LOCAL GOVERNMENT
Levy limits
Local levy overview
Generally, under current law, local levy increase limits are applied to the property tax levies that are imposed by political subdivisions in December of each year. Current law prohibits a political subdivision from increasing its levy by a percentage that exceeds its valuation factor, which is defined as the greater of either 0 percent or the percentage change in the political subdivision’s equalized value due to new construction, less improvements removed.
Current law contains a number of exceptions to these levy increase limits, such as amounts a county levies for a countywide emergency medical system, for a county children with disabilities education board, and for certain bridge and culvert construction and repair. In addition, a political subdivision may exceed the levy increase limit that is otherwise applicable if its governing body adopts a resolution to do so and if that resolution is approved by the voters in a referendum.
Alternative minimum valuation factor increase
The bill increases the alternative minimum valuation factor used to calculate local levy limits from 0 percent to 2 percent, beginning with levies imposed in December 2023.
Reduction for certain service revenues
Under current law, a political subdivision must reduce its allowable levy by the estimated amount of any revenue from fees or payments in lieu of taxes if the revenue is received for providing certain covered services that were funded with property tax revenues in calendar year 2013. The covered services are certain garbage collection, fire protection, snow plowing, street sweeping, and storm water management.
The bill repeals the requirement that a political subdivision must reduce its allowable levy by the estimated amount of revenues received for providing covered services that were funded with property tax revenues in calendar year 2013.
Reduction for service transfers
Under current law, if a political subdivision transfers to another governmental unit the responsibility to provide a service that it provided in the previous year, the levy increase limit otherwise applicable in the current year is decreased to reflect the cost that the political subdivision would have incurred to provide that service. The bill repeals that provision.
Approval of use of unused capacity
Current law provides two exceptions allowing a political subdivision to use previously unused levy capacity. Under these exceptions, if a political subdivision’s allowable levy in prior years was greater than its actual levy in those years, the otherwise applicable levy increase limit for the next succeeding year may be increased by the difference between the allowable levy and the actual levy, up to a specified maximum increase. These increases, in some cases, must be authorized by a supermajority vote of the political subdivision’s governing body. The bill eliminates the supermajority requirements and, instead, requires only a simple majority vote of the political subdivision’s governing body for use of either of these unused levy capacity exceptions.
Joint emergency services levy limit exception modification
Among the current law exceptions to local levy limits is an exception for the amount that a municipality levies to pay for charges assessed by a joint fire department or joint emergency medical services district organized by any combination of two or more municipalities. This exception applies only to the extent that the amount levied to pay for such charges would cause the municipality to exceed the otherwise applicable levy limit and only if the charges assessed by the department or district increase in the current year by an amount not greater than the rate of inflation over the preceding year, plus 2 percent, and if the municipality’s governing body adopts a resolution in favor of exceeding the otherwise applicable levy limit.
Under the bill, the exception is expanded to include joint fire services or joint emergency medical services provided by a combination of two or more municipalities through a joint district, joint ownership, joint purchase of services from a nonprofit corporation, or joint contracting with a public or private services provider. The exception is also expanded to cover all fees charged to a municipality by the joint fire services or joint emergency medical services.
Exception for cross-municipality transit routes
The bill creates an exception to local levy limits for certain transit services. Under the bill, amounts levied by a political subdivision for costs related to new or enhanced transit services that cross adjacent county or municipal borders do not apply to the limit if the political subdivisions between which the routes operate have entered into an agreement to provide for the services and if the agreement is approved in a referendum.
Exception for regional planning commission contributions
The bill creates a local levy increase limit exception for the amount a political subdivision levies to pay for the political subdivision’s share of the budget of a regional planning commission (RPC). An RPC’s budget is determined annually by the RPC. The RPC then charges all political subdivisions within its jurisdiction a proportional amount to fund the budget based on the equalized value of property in the political subdivision and the total amount of equalized value of property within the RPC’s jurisdiction.
