TO: Honorable Members, Committee on Government Operations and Spending Limitations

FROM: Edward J. Huck, Executive Director

RE: Assembly Joint Resolution 55

Thank you for holding a hearing on this important issue. The issue of property taxes and government spending is of great importance to my organization. I have attached a letter we have sent to our governor regarding the summit tomorrow in Milwaukee. As you can see there is much the legislature can do to help reduce the costs of local governments and actually reduce total property taxes in Wisconsin. I am also including a report that clearly shows while our major cities were cut more than $30 million in state shared revenues, their levies increased only $18.8 million.

Saying that let me address the Joint Resolution. We find some immediate problems with this draft. Since it is being introduced as a mechanism to save the taxpayers of Wisconsin from state and local government officials we are seeking additional constitutional protection from the future state legislators. These are our first thoughts on this issue and our concerns are not likely to be completely listed here and we will likely make more recommendations.

We recommend the following:

• That as in Colorado, enterprise funds and fees be exempted under revenue controls. Fees are NOT taxes and serve a necessary function for both state and local governments.
• That lines 3-8 on page 5 of the amendment be redrafted because (a) allowable spending provisions may not be meaningful due to the fact that local government does not levy the property tax on an equalized basis and (b) the proposal may prohibit revenue anticipation bonding in the absence of a referendum, compounding the cash-flow problems of local government.
• That the amendment make it clear that any cuts in local government assistance must be met with a reduction in the income tax or sales tax rates. Cutting local services so the state can spend more is not acceptable.
• We demand anti-mandate language. The arbitration decision placed on the City of West Allis was nothing short of irresponsible and the impact on the city’s spending is the result of state law, not local choice.
• The amendment must forbid future property tax and sales tax exemptions. Constitutional protection against state legislators getting political points for eroding local tax base is unacceptable.

I will be taking this proposal to a special committee of our organization for further review and recommendations. You will receive a follow-up letter at that time.