Where New London’s wheel tax goes
Think tank claims money not spent on roads
By Scott Bellile
City officials say an online article alleging New London fails to spend its wheel tax revenue on street repairs is inaccurate.
The John K. MacIver Institute for Public Policy, a Madison-based conservative think tank, published a piece on its website Sept. 4 titled “What Did New London Spend Its Wheel Tax Money On? Because It Wasn’t Roads.”
The piece argues New London’s wheel tax “clearly got spent on something other than roads.” MacIver News referenced budgetary documents found on the city’s website and YouTube videos of New London City Council meetings, but did not speak to city officials for the article.
The article states New London’s 2018 budget does not include a $184,000 increase in road projects to account for the anticipated wheel tax revenue. It also claims the city “dumped” the dollars generated from the $20 municipal vehicle registration fee into the city’s general fund rather than a special purpose fund.
According to Judy Radke, finance director for the city of New London, the wheel tax revenue appears in the 2018 budget, not under general fund revenue but in its own account under capital fund revenue.
“It just makes sense for the city to do that,” Radke said of the placement in the capital fund. “It’s a brand new revenue we are unsure of and is restricted, and that’s why we put it in as its own line item in the capital fund.”
Radke used the word “unsure” to describe the total wheel tax revenue because the $184,000 figure was a rough estimate, based on information the state provided the city when the wheel tax was enacted last September.
The total revenue will not be known until the city receives all residents’ payments by the end of this year, Radke said.
After the first year of collecting wheel taxes, New London will better understand much money the fee truly generates and then plan road projects accordingly, New London Mayor Gary Henke said.
“Judy doesn’t generally let us spend money unless we’ve got it, and until we find out how much we’re getting in wheel tax [revenue], we don’t want to spend that money,” Henke said.
The total wheel tax revenue for 2018 could land closer to $155,000 or $160,000, Henke said, because the original $184,000 estimate included registered vehicles in surrounding towns. People who live in municipalities such as Mukwa and Lebanon do not pay the wheel tax despite having New London postal addresses.
In the first half of 2018, the wheel tax generated $83,500 from city residents. The second half of the year could look similar, but Radke said that will also depend on how many residents buy vehicles.
MacIver News drew attention to a budget decrease this year for the public works department, which handles street projects.
Radke said that drop was due to wage decreases in public works. The decrease resulted from consolidating the public works and parks and recreation department heads into one position and filling the void by hiring part-time workers – two of which were in the buildings and grounds department’s budget and do not earn benefits.
One project done, more scheduled
One project was completed to date using wheel tax dollars: a “smear patch” on House Road in northeast New London. New London pitched in $15,000 to the project that was shared with the town of Liberty.
The next two projects – improvements to the roadway at the High Street and Industrial Loop Road railroad crossings – are in the engineering stages. Together they could cost an estimated $97,000.
MacIver News’ article notes the two railroad crossing projects were first proposed seven months after the 2018 budget was passed.
Radke said that is OK. Wheel tax-funded projects can be selected throughout the year, and wheel tax revenue can also accumulate and be spent in later years.
That will be the case with two street reconstruction projects planned in 2019: Cedar and Northridge streets, which intersect about a block south of Walmart.
The combined cost estimate to reconstruct these two streets is $224,000. One year of wheel tax revenue alone would not cover that amount, so Radke said the projects would be funded with a combination of 2019 and 2018 wheel tax revenues.
In regards to the aforementioned railroad crossing projects, MacIver News indicated Canadian National should pay for them because the company owns the crossings.
According to New London Public Services Director Chad Hoerth, CN owns 50 feet of road each way at the crossing. He said he informed CN of the crossings’ conditions and asked if the company planned to improve them in the near future, to which CN responded no.
High Street and Industrial Loop Road both serve major industries, Hoerth said, so he plans to ask CN to share costs with the city to improve the crossings. If CN declines, Hoerth said the city might scrap the Industrial Loop Road rail crossing project but still reconstruct the High Street crossing because a city-owned storm sewer is pushing up beneath the road, causing bulging.
The city has not ignored road repair projects, Radke said. Rather, one major project is happening this year, the 1-mile Division Street reconstruction, which was planned at least a year before the wheel tax was approved.
Radke said in theory, the city could have put the entire first year of wheel tax revenue toward the Division Street project’s $2.5 million price tag. But city officials believed residents would rather see it spent on more streets.
City ‘strictly following the law’
In Wisconsin, wheel tax revenue must be spent on “transportation related purposes.” State statute does not define those.
Municipalities have interpreted such purposes to include expenditures beyond roadwork such as buying vehicles for city staff and improving public transportation.
Last December, the New London City Council passed Resolution No. 1345 declaring city wheel tax revenue can only be spent on maintaining, constructing and reconstructing roads and sidewalks.
Curt Witynski, deputy executive director and former legal counsel for the League of Wisconsin Municipalities, said New London is “perfectly in compliance with the state law requirement that local vehicle registration fee revenues be spent on transportation projects only.”
“There is no story here. There is no mischief. In fact, just the opposite. The city is strictly following the law with regard to spending registration fee dollars,” Witynski stated in an email to Henke, Radke and Wisconsin Rep. Robert Brooks, R-Saukville, who brought the article to Witynski’s attention.
The Press Star contacted William Osmulski, author of the MacIver News article, for comment Monday, Sept. 10.
“You can try to spin this all day, but math doesn’t lie,” Osmulski said. “If you collect an extra $184,000 specifically for roads, then your road budget needs to increase by $184,000. That didn’t happen. The money didn’t end up in the fund balance either. It was clearly spent, and it wasn’t spent on roads.”
Henke said he believes MacIver News’ article is “extremely misleading.”
“It was unfortunately written,” Henke said. “It’s easy to lie with figures depending on your point of view.”