Tax incremental financing
Tax incremental financing overview
Under current law, cities and villages may use tax incremental financing (TIF) to encourage development in the city or village. In general, under TIF, a city or village pays for improvements in a tax incremental district (TID) and then collects tax moneys attributable to all taxing jurisdictions on the increased property value in the TID for a certain period of time to pay for the improvements. Ideally, after the period of time, the city or village will have been repaid for its initial investment and the property tax base in the TID will have permanently increased in value.
In general and in brief, a city or village makes use of TIF using the following procedure:
1. The city or village designates an area as a TID and creates a project plan laying out the expenditures that the city or village will make within the TID.
2. DOR establishes the base value of the TID. This value is the equalized value of all taxable property within the TID at the time of its creation.
3. Each year thereafter, the value increment of the property within the TID is determined by subtracting the base value from the current value of property within the TID. The portion of taxes collected on any positive value increment is collected by the city or village for use solely for the project costs of the TID. The taxes collected by the city or village on positive value increments include taxes that would have been collected by other taxing jurisdictions, such as counties or school districts, were the TID not created.
4. Tax increments are collected until the city or village has recovered all of its project costs or until the TID reaches its statutory termination date.
Workforce housing initiatives
The bill authorizes workforce housing initiatives and makes changes that affect TIDs and state housing grants. The bill creates a definition for “workforce housing,” changes the definition of a “mixed-use development” TID, increases the maximum number of years a city or village may extend the life of a TID to improve its affordable and workforce housing, requires a TID’s project plan to contain alternative economic projections, and changes the method of imposing certain impact fees.
Under the bill, a political subdivision may put into effect a workforce housing initiative by taking one of several specified actions and posting on its website an explanation of the initiative. Workforce housing initiatives include the following: reducing permit processing times or impact fees for workforce housing; increasing zoning density for a workforce housing development; rehabilitating existing uninhabitable housing stock into habitable workforce housing; or implementing any other initiative to address workforce housing needs. Once an initiative takes effect, it remains in effect for five years. After June 30, 2024, if a political subdivision has in effect at least three initiatives at the same time, DOA must give priority to housing grant applications from, or related to a project in, the political subdivision.
The bill defines “workforce housing” to mean the following, subject to the five-year average median costs as determined by the U.S. Bureau of the Census:
1. Housing that costs a household no more than 30 percent of the household’s gross median income.
2. Housing that is comprised of residential units for initial occupancy by individuals whose household median income is no more than 120 percent of the county’s gross median income.
Under current law, a mixed-use development TID contains a combination of industrial, commercial, or residential uses, although newly platted residential areas may not exceed more than 35 percent of the real property within the TID. Under the bill, newly platted residential areas may not exceed either the 35 percent limit or 60 percent of the real property within the TID if the newly platted residential use that exceeds 35 percent is used solely for workforce housing.
The bill also requires a TID’s project plan to include alternative projections of the TID’s finances and feasibility under different economic situations, including a slower pace of development and lower rate of property value growth than expected in the TID.
Currently, a city or village may extend the life of a TID for up to one year for housing stock improvement if all of the following occurs:
1. The city or village pays off all of the TID’s project costs.
2. The city or village adopts a resolution stating that it intends to extend the life of the TID, the number of months it intends to do so, and how it intends to improve housing stock.
3. The city or village notifies DOR.
Current law requires the city or village to use 75 percent of the tax increments received during the period specified in the resolution to benefit affordable housing in the city or village and 25 percent to improve the city’s or village’s housing stock.
Under the bill, a city or village may extend the life of a TID for up to three years to improve its housing stock or increase the number of affordable and workforce housing improvements, with at least 50 percent of the funds supporting units for families with incomes of up to 60 percent of the county’s median income. Also, for any extension of more than one year, the other taxing jurisdictions must approve of the extension.
