Wisconsin municipalities have been forced to navigate restrictive limits on property tax increases for years. These limits have taken their toll on the public infrastructure and community services that municipalities provide.
The levy limit’s negative impact on Wisconsin municipalities will only worsen as inflation increases. While several factors determine how the tax levy limit changes year to year, the foremost driving factor is net new construction. It is unlikely that municipalities with steady or shrinking populations will have net new construction, and because the change in the levy limit does not account for inflation, these levies will remain flat while inflation continues to grow.
Getting Creative
To offset this growing financial burden, municipalities are exploring creative funding options to pay for the infrastructure and services their communities need, including:
Grants, especially from the American Rescue Plan Act (ARPA) and the Bipartisan Infrastructure Law (BIL). Municipalities should take full advantage of these once-in-a-generation federal funding opportunities. Learn more about grant opportunities here.
Fees, especially utility fees. Municipalities should ensure that public utilities charge enough to sustain themselves without siphoning resources from the general fund. Communities interested in a new funding option for roads, sidewalks, and other transportation needs should investigate the benefits of transportation utilities.
Special assessments. These can be used to fund large infrastructure projects in a limited area. Individual property owners who benefit from these projects pay in proportion to the benefits they receive.
Wheel taxes. These are charges added to annual motor vehicle registration fees. Wheel tax revenue can be used to support transportation expenses within a municipality. Wheel taxes are simple to administer, although residents shoulder the lion’s share of these charges.
Up-front fees, most commonly in the form of impact fees. These are charges leveled on developers to pay for the infrastructure needed to support new growth. They fund facilities like libraries, booster pumps, and police stations.
LEARN MORE
To learn more about how your municipality can mitigate the impact of inflation by exploring these creative funding options, please please contact us today.
