County sales tax remains strong after 15 years
By DAVE RANK Daily News
It was another record-setting year collecting Washington County’s half-cent sales tax with more than $9.7 million coming in last year.
If there was such a thing as a half penny, the county would need a fleet of trucks to carry them all to the bank.
By DAVE RANK Daily News
It was another record-setting year collecting Washington County’s half-cent sales tax with more than $9.7 million coming in last year.
If there was such a thing as a half penny, the county would need a fleet of trucks to carry them all to the bank.
That total bested the 2012 record of $9.41 million by almost $300,000. Excluding the recession years of 2009-10, county sales tax revenue increased every year since it began with $5.89 million in 1999.
By ordinance, the county is restricted to use sales tax revenue for property tax levy reduction, which includes debt reduction, capital construction projects and, since 2010, seeding two low-interest economic development loan programs.
In a recent report from the nonprofit Wisconsin Taxpayers Alliance, when the optional county sales tax was used in the mid-1980s, it was thought to be a reliable new source of revenue that would help reduce local property taxes. After almost 30 years, many of the 62 counties using the tax have found it may have come up short of expectations. That does not seem to be true for Washington County.
In its 15-year existence in this county, the half-cent collected on every retail dollar spent has brought more than $122.6 million into the county’s coffers. Washington County’s budget for 2014 is $119.8 million.
Sixty percent of each year’s county sales tax revenue must be used reduce the property tax levy, the total amount of county property tax collected from land owners. In 2015, the county plans to increase that percentage to 65 percent.
In 2013, 60 percent amounted to $5.28 million; this year, it will be $5.4 million.
To put that in perspective, this year’s county tax levy is $36.4 million. Without the sales tax, that levy amount would be $41.8 million to maintain the 2014 budget.
“That’s a $5 million hole in our budget if we did not have the sales tax,” County Manager Joshua Schoemann said. “We’d have to cut $5 million in services or raise $5 million in revenue. That’s no easy task.”
This year, $2.48 million is allocated to fund capital improvement projects and economic development loan funds, with any additional sales tax collected going into a reserve account. (The county is also funneling $3.17 million from its sales tax reserve to fund capital projects this year.) In past years, Finance Director Susan Haag said sales tax revenue paid for the:
■ $18 million Washington County Fair Park;
■ $13.9 million county courthouse expansion and remodeling:
■ $7.75 million Vehicle Maintenance and Storage Facility in West Bend;
■ $2.5 million Highway Department’s satellite highway shop in Slinger;
■ $6 million to the campus expansion at the University of Wisconsin-Washington County.
It also partially paid for the $12.9 million countywide radio communications system upgrade and many other smaller projects, Haag said.
Without the sales tax as a funding source, those projects would not have been done or been financed with borrowed money, which would have raised the property tax rate, she said. “I think we would have had to make some very difficult decisions over the past few years if we didn’t have it (sales tax),” Haag said.
The County Board establish the county tax in 1998 on a 17-11 vote. Since then, the board voted twice to continue it, in 2006 and 2011. The board is scheduled to vote on continuing the tax in 2017.
Before that 2011 vote, then-County Administrative Coordinator Douglas Johnson reported to the board that the county sales tax “provides for diversification of revenue streams, reducing the reliance on property tax levy. ... Integrated sales tax and capital planning has resulted in improved anticipation of financial needs, fewer big surprises, and better financial rating. All of these accomplishments would be harder to continue without the county sales tax as a steady revenue stream.”
Without the sales tax, in 2010 an individual homeowner’s property tax would have been 13 percent higher, Johnson reported, adding $73 to the tax bill on a $200,000 house.
Still, there has always been opposition to the tax. In 2011, five county supervisors voted against extending it.
Daniel Goetz from Richfield said he does not believe sales tax money should be used to assist enterprise fund ventures, such as the Washington County Golf Course.
“It was supposed to be used for property tax relief,” he said. It should be limited to that and paying for county road projects, Goetz added.
Another supervisor who voted against the tax in 2011 was Kenneth Brandt from the town of Addison. “We told the people it was supposed to sunset. I feel when you say something, you should follow through.”
In 1998, advocates said the county sales tax could end once major capital projects were paid for, a suggestion that has come with debate on the tax ever since.
And over the years, other county supervisors have argued the sales tax should not be used as part of the county’s operating budget and allows the county to continue increasing its spending.
