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To be sure, the bite didn’t come all at once. The figure represents an accumulation of nibbles at your paycheck, a few bucks every time you fill up your gas tank or buy a new outfit for work and, for many, an extra couple hundred dollars a month added to your mortgage payment in property taxes.
All told, about one in every $8 each of us earns goes to support services ranging from building roads, paying teachers and locking up criminals, to providing poor residents with subsidized health care and college financial aid.
As a percent of personal income, state and local taxes paid in Wisconsin consistently rank among the top 10 in the nation. In 2004, the state placed sixth.
That’s partly because the state gets less of its money from the federal government than most other states. Wisconsin also hasn’t relied as much on user fees as other states, preferring to spread the burden for programs across all taxpayers.
But taxes — especially property taxes — increase nearly every year, often well beyond the pace of inflation. The increases threaten to price many out of their homes and drive businesses out of the state, some say. Combined with stories of waste, fraud and questionable decision-making by the stewards of all that cash, calls for freezing taxes are on the rise.
The challenge
How should the governor determine the right balance between taxes and ensuring adequate funding for schools and local services, many of which have been mandated by the state?
The complications
As baby boomers move from being the primary contributors to government coffers to the primary consumers of services, taxpayers’ ability to sustain the growth will be increasingly strained. Certain costs, such as health-care and fuel and utility costs, are galloping far ahead of inflation.
Lawmakers and the governor also did away with the state’s automatic increase in the gasoline tax earlier this year, to much praise from motorists. But a recent report by the nonpartisan Legislative Fiscal Bureau said the state may need to spend about $700 million a year more on transportation to pay for planned road projects through 2020.
Bills for prior budget commitments also are coming due — at least $1.5 billion in the coming two-year budget.
Where they stand
After years of dismissing it as a gimmick — and vetoing similar legislation three times — Gov. Jim Doyle signed temporary property tax limits on most units of local government last year.
The Democratic governor said he agreed with his Republican critics that taxes were too high. But he refused to endorse strict caps until the GOP-controlled Legislature handed him a budget he could carve up in such a way to also steer $300 million more toward schools, which would have faced the heaviest cutbacks.
If he’s re-elected, Doyle said, he would seek to extend the limits, but again only after he’s satisfied there’s adequate money for schools and to maintain the state’s roughly $1 billion annual payment to local governments. He dismissed as “very foolish” Republican efforts to permanently limit state spending.
“They try to do it backwards,” Doyle said. “I think for the state to impose limits on local government, the state has to do its share first, which is to make sure that we have funded education and that we have done our share of funding local services.”
But Doyle’s agreeing to levy limits — often referred to as a “freeze” although it allows slight annual increases for new construction — hasn’t blunted attacks by his Republican opponent, U.S. Rep. Mark Green, who notes overall local property taxes went up more than $600 million during the governor’s tenure.
“I would have signed the Republican tax freeze,” the Green Bay congressman said. “That would have had our property taxes $600 million lower.”
The charge requires some caveats, however: About a third of that increase is due to the added value of new construction, which also would have been allowed under the Republican plan. That means you didn’t necessarily pay more, but your neighbor who just built a house has been added to the tax rolls.
The increase also reflects the results of school spending referendums, in which voters agreed to tax themselves more than existing revenue caps would allow.
And while the GOP was the main force behind the limits, property taxes have grown at a faster rate than personal income virtually every year over the past two decades, including most of the 16 years Republicans held the governor’s office. (The notable exception was in the years after the state imposed revenue limits on school districts in 1993 and picked up two thirds of school costs in 1996.)
Doyle touts his record of introducing and signing two budgets that didn’t raise state income or sales taxes, a feat he said was all the more remarkable given the state’s projected $3.2 billion deficit when he took office in 2003. Several other states increased taxes in response to the economic slump at the start of the decade.
“I didn’t do it (raise taxes) then, and I’m not going to do it now that we’ve got this budget picture turned around and we’re seeing real growth in the state,” Doyle said.
But Green faulted the governor for closing the gap using many of the same one-time fixes for which Doyle criticized his predecessors. Green said that will leave the next governor little better off, although reliable revenue and spending estimates won’t be available until November.
If elected, Green pledged to cap state and local spending, something the GOP-led Legislature tried and failed to do over the past two legislative sessions through a state constitutional amendment.
To accommodate the caps, Green said he would put the brakes on contracting out for services, which in some cases has cost more than using state employees, and he vowed to cut the cost of state administration.
But he has not said where he would make the bulk of the cuts that would be required by freezing spending amid rising costs for Medicaid services, schools and the University of Wisconsin System, prisons and aid to local governments, which eat up the bulk of the budget.
Green said such talk amounts to putting the cart before the horse.
“Our problem is we’re spending too much money right now,” said Green, who recently proposed a three-day sales tax holiday for the first weekend in August on back-to- school merchandise. “I just don’t believe our problem is we’re undertaxed.”
Both candidates said they had no plans to increase the gas tax despite the projected shortfall in the road-building budget, and Green has also called for eliminating a separate 3-cent-per-gallon tax for an environmental cleanup fund.
Phil Brinkman is a reporter for the Wisconsin State Journal.
