May 23, 2000

To the Commission on State/Local Partnerships for the 21^st Century

Ladies and gentlemen of the Commission, my name is Doug Oitzinger and I am the Mayor of the City of Marinette. I would like to share with you a few facts about our city that I feel are important in understanding some aspects of the current relationship that exists between our community and State government.

Our city is a border city of approximately 12,000 people. Located just 55 miles north of Green Bay, we border the State of Michigan and share our community life with our sister city of Menominee, Michigan. Menominee lies just across the Menominee River, the natural boundary line between the two states. Not much is ever mentioned about the special circumstances that border cities experience, but I think it’s worth the time to talk briefly about these situations as I believe they may shed some light on some much larger issues.

Across the river, another 10,000 people live in Menominee. Many of them work at factories and businesses in the City of Marinette. Probably all of them shop at stores in our city on a regular basis. Would it be fair to say our streets are used as much by Menominee residents as our own? Probably not. But certainly our main thoroughfares are, and many side street "short cuts" that we all know. The snowplowing we do in the winter and street repair and replacement in the summer is certainly used by our neighbors. Many of our automobile accidents involve cars with Michigan license plates. The police and fire departments are routinely dispatched to these. Our parks are certainly used by our neighbors across the river. Our sewer and water utilities service the plants and businesses where our Menominee neighbors work. In short, our community of 12,000 people is frequently supporting services for a much larger population. I’m sure Menominee could make similar claims. Nowhere in the state formulas for shared revenue or local aides is this fact recognized.

Now, you do not have to be a border community to make this statement. I could have used the Town of Peshtigo that surrounds the City of Marinette on three sides to make the same point. Our city, like almost every city in the state, provides jobs, quality of life opportunities, shopping centers, and direct services like snow plowing, police and fire protection, etc. to a much larger population than just those that live in our city. Yet, it is the local city property taxpayer that funds these services. If the City of Marinette ceased to exist tomorrow, half of the jobs supporting the City of Menominee would go away, with that figure increasing closer to ninety percent for people that live in the Town of Peshtigo (our second largest population center in the county). For many, many miles out into Marinette County, and even Oconto County, significant job loss would occur. How much income tax from the surrounding areas would the State of Wisconsin lose?

One of the points I am attempting to drive towards is the question of local option taxing authority. What does that mean in such a highly mobile society? Marinette is a regional shopping area and would do quite well if we could keep all the sales tax collected in the City limits. But what about cities where the mall is located just across the town line? Do local option taxes represent the true tax base for services that are being provided? I think my earlier description of border community life suggests not. We must be very careful when we talk about "local" taxes if we haven’t first discussed what "local" means and how taxing boundaries are poor representatives of who is delivering services to a given population. The equalized value approach to distributing revenue collected by the State seems the only approach that currently addresses this issue.

The second point I would like to make is regarding the source of State revenue. It is often stated that shared revenue has been frozen to "cut State spending." I find that an interesting comment as it seems to suggest that the State has this pot of money which it created and local government is just another entitlement program looking to rob our state taxpayers of more of their money. My perspective is that most of the State revenue generated within the State of Wisconsin came from some local community. People do not work in the State of Wisconsin, own a home in the State of Wisconsin, buy their material possessions in the State of Wisconsin. People live, work and shop in a local community or do all three in several different communities. The State revenue that is being protected from local governments was all generated in some local municipality. The State Income Tax form requires that you tell the State what school district you live in. I wish it also asked what municipality did you earn your income in. That might just send a signal that State revenue came from "somewhere" that is a real place that delivers real services.

Our city has a very fine industrial and retail base. That didn’t happen by accident. Many people, many previous City administrations, and several local organizations have recruited and supported business development in our city. The City of Marinette has made many investments in its infrastructure to enhance our business development. Our City, like cities across the State, is the economic partner of business growth. The growth in the Corporate Income Tax, Personal Income Tax, and Sales Tax Revenues with which the State enjoys filling its coffers are often owed in part to the investments our local communities have made to attract and support business growth. Likewise, people and businesses come to live in our communities because of the quality of life benefits many of our services provide.

The third point I would like to make relates to how much state aide we actually receive. Local leaders are often chided with the stated statistic that two thirds of all State spending goes back to local government. I’ve attached a chart that demonstrates that of the Corporate, Personal and Sales taxes collected within the City of Marinette, only 24% is being returned to the City in the form of shared revenue and payments for municipal services. Yet, when a citizen picks up the phone looking for their street to be plowed, to make a 911 emergency call, to ask for brush to be picked up, or a pot hole filled, they do not dial an 800 number or area code 608 to talk to a Madison official to obtain help. They dial a local number because none of these services are delivered by the State; local government delivers them. It is odd indeed, that while nearly 100% of the services are delivered locally, our City receives only 24% of the tax revenue generated within the City to support these services.

Finally, I do not wish to do what I have experienced so many times with citizen complaints. Namely, point out where there are problems and not offer any solutions. There are several good proposals that I’m sure you have received already. I would like to offer one that I have not heard mentioned as yet. I believe that local government should live under the same revenue constraints and opportunities that the State experiences with the tax revenue it collects. Using an equalized formula for distribution, I believe the State should commit to a percentage of the General Purpose Revenue for the shared revenue line item in the budget. As the tax revenues grow, so would the money available to local communities grow. If we have a downturn in the economy, local communities would have to adjust to less growth or actual reductions just as the State does. This percentage of revenue should be a straight pass through that does not change as a percentage from budget to budget. What should not happen is for the State to adjust its commitment to this percentage for shared revenue based on new, emerging priorities that are politically expedient to support in a given budget cycle. This proposal would be a fair, real world based partnership that recognizes the role local municipalities play in delivering needed and wanted services to our taxpayers.