A Tale of Two Policy Proposals
City proposes a new transportation utility fee to raise money for road repair. Ald. Lowe proposes a gun buy-back program to...?
A Gun Buy-Back Program
Joseph Heller's novel, Catch-22, is about members of an Allied B-25 bombing squadron off the coast of Italy struggling to survive World War II. As a novel set in Europe and about World War II and about survival, you might expect the Germans to be involved. But in fact, they’re almost never mentioned. Because the real enemy of the book’s protagonist, Capt. John Yossarian, is a government bureaucracy whose authority over his life and death is often justified by a logic so irrational, absurd, and circular that he fears it might drive him insane if it doesn’t get him killed first.
For example, Yossarian knows that the more bombing missions he flies, the less likely he is to make it out alive. But every time he approaches the number of missions required to get the hell out of Europe and go home, his nemesis Colonel Cathcart raises the limit. He considers trying to convince him he’s too insane to keep flying, but it is here he realizes the bind he’s in:
There was only one catch and that was Catch-22, which specified that a concern for one’s safety in the face of dangers that were real and immediate was the process of a rational mind. Orr was crazy and could be grounded. All he had to do was ask; and as soon as he did, he would no longer be crazy and would have to fly more missions. Orr would be crazy to fly more missions and sane if he didn't, but if he were sane he had to fly them. If he flew them he was crazy and didn't have to, but if he didn't want to he was sane and had to. Yossarian was moved very deeply by the absolute simplicity of this clause of Catch-22 and let out a respectful whistle.
Similarly, if less consequentially, Ald. Lowe appears to have been ensnared in his own trap of bureaucratic illogic as he attempted to drum up interest from the Common Council and City Staff for his proposed gun buy-back program during last week’s Financial Affairs committee meeting on September 13. Settling into his chair facing the rest of the committee, single 8.5 x 11 in hand, he began with an air of breezy confidence and good humor:
“Easiest Financial Affairs item,” he tells them. “Because I’m not requesting any money from the city.”
And before anyone can ask why he bothered to come then, he tells them that he’s looked at similar buy-back programs in other cities, like Chicago and Cleveland. These cities didn’t pay residents in cash for any guns that were turned in; they got local businesses, including big box retailers like Target, to donate gift cards that they could provide as compensation. He wants to do something similar. And it’d be a big, one-day event, “like six hours, 10 a.m. to 4 p.m. and people would be able to turn in guns.”
But “let me be crystal clear,” he offers reassuringly: “We’re not going into anyone’s house taking guns away. It’s not mandatory. It’s [a] completely volunteer program.”
And that was mostly his presentation. It lasted four minutes.
What his presentation did not include, perhaps considering it to be self-evident and perhaps worried about getting to his next meeting on time, was much explanation of what the goal of this effort was and why a gun buy-back program would best accomplish it. He did assert that it would be “a good idea” and that “we know crime is going up,” but never specifies what types of crimes he’s referring to or why the city buying back old guns from residents would reduce them. Is it the would-be criminals that tend to turn in their weapons for Target gift cards?
“So that’s where I’m at,” he concludes, “Open to questions. Feedback?”
Perhaps surprised at the presentation’s brevity, the city’s Finance Director, John Ruggini, suggests that maybe the City Administrator could provide “the context of the discussion.”
But Asst. City Administrator Melissa Weiss says that actually, the city would rather not “invest too much staff time in exploring what this might cost in terms of staffing time and resources” unless the common council is actually interested in the proposal. You see, they’ve implemented a “new model” for alder-initiated requests like these:
So, this is one of the [first] handful of […] alderperson-requested memos that [have] come forward to a committee under this new model. And so if this committee is interested in advancing the proposal, we would ask that it come to staff for a review of what it would take to kind of create this program and run it and then we can come back with some of that information to you.
Unfortunately, the Common Council doesn’t have enough information to decide whether they’re interested or not. After much back-and-forth between committee members, Ald. Lowe, and city administrators about why this came before Financial Affairs, how this “new model” for handling proposals was supposed to work, whether the police department would collect the firearms and how much that would cost, and whether gun buy-back programs even did anything—Ald. Lewis thinks ‘no’ citing research here and here. Ald. Dolan refuses to believe him—Ald. Tilleson concludes:
If this is truly an all volunteer event, then I’m open to exploring this. But I think at this point I have too many unanswered questions regarding the structure of it. It would be just like any event that we sign-off on an event permit for: by the time it comes to the council to sign off it’s a thought-out plan of how it’s going to go, the look and feel of it—so that we’re just giving it our final approval.