“In a perfect world, it’s something that could be eliminated,” Schoemann said of the local sales tax. He wants to look at how other counties use the sales tax to see if there are better ways it can be used to reduce the property tax.
“We’ve become dependent on it,” Schoemann said. “It’s built into the operating budget and with (state-mandated) tax levy freezes, the sales tax is probably here to stay.”
By ordinance, the county is restricted to use sales tax revenue for property tax levy reduction, which includes debt reduction, capital construction projects and, since 2010, seeding two low-interest economic development loan programs.
In a recent report from the nonprofit Wisconsin Taxpayers Alliance, when the optional county sales tax was used in the mid-1980s, it was thought to be a reliable new source of revenue that would help reduce local property taxes. After almost 30 years, many of the 62 counties using the tax have found it may have come up short of expectations. That does not seem to be true for Washington County.
In its 15-year existence in this county, the half-cent collected on every retail dollar spent has brought more than $122.6 million into the county’s coffers. Washington County’s budget for 2014 is $119.8 million.
Sixty percent of each year’s county sales tax revenue must be used reduce the property tax levy, the total amount of county property tax collected from land owners. In 2015, the county plans to increase that percentage to 65 percent.
In 2013, 60 percent amounted to $5.28 million; this year, it will be $5.4 million.
To put that in perspective, this year’s county tax levy is $36.4 million. Without the sales tax, that levy amount would be $41.8 million to maintain the 2014 budget.
“That’s a $5 million hole in our budget if we did not have the sales tax,” County Manager Joshua Schoemann said. “We’d have to cut $5 million in services or raise $5 million in revenue. That’s no easy task.”
This year, $2.48 million is allocated to fund capital improvement projects and economic development loan funds, with any additional sales tax collected going into a reserve account. (The county is also funneling $3.17 million from its sales tax reserve to fund capital projects this year.) In past years, Finance Director Susan Haag said sales tax revenue paid for the:
■ $18 million Washington County Fair Park;
■ $13.9 million county courthouse expansion and remodeling:
■ $7.75 million Vehicle Maintenance and Storage Facility in West Bend;
■ $2.5 million Highway Department’s satellite highway shop in Slinger;
■ $6 million to the campus expansion at the University of Wisconsin-Washington County.
It also partially paid for the $12.9 million countywide radio communications system upgrade and many other smaller projects, Haag said.
Without the sales tax as a funding source, those projects would not have been done or been financed with borrowed money, which would have raised the property tax rate, she said. “I think we would have had to make some very difficult decisions over the past few years if we didn’t have it (sales tax),” Haag said.
The County Board establish the county tax in 1998 on a 17-11 vote. Since then, the board voted twice to continue it, in 2006 and 2011. The board is scheduled to vote on continuing the tax in 2017.
Before that 2011 vote, then-County Administrative Coordinator Douglas Johnson reported to the board that the county sales tax “provides for diversification of revenue streams, reducing the reliance on property tax levy. ... Integrated sales tax and capital planning has resulted in improved anticipation of financial needs, fewer big surprises, and better financial rating. All of these accomplishments would be harder to continue without the county sales tax as a steady revenue stream.”
Without the sales tax, in 2010 an individual homeowner’s property tax would have been 13 percent higher, Johnson reported, adding $73 to the tax bill on a $200,000 house.
Still, there has always been opposition to the tax. In 2011, five county supervisors voted against extending it.
Daniel Goetz from Richfield said he does not believe sales tax money should be used to assist enterprise fund ventures, such as the Washington County Golf Course.
“It was supposed to be used for property tax relief,” he said. It should be limited to that and paying for county road projects, Goetz added.
Another supervisor who voted against the tax in 2011 was Kenneth Brandt from the town of Addison. “We told the people it was supposed to sunset. I feel when you say something, you should follow through.”
In 1998, advocates said the county sales tax could end once major capital projects were paid for, a suggestion that has come with debate on the tax ever since.
And over the years, other county supervisors have argued the sales tax should not be used as part of the county’s operating budget and allows the county to continue increasing its spending.
“In a perfect world, it’s something that could be eliminated,” Schoemann said of the local sales tax. He wants to look at how other counties use the sales tax to see if there are better ways it can be used to reduce the property tax.
“We’ve become dependent on it,” Schoemann said. “It’s built into the operating budget and with (state-mandated) tax levy freezes, the sales tax is probably here to stay.”
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