Tim Ryan tryan@wolfrivermedia.com
A major spike in the city’s tax rate and a proposed wheel tax could make this year’s budget hearing on Wednesday a bit more spirited than the Shawano Common Council has experienced in recent years.
The hearing will be held at 6 p.m. at City Hall, 127 S. Sawyer St.
The hearings have typically drawn only a small handful of the public, but the proposed budget for 2018 has already created a stir in the community, judging by social media chatter.
It has also prompted Alderman Bob Kurkiewicz to announce he will vote against the budget as currently proposed.
It includes an increase in the city’s portion of the tax rate of nearly 60 cents per $1,000 of assessed value, from $9.29 to $9.89.
It also calls for an additional $10 fee to be added to vehicle registrations to help pay for the city’s street projects.
The so-called wheel tax is projected to bring in nearly $100,000 in revenue next year that will go into the city’s capital improvements projects fund.
The city has in recent years been trying to boost the amount of tax dollars that go directly into the CIP fund and lessen the amount of borrowing for those projects.
This year, however, the city faced a shortfall in the general operating levy of about $150,000 due to increased health insurance and workers compensation costs, according to City Administrator Brian Knapp.
That amount was moved out of the CIP fund and into the general fund to cover those costs, he said.
The wheel tax is intended to replenish some of what was taken from the CIP fund.
“We had to use more of the levy for the general fund in order to continue to do the $1 million or so of street work that we’re doing every year,” Knapp said. “The local vehicle registration fee was an option for keeping up that level of effort.”
Though the wheel tax was already part of the budget recommended by the finance committee, it wasn’t something widely known until last week when the finance committee for the first time discussed a separate resolution that would approve it.
It was sent to the Common Council, which delayed a decision until the budget hearing to provide more opportunity for public input.
Realtor Terry Hilgenberg was one of about a half dozen people who attended Wednesday’s council meeting. He slammed the wheel tax and the city’s tax increase during public comment.
“I’m very saddened by the total lack of transparency and ideological left-turn the city has taken,” Hilgenberg said.
Hilgenberg maintained that new home construction was down in Shawano versus other communities because of the city’s regulation and taxation.
He said businesses had been forced to cut their budgets over the past few years and said the city could do the same.
Knapp defended the budget in an interview Friday.
“Despite the criticisms, we are being conservative in our budgeting,” Knapp said. “We’re continuing to provide services that the community has expected and desired, but we’re having to pay for them. We’re not the federal government that can plan to rack up $1.5 trillion in new debt over the next 10 years without paying for it.”
Knapp also defended the vehicle registration fee as “a good, reasonable alternative” for continuing the city’s commitment to its current level of street reconstruction.
“The fee is a relatively minor charge, and it should be more attractive to businesses and commercial interests rather than applying that to the levy,” he said.
Knapp said that if the council rejects the fee, “there will be a $100,000 shortfall in the capital projects fund.”
He said the likeliest option in that case would be to cut back on a portion of street reconstruction or overlay projects that had been planned for next year.
Despite the city’s 60-cent increase, the overall tax rate will go up by only about 5 cents per $1,000, from $23.93 per $1,000 of assessed value to $23.98, thanks to a decrease in the tax rates of other taxing entities. That means the owner of a $100,000 home would pay an additional $5 in taxes.
The Shawano School District’s assessed tax rate for city property owners will drop by about 45 cents per $1,000 to about $9.65, while county’s assessed rate will ease by 9 cents to about $5.16 per $1,000.
Rates for the state and Northeast Wisconsin Technical College are roughly the same as last year.
The school district and the county benefited from an increase in equalized values, which drove their tax rates down. The county also saw a roughly 1 percent increase in net new construction.
Shawano’s net new construction, however, dropped by $476,000, or 0.09 percent, while the city’s equalized value dropped from $510 million to just under $508 million. The city’s assessed value dropped by more than $3 million from $514 million to just under $511 million.
The city did see a $5.1 million increase in the equalized value of properties within the Tax Incremental Finance districts, but those gains are not levied for general tax purposes. Instead, any increase in taxes goes to paying off the debt incurred for any infrastructure and other improvements that went into creating the TIF district.
“Those conditions account for a 15 cent increase (in the city’s tax rate) without any increase in actual dollars being levied,” Knapp said. “The 2017-18 capital improvement projects debt adds 17 cents and the parks referendum debt adds 27 cents.”