And right now we just have a memo with an idea—a good idea—but not a proposal […] I don't think we should be asking city staff to design the proposal for you.
For want of detail the Common Council remains uninterested. For want of interest the City refuses to provide details.
Perhaps unintentionally proving the City Administrator’s point, Ald. Lowe, somewhat baffled by everything that’s just happened, finally says:
I'm just kind of at the point where it’s like we ask staff to do things all the time, literally weekly. So why can’t we ask staff to spend like an hour, thirty minutes of research into this when we literally ask staff to do things every single week?
Ald. Lowe was asked to do a little more homework on the whole thing before coming back to the Common Council. Let’s hope he makes it out alive, with his sanity intact.
To his credit, I do think Ald. Lowe has at least half a point. It’s not exactly clear how “the new model” puts the Common Council in a better position to decide which proposals are worth the staff’s time and attention and which are not. Partly because alders don’t necessarily know how much time staff members have or how much time a single proposal might consume, and partly because it’s hard for the Common Council to decide the best allocation of staff resources when proposals are presented to them for consideration one-at-a-time and to different alders on different subcommittees.
I will also say that, while I can see the City Administrator’s logic, if I was a Machiavellian City Administrator I would be cooking up Helleresque bureaucratic procedures—excuse me, “new models”—like this all the time to bury proposals I thought were pointless and a waste of resources.
A Transportation Utility
The City of Wauwatosa spends money to employ police officers, buy fire trucks, fill libraries with books, pump water, drain water, and pave roads. It gets money for many of these things through property taxes. But the downside to paying for things through property taxes is that the state of Wisconsin places significant constraints on a municipality’s ability to raise those taxes to cover increased costs.
In the early-aughts many municipalities in Wisconsin increased property taxes year after year at a rate that far exceeded inflation. Homeowners got upset, and the state legislature said that from now on local governments could only raise more property tax revenue through “net new construction”1—they could get more money from people building more valuable buildings in their cities, but they couldn't simply increase the tax rate on current property owners.
On the one hand, this can encourage cities to be efficient and use their financial resources wisely since they can’t ask homeowners to fill the holes in their budgets. On the other hand, this can force declining cities into a downward spiral. Without enough revenue, cities must reduce services, but this reduction in services causes more residents to flee, lowering the city’s revenue even further. Additionally, even for cities that aren’t declining, services can increase in price beyond the rate of new construction, straining finances and forcing cities and municipalities to lay off employees, defer maintenance, or engage in somewhat complex financing methods (like Tax Incremental Financing) to encourage more new construction.
But cities can also raise revenue through utility fees. Wauwatosa doesn’t charge you for using water to fill your bathtub or wash your dishes based on the value of your home; it just measures how much you use and sends you a bill. What’s more, utilities aren’t subject to levy limits like property taxes are. They have their own constraints, but in general, they can raise prices in line with the underlying cost of the services they provide. If the city needs to replace a bunch of water pipes, they’ll increase your water bill to pay for it.
Given these constraints, it makes sense for local governments to find ways to label more city services “utilities” in order to take advantage of differences in state law.
The City’s Financial Director, John Ruggini, in a presentation to the Transportation Committee on September 13, likened it to pouring water from one glass into another. Previously, the city raised about $750,000 (the water) from property taxes (the glass) to repair roads. Now they’ll just raise that $750,000 (same water) through a transportation utility fee (different glass). An analogy isn’t really necessary to understand this idea, but he’s actually used it in a couple different contexts, and I wanted a reason to include this picture:
Furthermore, raising money for road repair through a Transportation Utility fee instead of property taxes has a number of advantages:
Partly because of levy limits, the city has been underfunding its road maintenance for many years. Ideally they would repair or replace 4 miles of road each year, but instead they are only repairing or replacing about 1.5 miles of road each year. So they’d like to raise money through transportation utility fees to fund an addition $1 million dollars for transportation capital projects.
Right now the city borrows any additional money it needs for capital costs. It would like to do less of this, because then it has to pay interest and interest rates are rising. Raising additional money through utility fees will allow them to achieve their longstanding goal of cash financing 40% of the overall capital budget.
Currently, property owners pay for transportation costs based on the value of their properties. It would be fairer for people to pay based on how much traffic they generate, and the wear-and-tear they put on roads. Transportation utility fees will be based on national data collected by the Institute of Transportation Engineers on the average traffic generated by different types of properties. This will actually shift the cost burden away from owners of single-family homes and toward big box retailers, restaurants, and other commercial businesses.
