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County Board Continues its Quest for New Tax

At its July 16 meeting, the Manitowoc County Board failed to override County Executive Ziegelbauer’s veto of a resolution that was seeking the State Attorney General’s opinion as to how a County Sales Tax could be used.

Huh?  If you are confused by what was just written, you are not the only one.  It’s really hard to keep track of all of the back and forth about this issue.  The purpose of this article is to explain what is really going on, how we got here, and where we see things going in the near future.  Here goes.

Since 2017, the County Board has been discussing whether Manitowoc County should levy a 0.5% (one-half of one percent) sales tax.  By Wisconsin law, individual counties have the authority to levy up to a 0.5% county sales tax. This would be in addition to the 5.0% that the state collects by way of its sales tax.  Manitowoc County is one of only 6 counties in Wisconsin that does not have a county sales tax. 

Much of the discussion has centered around how the sales tax revenue could be used, and who would receive the proceeds.  An ad hoc committee was formed, and they came back with a recommendation (around April 30) to use the money for infrastructure improvements, and to adopt a financing model wherein 70% of the sales tax revenue would go to the County, while the remaining 30% would be divided up by cities, villages, and towns proportionately.  A 0.5% sales tax would generate approximately $5.3 million per year.

This recommendation was felt by some to be faulty.  To start, it is commonly understood that the County cannot mandate that the new revenue be spent on infrastructure.  So, they can say that it should be spent on infrastructure, and their intentions may be to do just that, but they can’t require it to be spent in that fashion.  Second, there is an opinion from County Corporation Counsel Peter Conrad stating that the sales tax revenue would have to be shared with the school districts in the county–not just the municipalities.  If this is true, it would greatly diminish the amounts going to the municipalities. The Wisconsin Legislative Council issued a similar opinion. 

The County Board then voted to get the State Attorney General’s (Josh Kaul) opinion on how the money could be spent.  That measure passed 15 – 8 at their June 18 meeting. On June 24, County Executive Ziegelbauer announced his veto of that resolution, saying that we already have two legal opinions, and that the tax is not needed anyway.  At the July 16 County Board, the Board attempted to override the County Executive’s veto, which would have required 17 votes, or 2/3 of the Board’s 25 members. The override measure failed. It got 15 votes, but fell short of the required 17 (9 voted against it).  Meaning, the County Board will not ask the Wisconsin Attorney General for an opinion on how the sales tax revenue can be spent. Note that this vote and subsequent veto were not for the sales tax itself—that has yet to be voted on. 

So where do we go from here?  Is the whole sales tax issue dead or not?  I doubt it. County Board Chair Jim Brey indicated that he didn’t think we would get a county sales tax until we have a different County Executive.  I think that might be correct—Certainly, there is no way that Executive Ziegelbauer will ever support one. In fact, I suspect that the vote totals on the veto override would closely mirror the vote on the actual sales tax.  I think that the 9 who voted to uphold the veto did so because they are against the tax, and it doesn’t matter to them if the State Attorney General would have come back one way or another with an opinion. It would just draw out the process, and it would not make them support the tax. 

If my analysis is accurate, then the County Executive has a precariously narrow veto-supporting minority of County Board members—for now.  There is no doubt in my mind that supporters of this tax are not going away quietly. My guess is that they are trying to find a way to get the County Board to vote on the actual tax, but if that doesn’t work, they will then try to pick off the County Executive and/or the handful of County Board members that vote with him.  Readers who oppose this tax need to be aware of this, and also need to be proactive—Why not help to reelect Executive Ziegelbauer and try to oust some of the Board members who support the tax?

The Scope continues to oppose this tax.  The municipalities continue to cry poor when it comes to road maintenance, but a recent Scope article pointed out that municipalities aren’t always spending all of the money that they could on roads.  And—as pointed out earlier–there would be nothing forcing these municipalities to spend their sales tax revenues on roads, even if they had it.   Now, I have no doubt that some municipalities are indeed strapped for cash, but even then, they have the option of holding a referendum to raise their tax levy limit.  To me, that would be the more honest and direct approach. If Village X and Town Y feel that they don’t have enough money coming in, they can make their case directly to X and Y voters.  Why should everyone who shops anywhere in the County be taxed more to subsidize municipalities that could and should be getting the money directly from their own residents?  

Additionally, many of the taxers are really upset that the County is borrowing (bonding) to pay for some of the larger infrastructure projects.  They would rather raise the tax than pay interest on a loan. Bonding is how municipalities everywhere pay for large expenditures—They spread out the payments over the life cycle of the object, with payments that they can afford in their current budget.  Most of us do this exact same thing with houses and cars. Yes, it’s true—We pay interest—That is the cost of using someone else’s money. The money that the County borrowed to fund 2019 road projects will involve paying in the neighborhood of $3 million in loan interest by the time the bonds are repaid.  This really, really bothers the tax proponents.  They think it’s a waste of money.  But don’t you find it ironic that these same people have no qualms taking $5.3 million per year out of people’s pockets in the form of a sales tax? The County’s overall debt is exceptionally low.  Don’t let the debt argument sway you.

Finally, many tax proponents are saying that most of us wouldn’t even notice half a percent, so why not just implement the tax?  It’s true–most individuals wouldn’t notice an extra nickel on their lunch bill at their favorite restaurant. Many businesses would notice this extra tax though.  It would also hurt lower income people most. Most of all, please look at it from the other side. We will be turning another $5.3 million each year over to the government, and they haven’t illustrated a need for the money.  It’s lunacy to turn it over to them.  

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