Transportation utility fee considered
Clintonville seeks new revenue source for roads
By Bert Lehman
The city of Clintonville is soliciting feedback from residents, business owners and property taxpayers about a possible transportation utility.
“Like many other municipalities in the state of Wisconsin and throughout the rest of the country, the city of Clintonville is dealing with a mismatch between budgetary needs and its available revenue,” said City Administrator Sharon Eveland in a March 11 press release.
She said city staff and city council members have received numerous complaints about the streets, but the city does not have available funds or borrowing capacity to properly maintain and improve them.
“Between the state-imposed levy limits and expenditure restraints, the city is left with few options for generating the necessary funds for proper street maintenance and repair,” Eveland said.
She said transportation funding paid for by property taxes places the entire burden on owners of taxable properties.
However, tax-exempt properties also benefit from using the transportation system.
“Over the last three decades, municipalities across the country have begun experimenting with transportation utility fees as a way to shift that burden from the property tax roll to those who have and benefit from the transportation system,” Eveland said. “The argument has been that the transportation system functions similarly to the municipal water and sewer systems as a public utility in that users could be charged for their use of the system by assessing properties based on the number of trips they generate. This concept creates a much closer connection between the cost associated with constructing and maintaining the transportation facilities and the demand for them.”
Eveland acknowledged there will be a “significant” drop in the city’s debt load between 2021 and 2022.
“Much of that decrease will be negated by an additional round of borrowing in 2021 that will be needed,” Eveland said. “As municipalities rely more heavily on borrowing, a larger portion of property taxes are being allocated annually to make debt payments.”
Because of this, Eveland said municipalities like Clintonville need to get creative to increase revenue.
“A transportation utility is a creative method for funding needed and expected services in a potentially more equitable and palatable way than property taxes,” she said.
Eveland also claimed in the press release that “shifting transportation costs to the utility, municipalities could use some of the space created in the tax levy to pursue other needed projects and even reduce the tax levy once some of the backlog is addressed.”
In addition, Eveland said municipalities can set the fee structure in a way “to capture the cost of future growth, and because that fee structure is tied to land-use and not value, the revenue stream would be stable rather than elastic as is the case with property tax.”
One of the most useful aspects of a transportation utility fee is it can be applied to all tax-exempt properties, with the exception of those belonging to the federal government, Eveland said.
“Meaning that virtually all local properties that use the transportation system would become responsible for the cost of their usage of the system,” Eveland said. “In addition, because the fee determination is connected to usage, those properties that utilize the system more would pay a larger share of the costs, regardless of the value of the property.”
Eveland acknowledged more research about transportation utilities need to be done, and public informational meetings will be held in the future.
“City staff want to stress that any recommendation to implement this fee would be accompanied by a recommendation of some level of tax levy reduction, though it is too early in the process to provide any hard numbers,” Eveland said.