Madison Mayor Satya Rhodes-Conway says the $40 wheel tax included in her 2020 budget is one of her only options to gain revenue, short of cutting other essential City of Madison services.
“When I say that the vehicle registration fee is our only option, it is literally the only option that the State legislature has left to us to raise revenue. It would not be my choice; it is not a progressive tax. It would be way better to do something else, but this is the option we have available to us and so it’s unfortunate but we have to use it,” says Rhodes-Conway.
The State of Wisconsin limits the way its municipalities can raise revenue. Municipalities can rely on a property tax, which can be used to fund any part of the budget. Other options include program fees to fund specific programs, or what’s at issue here: a vehicle registration fee that can help pay for the city’s transportation budget.
The revenue raised from the fee would free up $3.5 million in revenue raised through property taxes to go to essential city services. The remaining revenue from the fee would underpin several of Mayor Rhodes-Conway’s high-priority initiatives, like starting Bus Rapid Transit, increasing bus service to under-served areas, and providing over 700 free summer passes for youth.
The fee would be collected every time a City of Madison resident wants to register or renew their vehicle. The state already charges a $75 fee to do so, and charges another $100 for electric vehicles and $75 for hybrids. Last year, Dane County added a $28 wheel tax to fund road maintenance.
This isn’t the first time a Madison mayor has considered a wheel tax. Last year, Madison’s city council rejected a $17 wheel tax proposed by former Mayor Paul Soglin.
But not everyone on the Council is on board with the wheel tax. According to Alder Skidmore, the forty dollar tax is unconscionable.
“It’s the highest in the state, [and] given how we’re going to spend the money, I don’t see any way that I would support anything more than ten, and I’m not even sure I would support ten,” Skidmore says.
Yesterday, Alder Grant Foster announced an alternative to reduce the amount of wheel tax by five dollars. Foster says he thinks it’s “irresponsible” to vote against the wheel tax without providing an alternative way to balance the budget.
“By doing that, along with some other adjustments, we’re able to accommodate a reduced vehicle registration fee of thirty-five rather than forty [dollars],” Foster says.
Foster’s proposal would also have the City include its transit studies in its capital budget instead of its operating budget, and push back the start date of some new city positions.
Alder Rebecca Kemble says she will support Foster’s amendment, but that she’d like state legislation to change so that the wheel tax could be eliminated outright. That could include a sales tax, which is currently limited by the state.
“I see a future where our state legislature is not dominated by Tea Party Republicans and where our state legislature allows us, like most every other state in the country does, to raise money for transit through a regional transit authority and by assessing a very small sales tax,” Kemble says.
Kemble also says that, going forward, the City must work with Dane County to more fairly fund the City’s transportation system.
Alder Samba Baldeh, also circulated a proposed amendment that would make the fee expire in six years.
But Rhodes-Conway says that such a “sunset” provision would hamper the City’s ability to get funding from the State and the Federal government to improve Madison’s transit system.
“One of the ways that we’re going to leverage federal funding is [that] we’re going to apply for $100 million in capital funding for the bus rapid transit system,” Rhodes-Conway says.
“In order to get that $100 million dollars, we have to show them that we can afford to operate a bus rapid transit system, and one of the ways that we’re going to be able to afford that bus rapid transit system is by having a vehicle registration fee. So, if we put a sunset on it, there’s a good chance that we lose that $100 million, so I just don’t think a sunset is a prudent thing for us to do,” the Mayor adds.
The tax would be regressive, meaning that it would be applied uniformly to low- and high-income earners. State law does not allow the city to waive or alter the fee based on income or need.
At their last meeting, the Council’s Finance Committee recommended an indirect proposal to waive the tax for some low-income residents. That would provide $40 gift cards to about 2,500 Madison residents enrolled in the federal Women, Infant, and Children Program.
The Council is deciding tonight whether to adopt a wheel tax.
Update: The Council rejected Alder Foster’s $35 amendment and Alder Baldeh’s amendment to sunset the wheel tax in six years.