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Impacts of Levy Limits

Posted on: March 7, 2019

City of Kewaunee


How does the levy limit impact your community's services?    A new report issued by the Public Policy Forum clearly shows that Wisconsin is more dependent upon property taxes than any other Midwestern states. In my opinion, this fact puts Wisconsin, as a whole, at a strategic disadvantage when competing economically with other States and gives our rural municipalities like the City of Kewaunee a double whammy as we are unable to expand out tax base. In my opinion, the number one issue facing Kewaunee and all other small, rural, low growth municipalities and school districts in Wisconsin is the funding caps. These must be lifted or provide a little flexibility. Our City's growth has been about zero but, the cost of living has increased about three percent every year. So, when figured for inflation, Kewaunee is falling behind every year due to our small growth and the state imposed caps. Therefore, low growth municipalities like Kewaunee should be allowed to spend to a level, at a minimum, to cover cost of living increases. As an example, Kewaunee passed a referendum for a $176,000 increase in 2016. Given that our annual budget is $6 million, that referendum increase was expended in just Cost of Living in that one year. ($6 million times 3% = $180,000) In 2017, Kewaunee had zero percent growth and no referendum, so we had to chop $180,000 in services just to keep up with inflationary costs of other services. In 2018, we increased the levy to cover $200,000 in debt. Given the financial trajectory that Kewaunee is on, we may very well hit our debt limit in a few years. (this is also an important point because there is a built-in incentive with the budget caps for slow growth communities to go into debt. However, sooner or later those communities will hit debt ceiling) Once they hit their debt ceiling, those communities, Kewaunee included, will have to go to referendum each and every year just to keep up with inflation or continue to eliminate necessary services. The excuse the state legislature gave for capping local spending was the precipitous rise in property taxes. But our state representatives needs to know (if they don't already), that rise in property taxes was caused by the legislature never funding schools districts to the required sixty six and two thirds percent level for nearly forty years. The budget caps put schools and municipalities in the same financial boat. What the legislature has done over the course of the last several years is to penalize local units of government and schools for the lack of fiscal accountability by the legislature. Added to this problem is the consistent erosion of home rule. In my opinion, the funding caps are just one extreme example of legislature's undermining of local control which has so narrowed the ability of locals to have an impact their own destiny.

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