Wheel Tax Now Ranges from $85 to $253

It’s Wisconsin’s newest lottery: Your zip code determines whether you will pay anywhere from $85 to $253 when you register your car or SUV next year.

The City of Madison’s decision to levy the highest “wheel tax” in the state – $40 per vehicle – renews a debate over local governments using a revenue-raising tool they have had since the 1960s, but have lately begun to use far more.

“Some of us homeowners over 60 years old are being taxed out of our homes,” one Madison resident emailed city officials. The Wisconsin State Journal reported the email. “Cut spending, please,” the email went on. “The wheel tax is yet another tax on those of us who most vulnerable…Cut all spending but police and fire.”

If that Madison homeowner drives a Chevy Impala, they will pay $153 to register it next year: $85 to state government, $28 to Dane County, and $40 to the City of Madison.

If they drive an environment-friendly electric car – a Tesla or Chevy Volt, for example – add a state-government surcharge of $100, bringing the total registration fee to $253. If they drive a Toyota Prius hybrid, the state’s surcharge would be $75, bringing the total fees to $228.

But, if they live in a community just outside Dane County without a wheel tax, they will pay $85 to register their Chevy Impala next year.

Milwaukee County has a $30 wheel tax and the City of Milwaukee adds $20 through its vehicle registration fee.

The Wisconsin Department of Transportation website says:

*11 of the 72 counties now levy wheel taxes that range from $10 (Chippewa and St. Croix counties) to $30 (Eau Claire and Milwaukee counties). A 12th county – Langlade – starts a $15 wheel tax next year.

*25 cities, towns and villages now levy wheel taxes that range from $10 to $30. Madison will be the 26th when its $40 tax starts Feb. 1. Some of the smallest municipalities – Tigerton, population 709; Iron Ridge, 899; Gillett, 1,386, and the Town of Arena, 1,494  – now levy $10 or $20 annual wheel taxes.

Madison officials say the $40 wheel tax will raise about $7.8 million, which will help pay for new rapid-transit bus routes and other transportation programs. “I don’t want us to miss our opportunity to invest in the things that will make us a greater city than we are,” Madison’s Mayor Satya Rhodes-Conway said. “I’m sorry, but the vehicle registration fee is the way to make those investments. I don’t want that to be the answer, but it is.”

Curt Witynski, deputy director of the League of Wisconsin Municipalities, said local governments adopt wheel taxes “because their transportation needs continue to be greater than the revenue they have available under property taxes and state aids.”

“While it is true the state increased transportation funding for local governments, that was after significant cuts in 2011 to general transportation aids and shared revenue,” he said. “The [current state] budget finally fully restored the 2011 cuts.”

Overall, he said, general transportation aid for cities and villages “is funded at levels only slightly higher than 2010 .” And the cumulative inflation rate since then has been 18 percent.

And, Witynski said, funding formulas that determine how the increase in state aid is spent favor towns. He gave this illustration:

“The new local transportation grant program … set aside $75 million for local governments to compete for. Towns receive 39 percent, or $28.8 million. Counties receive 36 percent, or $26 million. And cities and villages receive 25 percent, or $18.5 million. So, 600 cities and villages will be competing for $18.5 million.”

Some Republican legislators have sponsored bills requiring that voters approve a referendum before a local government can levy a wheel tax.

Bad idea, Witynski said: “The Legislature should continue to allow locally elected officials the discretion to make this policy decision. Local voters can take action at the spring elections, if they are dissatisfied with the enactment of a local vehicle registration fee.” Counties do not have to pass a referendum to levy a 0.5% sales tax surtax, Witynski also noted.

In 2017, counties collected $377.5 million from local sales taxes and local wheel taxes totaled $30 million.

Referendums are also not required before a community can adopt a room tax, Witynski added. Room taxes totaled $99.5 million in 2017.

“Why require a referendum for local vehicle registration fees,” Witynski questioned, “but not for these other taxes?”

Steven Walters is a senior producer for the nonprofit public affairs channel WisconsinEye. Contact him at stevenscotwalters@gmail.com