Under current law, if a city, village, or town imposes an impact fee on a developer to pay for certain capital costs to accommodate land development, the city, village, or town may provide in the ordinance an exemption from, or a reduction in the amount of, impact fees on land development that provides low-cost housing. Under the bill, the impact fee exemption or reduction provisions also apply to workforce housing. Current law prevents the shifting of an exemption from or reduction in impact fees to any other development in the land development in which the low-cost housing is located. The bill applies this provision to workforce housing as well.
TIF 12 percent rule exception
Under current law, when creating a new TID or amending a TID, a city or village must make a finding that the equalized value of taxable property of the new or amended TID plus the value increment of all existing TIDs in the city or village does not exceed 12 percent of the total equalized value of taxable property in the city or village. Under the bill, in lieu of making the 12 percent finding, a city or village may certify to DOR that 1) TIDs with sufficient value increments will close within one year after certification so that the municipality will no longer exceed the 12 percent limit and 2) the city or village will not take any actions that would extend the life of any TID under item 1.
General local government
Regional transit authorities
The bill creates, or authorizes the creation of, a southeast regional transit authority (SE RTA), a Dane County regional transit authority (DC RTA), a Fox Cities regional transit authority (FC RTA), and a regional transit authority in any other metropolitan statistical area in which qualifying political subdivisions agree to create one (statewide RTA). Upon creation, each transit authority is a public body corporate and politic and a separate governmental entity.
The SE RTA is created if the governing body of Milwaukee County or Kenosha County, or of any municipality located within that portion of Racine County east of I 94, adopts a resolution authorizing the county or municipality to become a member of the SE RTA. If any of these counties or municipalities fails to adopt a resolution creating the SE RTA, these counties and municipalities, as well as Racine County, may also join the SE RTA after it has been created by one or more other counties or municipalities. If Milwaukee County or Kenosha County joins the SE RTA, all municipalities located within Milwaukee County or Kenosha County, respectively, become members of the SE RTA. Any of the counties of Waukesha, Ozaukee, and Washington may join the SE RTA upon adoption of a resolution by the county’s governing body, and any municipality located within the county may join the SE RTA upon adoption of a resolution by the municipality’s governing body and approval of the SE RTA’s board of directors. The jurisdictional area of the SE RTA is the geographic area formed by the combined territorial boundaries of counties and municipalities that are members of the SE RTA.
The DC RTA is created if the governing body of Dane County adopts a resolution authorizing the county to become a member of the DC RTA. Once created, the members of the DC RTA consist of Dane County and all municipalities located within the Madison metropolitan planning area (MMPA). Any municipality located within Dane County but not within the MMPA may join the DC RTA upon adoption of a resolution by the municipality’s governing body and approval of the DC RTA’s board of directors. The jurisdictional area of the DC RTA is the geographic area formed by the MMPA combined with the territorial boundaries of all municipalities outside the MMPA that join the DC RTA.
The members of the FC RTA consist of Outagamie County, Calumet County, and Winnebago County and all municipalities located within the urbanized area of the Fox Cities metropolitan planning area (UFCMPA). Any municipality located within Outagamie County, Calumet County, or Winnebago County but not within the UFCMPA may join the FC RTA upon adoption of a resolution by the municipality’s governing body and approval of the FC RTA’s board of directors. The jurisdictional area of the FC RTA is the geographic area formed by UFCMPA combined with the territorial boundaries of all municipalities outside the UFCMPA that join the FC RTA.
A statewide RTA is created if any two or more political subdivisions located within a metropolitan statistical area adopt resolutions authorizing the political subdivision to become members of the RTA. Once created, the members of a statewide RTA consist of all political subdivisions that adopt resolutions authorizing participation. Any political subdivision located in whole or in part within a metropolitan statistical area located in whole or in part within a statewide RTA’s jurisdiction may join the statewide RTA. The jurisdictional area of an authority created under this paragraph is the geographic area formed by the combined territorial boundaries of all participating political subdivisions.
