November 24, 2014

State tax cut causing problems for municipalities

File Photo

File Photo

A change in how the state handles property taxes for technical colleges is hurting the income from TIF districts across central Wisconsin.

State legislators and Governor Walker’s office pushed through a massive property tax cut at the start of 2014, based on a projected billion dollar tax surplus coming in 2014. Inside that bill was a modification on how technical colleges collected their funding. The measure cut some of those funds from local taxes and to be paid out of state grants instead. That means that local tax rates are lower for residents, but it also means that tax valuation is down for many municipalities, which changes the calculations on tax incremental financing districts. Those are tools local governments can use to collect taxes on improvements in the tax rates in order to fund capital improvements and business investments in the area.

Officials in the village of Weston says this has hit them especially hard, at a time when the village is already projecting several years of operating deficits. Weston finance director John Jacobs says the funding formula reduces resident taxes at the cost of the municipalities. “Since the bill will go down, that means the portion that municipalities collect for TIF districts will also go down. And it happens that for us for December 2014, we will have a reduction about $175,000 that we will lose.”

He’s hoping they can convince lawmakers to give some of that money back to the communities. “There’s nothing in this act that says that there will be a payment made to municipalities, so we’re not kept whole in this whole situation.”

Wausau will be seeing a similar hit, although finance director Mary Ann Groat says they will be able to weather the change more easily. “Based on the increments we received for the 2014 budget, it looks like a $164,000 reduction for next year.”

Stevens Point Treasurer-Comptroller Corey Ladick says his staff is not seeing much in the way of damage. “It’s about $10,000 for us over all,” due to the fact that the city’s TIF districts are not seeing much growth right now.

Some legislators, including Representative Bob Kulp of Stratford, are optimistic the shortfall will not affect the municipalities as much. He says preliminary figures from the Legislative Fiscal Bureau project property values to go up around 2 to 3 percent, meaning more tax dollars will be coming in.

Representative Mandy Wright says this is an unintended consequence of the tax cuts. “It is something I voted against, because I did not think that we were making these cuts in a responsible manner.” She says it shows that the state needs to do more to protect local funding to municipalities. “If we’re truly talking about cutting past the bone, which is the case here as well as in public transit and public education, that’s extremely problematic and the state is not meeting its fiscal obligations to local municipalities.”

Senator Jerry Petrowski says he will be talking to the Legislative Audit Bureau for more information. “I know that it is a real benefit for the property tax payers to have property taxes go down, but it makes it a little tighter on the municipalities. I think we have to look at a number of things to see how this will be affecting how many people and how many TIFs across the state.”


Kind proposes tax breaks to keep jobs in America

U.S. Representative Ron Kind

U.S. Representative Ron Kind

Companies that keep jobs in the US could get a tax break, under a proposal from Wisconsin Congressman Ron Kind (D-WI).

The proposal would give companies that keep jobs in the country a 20 percent marginal tax rate, which Kind says is much lower than what they are currently receiving. He says it would reward job creators and “level the playing field so they can compete globally” and not have to consider moving product lines overseas to lower manufacturing costs.

Kind says he believes that “if you decide to stay here and create jobs here and make things here in America, you’re going to get a tax break for doing it.”
The proposal would pay for the manufacturing tax credit by eliminating loopholes Kind argues provide no economic benefit to the country, such as provisions he says currently reward companies that are moving jobs overseas.


WEDC partially lifts moratorium on historic tax credit program

WEDC Secretary Reed Hall

WEDC Secretary Reed Hall

The Wisconsin Economic Development Corporation is reviving tax breaks for some historic preservation projects, just three weeks after it put the program on hold.

WEDC halted the tax breaks, which were approved by lawmakers last year, after the awarded tax credits grew to $35 million. The figure was well above the initial estimated economic impact of $4 million for the first year of the program.

The governor and several lawmakers backed the move, saying the state should proceed with caution. Critics of the move argued WEDC should continue awarding the tax breaks though, because the projects they are encouraging have the potential to create hundreds or thousands of jobs.

