wisconsin Department of Revenue, which would take a 17-cent cut of each vehicle registration.
Judy Radke, finance director for the city of New London, told the committee the wheel tax would generate $197,000 in additional annual revenue to repair and replace city roads, or nearly $1 million over five years. This would be on top of the dollars that the city budgets each year for roadwork.
“And that money could only be used for transportation issues,” New London Mayor Gary Henke clarified during the meeting. “We can’t go out and buy computers with it, we can’t go out and use it for art programs, nothing. It’s got to be used for transportation.”
Showing the need with numbers
Finance committee members, who authorized city staff to prepare a draft wheel tax ordinance in July, said at last week’s meeting they’ve been fielding community members’ questions.
Committee members asked city staff to prepare talking points to help them explain to fellow residents the reasons for pursuing a wheel tax.
“I just want to be educated because this is going to be unpopular, but I’m going to stand by it if it’s the last thing I do. I believe in this,” said First District Alderman John Faucher, who proposed the wheel tax to the committee. “I believe it’s the fairest tax of all of them, but I need to be educated … so that I can take those calls.”
Radke said they should tell community members that while the city receives around $300,000 in state highway aid each year, this number has not increased in 10 years.
Meanwhile, the cost for roadwork continues to climb, so “we need to try to find a revenue to make ends meet,” Radke said.
Committee Chairman and Fifth District Alderman David Morack calculated that between 2010 and 2016, the state’s intergovernmental revenue provided to the city that includes roadwork dollars has plummeted by $84,000.
At the same time, the city’s operating costs are up $894,000 since 2010. This is due to project costs, inflation, wages, insurance and cost of materials.
The city says it is not meeting citizens’ expectations as it falls behind on maintaining its 45 miles of roads. So whereas the city currently spends $100,000 a year on roadwork, the added wheel tax revenue would allow it to more than double that.
Radke said a wheel tax would reduce the amount of money the city borrows for road construction through bonding because there would be more dollars immediately on hand to cover projects. This would reduce the city’s interest payments.
Henke said this approach would allow the residents who are actively living in the city and using the roads in the moment to cover roadwork expenses, rather than burdening the future generations with the debt incurred from bonding.
Council members’ opinions
The finance committee’s first agenda item discussion regarding the wheel tax took place July 5.
At last week’s meeting, committee member and Second District Alderwoman Mary Tate said she was taken aback by how one month later, the committee was already voting to send the ordinance to the city council for a reading. She had hoped for more time to research the issue.
“The people that are going to have to pay it should have more input,” Tate said.
After hearing the wheel tax talking points and answers from city staff, Tate’s joined three aldermen in casting yes votes for sending the proposal to council: Morack, Faucher and Third District Alderman Mike Barrington. Second District Alderman Tom O’Connell cast the lone no vote.
O’Connell expressed concern that the new wheel tax revenue could encourage the city to budget less for road repairs and instead rely more on everybody’s annual $20 tax payments.
Henke assured O’Connell the wheel tax revenue would not replace what the city sets aside each year for streets, but rather supplement it.
Faucher, who made the motion to recommend the wheel tax ordinance’s first reading to council, admitted to the committee that was a “difficult decision.” He joked it could be the end of his political career.
But he said improved roads will lower motorists’ personal car maintenance and repair costs.
“In the long run, for tires and everything, when we get these streets back to where we’d like them to be, people are going to save money,” Faucher said.
A view Tate and Faucher expressed is that a state rule excluding trucks over 8,000 pounds from wheel taxes is unfair considering the damage these vehicles do to city streets.
Henke said it is in a sense fair because drivers of semis and heavier trucks pay a higher license fee, which gets returned to municipalities in the form of state highway aid. Plus, diesel fuel consumers pay a higher federal gas tax.
But he added the city would prefer to tax every vehicle registered within city limits in the name of fairness.
“But we don’t have the power to do that,” Henke said. “The state legislature does, and maybe people [dissatisfied with the exemption] could get on the phone or email or whatever and call their state legislator.”
First District Alderman Robert Besaw questioned the timing of the city passing a wheel tax ordinance. State lawmakers are proposing that a municipal wheel tax would require approval by voters via referendum during a regular election.
Henke answered that lawmakers are also proposing retroactive wheel tax referendums for communities that have already implemented wheel taxes. If the retroactive referendum rule were approved, then New London residents would get to go to the polls and decide whether the city continues or discontinues an established wheel tax.
“And that makes sense,” Faucher said of the retroactive referendum proposal. “I just don’t think that the looming possibility of the state doing that should prevent us from delay. We just can’t keep kicking this to the side and taking our roads for granted.”