Wheel Tax FAQ

As you likely know if you've been reading this blog, the City of Appleton's Finance Committee has been working for most of the summer on a reevaluation of the city's policy regarding special assessments. For as long as anyone can remember the city has been passing along a portion of the cost to property owners when a new street or utilities are installed or the street or utility infrastructure is repaired near their property.

Rising construction costs and other factors, however, have led to those assessments becoming increasingly significant and challenging for many property owners. It's not unheard of for a street/utility project to result in over $10,000 in assessments for some properties. Even with the city's five-year payment option, that's simply not a cost some property owners can afford to take on all at once.

On Wednesday the Appleton Common Council will debate one alternative: a proposed $20-per-vehicle "wheel tax." The tax would apply to all cars weighing less than 8,000 pounds and would raise an estimated $1.7 million in annual revenue for the city. Over the last ten years the city has spent an average of around $5 million per year on road repairs, and of that amount $1.3 million per year has been recovered via special assessments.

Over the last few months we've heard a lot of questions about the wheel tax. Below I've attempted to answer some of the more frequent questions I've received.

Why do we need a new tax to pay for street repairs?

As I mentioned above, special assessments have brought in about $1.3 million in annual revenue on average over the last ten years. For perspective, in 2014 the city's total property tax levy was slightly under $38 million, meaning that eliminating special assessments and absorbing this revenue loss with property tax dollars would reduce the general fund by about 3.4%. That's simply not a funding cut the city can afford to absorb without reducing other services.

There seems to be a perception out there that the city can just "cut the fat" and find this money in the budget, but in reality it's not quite that simple. We've already had to cut dozens of staff positions in response to reductions in state aid and levy limitations in recent years, and the impact is still being felt around the city. We also have (per capita) very small police and fire departments and other city departments operating under significant limitations. There simply isn't room in the budget or in our city operations at this point to take on a cut of this magnitude. If we can't pass a wheel tax, it appears pretty certain that we'll need to continue special assessments.

Why can't we just raise property taxes to pay for this?

By state statute, the city of Appleton and all municipalities have a cap on our property tax levy. Raising more than that levy limit requires the voters' approval through a referendum. As such, we simply don't have the ability to decide to raise property taxes to pay for this. If we elect to eliminate special assessments, we have to find another way to recoup this revenue.

Towns, villages, cities or counties are allowed, however, to create a wheel tax as long as all of the revenue collected is used for "transportation related purposes." That's a pretty broad umbrella, but the proposal recommended for approval by the Finance Committee narrows the allowed uses of Appleton's proposed tax to street reconstruction.

Why $20?

As mentioned above, our average over the last ten years has been about $1.3 million collected via special assessments. The actual number fluctuates pretty significantly year-to-year, though, depending on that year's projects and the adjoining properties' ability to be assessed. In addition, construction costs tend to go up from year-to-year, so using the last ten years' cost as a prediction for future expenses will probably underestimate our needs a bit.

A $20 wheel tax is expected to raise around $1.7 million annually, as I mentioned above. Some years that may be more than enough to cover the lost revenue from special assessments, but in those years the extra money will go into a segregated fund to help cover the difference on years where assessments would have exceeded our wheel tax revenue.

What happens if there's extra money?

I'm answering this one again because it's part of an important distinction we made at the last Finance Committee meeting: This money will only be used for street repairs, and if there's excess beyond what is needed to cover lost special assessment revenue it will go into a separate fund to be used to replace special assessment revenue in future years when the cost would have exceeded $1.7 million. This isn't just a "cash grab" or another tool to use to pump extra money into the general fund - it's going to be specifically segregated to be used for its stated purpose.

Why only cars and trucks under 8,000 pounds and not bicycles, motorcycles and heavier vehicles?

Certainly, cars aren't the only vehicles that benefit from having well-maintained roads. However, state statute specifically defines the vehicles we are allowed to charge this fee. The statute includes only vehicles with automobile or truck registration (eliminating bikes and any other two-wheeled vehicles) at 8,000 pounds or less (excluding heavier vehicles).

While I agree that other vehicles have an impact on the condition of our roads, especially heavier vehicles, the statute clearly says that we cannot apply a wheel tax to them.

Will this eliminate assessments on all streets?

No. Early in this process the Finance Committee and Common Council approved a policy that will continue to special assess property owners in new subdivisions when their first permanent street is installed. For most of the 13th district that has happened relatively recently or will happen soon. If you move into a property that doesn't have a permanent street, you will still be assessed for the city hiring someone to construct a street to you.

Under this proposal, however, once that permanent street is installed it becomes the city's sole responsibility to reconstruct it when the time comes. This would be similar to our city policy regarding sidewalks: Property owners pay for the initial construction of a sidewalk, but once it's in the city repairs or replaces it as needed.

What about people who recently paid for their streets?

I understand that this is going to be challenging to accept for some, but the city is not in a financial position to refund past special assessments. As I mentioned above, our budgets are tight. Repaying past assessments or offering to exempt recently assessed properties from the wheel tax simply isn't feasible at this point.

Individually I've explained the situation to a few people with the following metaphor: Imagine for a moment we had everyone on a street come out and put their fingers on their curb, then someone walked by and stepped on them. Halfway down the block, we realize that this is an awful idea. The "fair" way to do it would be to step on everyone's fingers anyway, but that doesn't make it right. At the same time, we can't really undo what's already been done.

There's really no way to eliminate special assessments that's perfectly "fair" for all of the property owners that have paid them in the past. I know some people will be upset about having to pay for their street and a wheel tax, but I hope over time they'll come to understand that if we're going to make a change it has to start somewhere.

But I live on (street name) street and it's not due for reconstruction. Why should I have to pay for everyone's streets?

While you may only live in a building adjacent to one or two streets, odds are you drive on other streets too. Having all of the city streets maintained well is in every driver's best interest.

How can I weigh in on this?

The wheel tax proposal is on the agenda for the Wednesday, August 20, 7 pm meeting of Appleton's Common Council. The meeting will be held in the council chambers on the sixth floor of City Hall, at 100 N Appleton St. If you're attending the meeting and would like to address the council, please come early and sign in on the sheet at the back of the room.

If you're unable to come to the meeting but you'd like to contact an alderperson to share your opinion on this or any other matter, this page contains links that allow you to contact them individually and this page allows you to send an email to all of them.

You can see agendas for all of this week's meetings and the full schedule at the city's Legistar page.

Keeping you informed on issues that may impact you around the city is one of my primary goals as an alderman. Making the council's activity as accessible as possible to as many people as are interested is part of my goal to make it easier for more people to get involved with issues that matter to them.