An RTA’s authority is vested in its board of directors. Directors serve four-year terms. An RTA’s bylaws govern its management, operations, and administration and must include provisions specifying all of the following:
1. The functions or services to be provided by the RTA.
2. The powers, duties, and limitations of the RTA.
3. The maximum rate of the sales and use tax, not exceeding the statutory limit, that may be imposed by the RTA.
An RTA may do all of the following:
1. Establish or acquire a comprehensive unified local transportation system, which is a transportation system comprised of bus lines and other public transportation facilities generally within the jurisdictional area of the RTA. “Transportation system” is defined to include land, structures, equipment, and other property for transportation of passengers, including by bus, rail, or other form of mass transportation. The RTA may operate this transportation system or provide for its operation by another. The RTA may contract with a public or private organization to provide transportation services in lieu of directly providing these services and may purchase and lease transportation facilities to public or private transit companies. With two exceptions, an RTA may not directly or by contract provide services outside the RTA’s jurisdictional area.
2. Coordinate specialized transportation services for persons who are disabled or aged 60 or older.
3. Own or lease real or personal property.
4. Acquire property by condemnation.
5. Enter upon highways to install, maintain, and operate the RTA’s facilities.
6. Impose, by the adoption of a resolution by the RTA’s board of directors, a sales and use tax in the RTA’s jurisdictional area at a rate of not more than 0.5 percent of the sales price.
7. Impose a fee of $2 per transaction on the rental of passenger cars without drivers.
8. Incur debts and obligations. An RTA may issue tax-exempt revenue bonds, secured by a pledge of any income or revenues from any operations or other source of moneys for the RTA. The bonds of an RTA are not a debt of its member political subdivisions and neither the member political subdivisions nor the state are liable for the payment of the bonds.
9. Set fees and charges for functions, facilities, and services provided by the RTA.
10. Adopt bylaws and rules to carry out the powers and purposes of the RTA.
11. Sue and be sued in its own name.
12. Employ agents, consultants, and employees; engage professional services; and purchase furniture, supplies, and materials reasonably necessary to perform its duties and exercise its powers.
13. Invest funds not required for immediate disbursement.
14. Do and perform any authorized acts by means of an agent or by contracts with any person.
15. Exercise any other powers that the board of directors considers necessary and convenient to effectuate the purposes of the RTA, including providing for passenger safety.
The board of directors of an RTA must annually prepare a budget for the RTA. Rates and other charges received by the RTA must be used only for the general expenses and capital expenditures of the RTA, to pay interest, amortization, and retirement charges on the RTA’s revenue bonds, and for specific purposes of the RTA and may not be transferred to any political subdivision. The RTA must maintain an accounting system in accordance with generally accepted accounting principles and must have its financial statements and debt covenants audited annually by an independent certified public accountant.
An RTA must provide, or contract for the provision of, transit service within the RTA’s jurisdictional area. An RTA that acquires a transportation system for the purpose of operating the system must assume all of the employer’s obligations under any contract between the employees and management of the system to the extent allowed by law. An RTA that acquires, constructs, or operates a transportation system must negotiate an agreement with the representative of the labor organization that covers the employees affected by the acquisition, construction, or operation to protect the interests of employees affected, and that agreement must include specified provisions. Employees of the RTA are participatory employees under the Wisconsin Retirement System (WRS) if the RTA elects to join the WRS.
A member political subdivision for which joinder into an RTA is optional may withdraw from an RTA if the governing body of the political subdivision adopts a resolution requesting withdrawal from the RTA and the political subdivision has paid, or made provision for the payment of, all obligations of the political subdivision to the RTA. A member of the SE RTA that must become a member as a result of the membership of the county in which the municipality is located must withdraw from the SE RTA if the county in which the municipality is located withdraws from the SE RTA.
