City council to consider transportation utility fee for infrastructure funding
Board of Public Works hears proposal after several failed attempts to implement PRAT
By Jalen Maki
Tomahawk Leader Editor
TOMAHAWK – The City of Tomahawk’s Board of Public Works on Tuesday, Sept. 28 heard a proposal from Ruekert & Mielke, Inc., a firm that assists municipalities with infrastructure needs, explaining a potential way the city could generate infrastructure funds: a transportation utility fee.
“A transportation utility fee is a user-based charge meant to augment other revenue sources and fund the maintenance and operation of a municipality’s transportation system,” the firm’s website states.
The board heard the proposal following numerous unsuccessful attempts to implement a Premier Resort Area Tax (PRAT).
After hearing the proposal, the board unanimously voted to send it to the City of Tomahawk Common Council for further examination.
Attempts to implement PRAT unsuccessful
The transportation utility fee proposal came after the City of Tomahawk and state legislators have tried and failed numerous times to enact a PRAT to help with infrastructure funding.
Despite past local support, the PRAT has never received the final stamp of approval needed from the State Legislature.
The city’s efforts to put a PRAT in place date back to 2018, when 69% of voters supported a PRAT in an advisory referendum.
In 2019, then-35th Assembly District Representative and current 12th Senate District seat holder Mary Felzkowski (R-Tomahawk) and several other legislators introduced a bill that would have authorized the City of Tomahawk, the Town of Minocqua and the City of Sturgeon Bay to become premier resort areas, ultimately allowing the municipalities to implement a 0.5% PRAT. The bill died in committee due to leadership choosing not to move it forward.
After the bill stalled, Felzkowski said, “We have a whole segment (of legislators) that hate PRATs.”
“It’s a vote for a tax, and there are just certain people that will never vote for a tax,” she stated.
A bill introduced at the same time by then-State Senator and current U.S. Rep. Tom Tiffany (R-Wis.) also died in committee.
Transportation utility fee proposal
Ed Maxwell and Kevin Wagner of Ruekert & Mielke, Inc. provided the board with an informational presentation regarding a potential transportation utility fee.
Maxwell told the board that transportation utilities are similar to stormwater utilities, which were created in the early 2000s to help municipalities to cover the cost of unfunded mandates, as well as assist in reducing flooding and improving water quality.
“Transportation utilities are the same concept,” Maxwell explained. “It’s a way to get funding for the things you need, and you’re not creating any additional infrastructure, buildings, or adding layers of employees to do that.”
Transportation utilities can fund “just about anything transportation-related,” Maxwell said, including road repair and reconstruction, vehicles needed for departments involved in infrastructure maintenance, and operations. Maxwell noted that transportation utility funding is not intended to be spent on street sweeping and snow plowing, “because those are called out by the state statutes as covered services, and if you did, that would count against your levy limit.”
Transportation utility fees, like stormwater utilities, are housed within other departments, leading to the sharing of resources and an increase in efficiency, Maxwell said.
Maxwell said the administration of a transportation utility fee is “pretty straightforward,” noting that most of the work involved comes from billing and keeping track of spending.
Implementing transportation utility fees helps municipalities “(get) around levy limits” and provides “sustainable cash flow,” Maxwell told the board.
Calculating utility costs
Maxwell said the transportation utilities are “very fair in terms of matching the benefit of a transportation system with the cost.”
“People pay in proportion to how much they use the roads,” Maxwell stated. “It can (also) help fund economic growth and help people save money, because bad roads end up costing people a lot in vehicle maintenance.”
To put a transportation utility in place, a municipality must start with a “revenue requirement,” which is how much money it needs to raise to fund its transportation needs. The City of Tomahawk’s revenue requirement is $500,000.00 per year, according to an estimate from the firm.
After determining the revenue requirement, a municipality then must decide how to allocate the costs. To do this, the firm divides properties into groups “based on how much traffic comes out of (each) particular land group class, all the way from your really low-use properties, like churches, all the way up to your really high-use (properties), like supermarkets and fast food restaurants,” Maxwell explained.
Classes are categorized as multi-family residential (apartments, condos), single-family residential, commercial, manufacturing/industrial, and institutional (schools, churches).
The firm then consults studies by the Institute for Transportation Engineers (ITE) to calculate an average number of trips generated from each property on a daily basis, based on the size of the building(s) on the properties.
In total, the firm estimated the City of Tomahawk would see 28,058,531 trips from 1,459 customers each year.
A single-family home, which the firm refers to as an Equivalent Residential Unit (ERU), would pay $65.76 per year for a transportation utility fee, according to the estimate.
The city council would ultimately have to approve a resolution implementing a transportation utility.
Maxwell noted some challenges transportation utilities in general could face.
Conservative law firm The Wisconsin Institute for Law & Liberty (WILL) last month filed a lawsuit against the Town of Buchanan near Appleton after it implemented a transportation utility fee, alleging the fee is “an unlawful tax.”
“I don’t think (WILL) will be successful,” Maxwell stated. “I think the courts will uphold transportation utilities like they did stormwater utilities 15 years ago. But, it’s hard to predict how the courts will go, so this is something to monitor and watch. Depending on how the courts rule, that could have some impact on what (the City of Tomahawk wants) to do.”
The State Legislature could also present potential problems to the transportation utilities.
Wagner noted that if the Buchanan lawsuit is unsuccessful, WILL could attempt to get the Legislature to pass a law requiring municipalities with transportation utilities to reduce their levies, ultimately resulting in a “wash” fiscally. In that event, Wagner stated his belief that the Legislature would “grandfather in” municipalities with transportation utilities already in place.
Wagner noted that the firm does not anticipate the Legislature to take up transportation utilities in its current session.
City council to consider utility
The City of Tomahawk Common Council will consider the implementation of a transportation utility fee.
Maxwell noted the importance of educating citizens about the potential transportation utility, suggesting the city hold public information meetings where citizens can learn more.