WEDC Secretary and CEO Reed Hall says Monday’s decision will result in the agency awarding tax breaks to projects involving buildings that meet the standards of the State Historic Preservation Officer and the National Park Service of historic buildings. Hall says that process for Certified Historic Buildings “is very rigorous” and should result in the focus shifting to larger projects that have community and investor involvement behind them.

The moratorium will remain in place for buildings that do not have a historic designation. Hall says that should ensure the focus is on projects that can have the greatest economic impact, to balance out the reduction in state revenue. He says they will “try to determine, in a scientific way, the investment return to the state of Wisconsin.”

Hall says WEDC may consider asking the Legislature to make changes to the program next year.

At odds over Internet sales tax

Competing arguments on Internet sales taxes were in focus Monday. At a Capitol media briefing, Pete Sepp with the National Taxpayers Union said polling finds voters in Wisconsin strongly oppose out-of-state tax collection on the state’s online merchants.

The survey of 400 likely voters was conducted from June 3rd to the 5th, and found that Wisconsin residents opposed, by a 63 to 30 percent margin, the Marketplace Fairness Act. The federal legislation would allow revenue agencies in one state to collect internet sales taxes in another state.

Sepp said the prospect of additional revenues could be a double-edged sword for states. “Every state revenue department that thinks this is a good idea because suddenly revenues will come flowing back to their states, they need to realize this works 45 other ways,” he said, referring to the 45 states which currently collect sales taxes.

The U.S. Senate has passed the Marketplace Fairness Act, also known as e-fairness legislation, but the House has not acted on the measure. “Whether you sell on-line or, whether you sell as a brick and mortar outfit, you collect and submit the tax for where you are located,” said Sepp. “That’s fair, isn’t it?”

“We right now have a ridiculous tax policy that harms Wisconsin businesses,”said Alliance of Wisconsin Retailers executive director Scott Stenger. “It says we’re going to give a benefit to an out-of-state business that employs nobody (in Wisconsin), pays no taxes. We’re going to give them an advantage over a Wisconsin-based business that employs thousands of people and pays taxes. E-fairness legislation simply closes a tax loophole that allows out-of-state companies to avoid collecting sales tax – something the government forces all businesses in Wisconsin to do.”

Wisconsin’s tourism industry increases $700 million

Wisconsin Department of Tourism Secretary Stephanie Klett has a lot of numbers, and it’s all good.

“We have great news to report, and that is, Wisconsin Tourism is up $700 million from 2012 to 2013. So that’s a 4 percent increase. Our total visitor spending was $17.5 billion.”

Visitor growth last year was the fastest since 2010. A new study finds visits to the Badger State increased 3.5 percent in 2013 to more than 100 million.

Klett says Wisconsin attracts tourists from other states and across the globe, but many big spenders are right here in our own back yard. “Fifty-one percent of people who vacation in Wisconsin are from Wisconsin … and then 49 percent are coming from all across the world, literally.”

AUDIO: Klett explains how Wisconsin benefits from free publicity. :35

In order to make money, one has to spend money, that’s called a return on investment. For every $1 the agency spent on advertising last fall and summer, $6 was returned to the state in the form of tax revenue.

With a little creativity, advertising can be free. It’s called “earned media.” Klett explains, by reuniting the cast of airplane for the summer ad campaign, the state earned a lot of free publicity.

“Our earned media for that was $35 million. Our marketing budget is just $12.5 million. So, in 2013, we had $70 million of earned media when the average state gets $17 million.”

That commercial is scheduled to begin airing on TV the week of May 12th .

Wisconsin tourism supports nearly 185,000 jobs and $4.6 billion in personal income. Visitors generated $1.35 billion in state and local revenue last year, and $1 billion in federal taxes. Each household in Wisconsin would need to be taxed an extra $590 a year to replace those tourism taxes.

AUDIO: Jackie Johnson report 1:14