Current law provides limited immunity for cities, villages, towns, counties, and other political corporations and governmental subdivisions, and for officers, officials, agents, and employees of these entities, for acts done in an official capacity or in the course of employment. Claimants must generally follow a specified claims procedure, and liability for damages is generally limited to $50,000, except that no liability may be imposed for performance of a discretionary duty or for punitive damages. If a person suffers damage resulting from the negligent operation of a motor vehicle owned and operated by a county, city, village, town, school district, sewer district, or other political subdivision of the state in the course of its business, the person may file a claim for damages following this claims procedure, and the amount of damages recoverable is limited to $250,000. The bill specifies that this provision related to claims and liability for negligent operation of a motor vehicle by a political subdivision applies to an RTA.
The bill also allows RTAs to participate in organizing municipal insurance mutuals to provide insurance and risk management services.
Professional baseball park districts
Under current law, a professional baseball park district is created in each county with a population of at least 600,000 (presently, only Milwaukee County) and all counties that are contiguous to that county (in relation to Milwaukee County, these counties are Ozaukee County, Racine County, Washington County, and Waukesha County). A district has a variety of powers. Among these, a district may acquire, construct, equip, maintain, improve, operate, and manage baseball park facilities and may set standards governing the use of, and the conduct within, baseball park facilities. A district is authorized to impose a sales tax and a use tax at a rate of no more than 0.1 percent. Also, a district may issue bonds for the purpose of purchasing, acquiring, leasing, constructing, extending, adding to, improving, conducting, controlling, operating, or managing baseball park facilities. Bonds issued by the district must be secured only by the district’s interest in any baseball park facilities, by income from these facilities, and by the sales tax and use tax that the district is authorized to levy. The district may not collect sales taxes after the calendar quarter in which the district certifies to DOR that the district has retired all of its bonds. The sales tax ended on March 31, 2020. The district continues to have outstanding bonds, but these bonds are fully defeased.
The bill eliminates a district’s authority to impose a sales tax as of April 30, 2024. The bill also requires the district to establish a facilities enhancement fund into which it must deposit certain grant payments received from DOA. Moneys from this fund may be used only for purposes related to the development, construction, improvement, repair, and maintenance of baseball park facilities, and specifically may not be used for the securitization or retirement of bonds.
The bill also does the following:
1. Authorizes a district to acquire and manage property related to “baseball park development,” which is defined as “property, other than baseball park facilities, tangible or intangible, operated by a professional baseball team on real estate leased or subleased from a district that is part of the operations of the professional baseball team for any legally permissible use, including retail facilities, hospitality facilities, commercial and residential facilities, health care facilities, and any other functionally related or auxiliary facilities or structures.”
2. Defines what constitutes a “professional baseball team” and limits the establishment of new professional baseball park districts to counties with populations over 600,000 that are the site of baseball park facilities that are home to a professional baseball team.
3. Alters the district termination procedure. Currently, if a district is terminated, the property of the district is transferred to the counties within the jurisdiction of the district. Under the bill, upon termination all district property is transferred to the state. The state then apportions the properties to the constituent counties and the state based on a statutory formula.
Local government civil service system and grievance procedure requirements
The bill modifies the requirements for any grievance system established by local governmental units, including adding a requirement for any civil service system or grievance procedure to include a just cause standard of review for employee terminations. Under current law, a local governmental unit that did not have a civil service system before June 29, 2011, must have established a grievance system. In order to comply with the requirement to have established a grievance system, a local governmental unit may establish either 1) a civil service system under any provision authorized by law, to the greatest extent practicable, if no specific provision for creation of a civil service system applies to the governmental unit or 2) a grievance procedure as set forth in the statutes. Current law requires that any civil service system established or grievance procedure created must contain a grievance procedure that addresses employee terminations, employee discipline, and workplace safety. The bill does not eliminate the requirement for these provisions but instead adds a requirement for a provision relating to a just cause standard of review for employee terminations, including a refusal to renew a teaching contract.