Although the city doesn’t know how it will implement this yet, they also plan to provide utility fee credits to businesses and property owners that can demonstrate reductions in the amount of traffic they are generating.
They can also provide credits to low-income homeowners.
Currently, when the road is repaved in front of your house, you get what’s called a “special assessment” which is a bill on top of your normal property taxes that covers about 60% of the total cost of the project. With extra funding available through a transportation utility fee, they want to reduce these special assessments to 25% of the total cost.
If you’re like me, you might be thinking, “Gee, why don’t they just make everything a utility?” For instance, Wauwatosa spends 21% of its revenue on the Fire Department and 25% on the Police Department. Why not create a Public Safety Utility, charge everyone some sort of base fee plus a variable amount dependent on the typical number of service calls for different types of properties?
I’m not sure. According to the presentation, the Home Rule Act gives municipalities broad discretion to take actions that improve the “health, safety, and welfare of the municipality.” This was how stormwater utilities were justified in the 90s before a law was created that explicitly allowed them. It is how Wauwatosa, and several cities before, justify the creation of transportation utilities.
But it’s contentious. Currently, the City of Pewaukee is being sued by Wisconsin Manufacturers and Commerce, a business trade association “representing roughly 3,700 employers of every size and from every sector of the economy” for the creation of their transportation utility. RA Smith, the consulting firm hired by Wauwatosa to design this new program, thinks the City of Pewaukee’s case is a good one but that the result will provide better clarity either way.
Overall, members of the Transportation Affairs committee seemed pretty receptive to the idea. No vote was taken—the city has already asked for $25,000 in the 2023 budget to implement the plan—but they did approve city staff to begin drafting the necessary ordinances and policies for Common Council approval. The Department of Public Works expects that they’ll be finished with implementation by early-2024.
A moment with John Ruggini:
→ So will this reduce my property taxes? John Ruggini says all else equal, yes, but all else isn’t equal. It is true that we’ll stop raising money through property taxes and instead raise it through a transportation utility fee (TUF) and that if we charged based on what transportation engineers call “traffic generation” rather than property value, homeowners will owe less and other property owners will owe more (the graphic below illustrates this pretty well). But we also want to raise more money in aggregate, so the absolute cost to homeowners may not change much at all.
→ Alright, so how much will I pay? John Ruggini really doesn’t say. There’s a not-very-helpful graph that suggests the owner of a single-family home will owe $51 per year in transportation utility fees, but that doesn’t tell you how your property taxes will change. Will they go down? By how much? No idea.
And there are other things that are a little unclear. For instance, in one part of the presentation they mention shifting $750,000 raised by property taxes to the transportation utility. But on a separate slide it’s clear that the $51 per year figure assumes funding the transportation utility with $3 million. And on a third slide, there’s a table that suggests the city spends $10.1 million per year on transportation related costs. It’s not clear to me how all these numbers fit together.
→ What will this new transportation utility fee look like? John Ruggini says the new transportation utility fees would appear on the same bill as your water and stormwater utility fees.
→ Aren’t big box stores going to be irritated and sue the city because they’ll be forced to pay a larger portion of transportation capital costs? John Ruggini says they're waiting to see how the Pewaukee lawsuit resolves. The benefit of hiring RA Smith is that they’ve helped several cities design these types of utilities, and they’ve structured Wauwatosa’s in a way that’s “100% defensible and within the way the law is structured.” If Pewaukee wins their lawsuit, Wauwatosa will feel even more confident about theirs.
→ You mentioned lowering special assessments. Why not eliminate them entirely? John Ruggini says it’s good for you to have some skin in the game. If he reduces the cost of special assessments to zero, he worries you’ll start calling the city to repave your street as soon as it gets a pothole in it, because what do you care? You’re not paying anything extra for it. And John Ruggini wants you to care.
This is a bit of a simplification. A city can also raise more revenue via referendum. I think. I wrote a little about property taxes previously: Budget Gaps in Wauwatosa’s Finances
Thank you for covering this. Also, the new legislative system we voted to fund on Tuesday should streamline the proposal system. I've been lobbying for it and looking forward to seeing it in action.
*The WI Walking Quorum rule is something.
Given the somewhat recent history of property tax policy in WI, it seems like there is a middle ground that could be had. Unfortunately that would require some trust between the legislature and municipalities, and it’s pretty evident there’s a shortage on trust these days.