Initiative aims to curb debt
By Scott Bellile
Outagamie County will implement a 0.5% sales tax next year following a debate that pitted the county executive against most of the county board.
After the Outagamie County Board passed the sales tax ordinance last month, County Executive Tom Nelson vetoed it two weeks later.
However, county board members voted to override Nelson’s veto, meaning the tax will go into effect Jan. 1, 2020.
The Outagamie County Finance Committee drafted the resolution to enact the sales tax due to concerns over the county’s financial hardships.
Those strains included the county’s inability to contribute $26,600 to the Lake Winnebago Area Metropolitan Enforcement Group Drug Unit, rising health insurance costs and the suspension of a performance-based employee wage increase program, according to the May 7 meeting minutes.
On May 28, the county board passed the sales tax ordinance 28-4 during a four-hour meeting.
Voting no were supervisors Curt Konetzke of Appleton, Christine Lamers of Kaukauna, Brian Peterson of Little Chute and James Duncan of Appleton.
Hortonville Supervisor Mike Woodzicka and Appleton Supervisors Thomas, Kelly Schroeder and Nick Thyssen were absent.
Two weeks later at the June 11 county board meeting, Nelson vetoed the sales tax ordinance, calling it “unnecessary, irresponsible and against the will of the people” in a letter to the county board.
The board voted 32-3 to override Nelson’s veto.
Lamers, Duncan and Black Creek Supervisor Daniel Rettler voted no. Kimberly Supervisor Lee Hammen was absent.
What’s in the sales tax
Outagamie County is among six Wisconsin counties that do not have a sales tax on top of the state’s 5% sales tax. The other counties are Winnebago, Manitowoc, Menominee, Racine and Waukesha.
The sales tax could generate an estimated $20 million for the county next year, according to an analysis by the Outagamie County Finance Department.
The tax could reduce the average Outagamie County property owner’s taxes by 78 cents per $1,000 of property in 2020, or $133.
However, the average household will also pay an estimated $109 annually in sales tax, according to the analysis.
That means in the end, the average Outagamie County household could expect to save $24 per year, according to the analysis.
About 75% of sales tax revenue will come from county residents and businesses while 25% would come from outsiders.
The county anticipates saving $6.5 million in interest payments on capital equipment and projects over the next 10 years by funding them with readily available sales tax revenue instead of borrowing money.
Where the tax revenue will go
The $20 million in sales tax revenue would be split up and applied in these ways:
• $7 million: Reducing the county’s property levy, which is used to fund government operations.
• $5 million: Reducing the government debt service levy, excluding debts for the county’s enterprise funds: Brewster Village, Appleton International Airport, and Outagamie County Recycling and Solid Waste.
• $5 million: Funding government capital projects and purchases, thereby reducing borrowing for these expenditures.
• $3 million: Sharing with local cities, villages, towns and school districts to pay for their own projects, operations and debts.
Disagreement over initiative
“I opposed (the sales tax) for many reasons,” Nelson said. “No. 1, this was jammed through the process. This is one of the most significant changes in county tax and finance policy in many, many years. The day before the vote in the committee, I got a call from a major employer and then later a call from the (Fox Cities) chamber of commerce, neither of whom knew anything about this.”
Proponents of the sales tax argued the process was not rushed because the topic was brought up during budget discussions in 2017.
“No. 2, this is a regressive tax,” Nelson said. “It’s going to hurt those who can least afford it.”
Nelson said Outagamie County’s sales tax will cost “every citizen” $100 per year, and the 35,000 renters who pay it will not see the property tax relief that homeowners will.
Shiocton Supervisor Keith Suprise, who voted in favor of the sales tax, disputed Nelson’s claim that “every citizen” will pay $100 per year. He said the analysis states each household will pay about $100.
Suprise acknowledged that some low-income renters who are in debt may be hurt by the sales tax, but he added that as a county board member, “I can’t help that – that’s not my fault that you’ve got a lot of debt.”
He said the county is always short on money, and the sales tax is necessary to continue funding services such as Brewster Village, the foster care program and the Aging and Disability Resource Center.
“When you say ‘tax,’ everybody is upset, I understand,” Suprise said, “but we didn’t really have a choice.”
Larry Abitz, communications and administrative assistant for the County Executive’s Office, said he and Nelson heard from many residents who opposed the sales tax.
“County government is usually pretty dull. We don’t get a lot of public input on most of the stuff we do,” Abitz said. “Our office got lit up with communications” about the tax.
Nelson said he received 101 messages against the sales tax prior to his veto on June 12, and his contacts disapproved of it by a ratio of 7-to-1.
Greenville Supervisor Kevin Sturn, who chairs the finance committee and voted for the tax, said the constituents he heard from were split on the matter until he explained the alternative is driving up the debt further and sacrificing necessary projects.
“The two words ‘sales tax’ create a lot of emotion, but (if) you sit down and look at it realistically as to why you’re doing it, it seems to be a solid plan going forward,” Sturn said.
The county today is $55 million in debt, compared to $15 million eight years ago, as a result of borrowing money for projects and accruing interest, Sturn said.
Sturn said the county borrowed within $200,000 of its levy cap last year, whereas eight years ago it had $1.2 million available.
The sales tax will reverse the current trends and put the county in a stronger financial position for future generations, Sturn said.
“This is the right thing to do,” he said. “This is getting in front of the trends before you have a crisis … To me, this right here is proactive versus reactive, and I believe that.”
History of county sales tax
In 1986, a county task force charged with finding ways to meet future needs recommended a sales tax as a means of funding county programs.
In 2001, then-County Executive Robert Paltzer proposed a 0.5% sales tax for the 2002 budget.
“My final alternative is the possibility of enacting a sales tax, the option that the State Legislature points to when we complain to them about reduced funding,” Paltzer said in an August 2001 Press Star article.
However, the county board voted down the sales tax.
Paltzer appeared at the May 28, 2019 board meeting. There he urged the county board to pass the tax, saying the county could have funded recent projects without borrowing money had it been implemented 17 years ago, according to meeting minutes.