Community Conversations - Act 12 and local control

In another of the continuing series of Community Conversations held at the Menomonie Public Library, a discussion was held on Act 12 and issues of local control in Wisconsin. The panel included Lorene Vedder and Margo Hecker moderating the discussion, and Menomonie City Administrator Eric Anderson, State Senator Jeff Smith(D), and State Representative Clint Moses(R).

The following narrative of the meeting was contributed by Lorene Vedder.

On January 18, 2025, Community Conversations discussed Act 12, the “Shared Revenue Act” signed into law June 20, 2023.  This law has had significant affect on Wisconsin’s local governments both with funding as well as local control.

 

Lorene Vedder, moderator of the presentation, introduced the presentation as a story about local governments.  We interact with them every day as they provide vital services.   Counties and townships provide and maintain the roads that connect us.  Cities and villages provide us clean water and numerous other services.  In local communities we take care of each other.  Local government is the government closest to us.  

 

The other part of the story is about the affect of our Wisconsin State Government on local governments as it oversees their finances and local laws.  The state government can cut off funding sources for the municipalities and counties.  It can issue mandates to fund specific services such as police, fire protection and EMS.  It can limit or control our local law (ordinances) taking away local control.

 

In the over 100 years of shared revenue since the establishment of Wisconsin Income Tax, communities have been getting diminishing amounts of shared income for financing their services.  In 1980 they received 1/3 of the funds for their budgetary needs from shared revenue.  By 2021 they received only 11% from the state.  Also there is an inexplicable variation in the amount of aid that every municipality receives.  The Madison newspapers have reported inequities of shared revenue between Dane County communities and the rest of the state.

 

Inequities of shared revenues between Dane County cities and cities of comparable size in other parts of the state (from Sept. 15, 2024, award letters to the cities):

 

City of Superior - $9,782,544.20

City of Fitchburg   2,244,146.65

 

City of Chippewa Falls. $4,035,657.97

City of Verona                    532,245.94

 

 

In the 21st century our local governments in the State of Wisconsin have been struggling to fund services as shared revenue has been decreasing and due to statewide strict levy limits starting in 2006.  Municipalities are unable to impose sales taxes and have had to rely on the tax levy on real estate.  In 2011 the state stopped allowing the raising of levy limits related to inflation.  Now the only way to increase the tax levy is on net new construction (and it is difficult for all of Wisconsin cities to grow their economies).   Act 12 of June 2023 was a compromise between the governor and the legislature to bring more funding to the local governments from shared revenues.   Also in Act 12, there is a section that reduces the benefit of Tax Incremental Finance Districts (TIDs).  City Administrator Eric Atkinson, one of our speakers at this presentation, told us that the TIDs have been an important instrument in creating new development in the City of Menomonie.  He thought that TIDs should be allowed to continue as before to assist in the new growth of his city.

 

There were 1,924 award letters sent out to all counties, cities, villages and townships in Wisconsin on September 15, 2024.  The shared revenue is broken into 4 categories: 

1. Base payment for county and municipal aid.  This is general aid based on the proportion of aid each county and municipality received in 2024 for shared revenues
2. Utility aid.
3. Supplemental county & municipal aid.  This is supplemental aid to counties and municipalities for spending on certain types of services.  These services are law enforcement, fire protection, emergency medical services, emergency response communications, public works, courts, and transportation. The act prohibits the use of supplemental aid for administrative services.
4. Expenditure restraint incentive program.  These are additional funds granted to local governments by submitting a plan to transfer specified types of services to another county or municipality, or to a nonprofit organization or other private entity.

 

Example: City of Menomonie (award letter) for $4,211,804.79:

 

1. General payment: $3,246,488.03
2. Utility Aid: $133,386.77
3. Supplemental Aid: $790,436.25
4. Expenditure restraint incentive program: $41,493.74

 

City Administrator Eric Atkinson doesn’t expect to receive any grants from the Expenditure restraint incentive program in the future.

 

 

Also a part of this presentation, Republican Representative Clint Moses of the Wisconsin Assembly and Democrat Senator Jeff Smith of the Wisconsin State Senate gave their perspectives on shared revenues and local control and the new legislation in Act 12.  They both voted to adopt Act 12 as several municipalities and counties were reaching a fiscal cliff in 2024 and 2025.  The City of Milwaukee and Milwaukee County were allowed to increase sales taxes - .4% for the county and 2% for the city.  20% of the Wisconsin state sales tax would be applied to shared revenues for the townships, villages, cities and counties across the state.  According to our state representatives, the cities most harmed by the calculated formulas used in Act 12 were the larger cities such as Eau Claire.

 

With accepting the new law to allow increasing shared revenue distributed to our local governments, many new changes were made that limit our local health departments, eliminate advisory referenda, and forbid preferential treatment to protected classes of our population unless it is required to secure federal aid.    

 

Neither of our state representatives wanted the many measures that were included in Act 12.  As this bill was not a “budget bill,” there was no line item veto for Governor Evers.  Many items were placed in the bill that favored special interest groups.  Both Rep. Moses and Sen. Smith want to hear from their constituents in referenda as well as by contacting their offices and filling out surveys.  Senator Smith was in favor of ballot initiative and referendum to circumvent the state legislature through a petition in order to place a proposed state law or constitutional amendment directly on the ballot for citizens to adopt or reject at a referendum election.  

 

Our state representatives were impressed by the Act’s actual severe restrictions of local health departments in case of a new epidemic or pandemic.  The thought was that the governor could override the mandate of total days that businesses could be closed.  An audience member mentioned that might not be done in the case of a serious infection that was not statewide.  

 

Act 12 prohibits both discrimination against or granting preferential treatment to persons in protected classes when making employment decisions or contracting for public work.  These classes are race, color, ancestry, national origin and sexual orientation.  In regards to employment of persons of protected classes, Clint Moses believed that the best person should be hired.  Jeff Smith disagreed and was concerned about propaganda against DEI.  We need to help people in the community that are in need.

 

The next Community Conversations will be on Saturday, February 22.  The presentation will be by Georgina Tegart from the Community Foundation of Dunn County.  She will inform us about the services of her organization especially in regards to funding our local nonprofits.  This presentation will be at the Menomonie Public Library from 12:30 - 2:30 PM.  Lorene Vedder