Racine Revenue Racine Revenue Sharing ProgramSharing Program

Presented to:The Local Government Institute of

Wisconsin

May 30, 2012

William Mielke, P.E., R.L.S.wmielke@ruekert-mielke.com (262) 542-5733

Presentation Presentation OverviewOverview

• The Racine Area

• The Problem Statement

• The Racine Experience

• The Intergovernmental Process

• The Agreements Reached

Racine Racine AreaArea43

43

79494

894 43

894

43

94

9443

94

Washington Ozaukee

Waukesha Milwaukee

Racine

Kenosha

Walworth

Area ServedArea Served

The Racine The Racine ExperienceExperience

• Racine extended utility service without annexation in 1960’s

• Previous tax base growth depended on annexations

• Industry and high-value homes migrated to surrounding towns.

• Courthouse, hospital and other tax-exempts stayed in the City

• Racine residents supported regional amenities such as the Zoo, Library and Art Museum

• City customers carried the cost of water and wastewater capacity to support growth in the towns.

• Fiscal capacity of City fell to the point where the tax rates needed to be twice as high in the city.

2000 Equalized Property 2000 Equalized Property Values per CapitaValues per Capita

Costs for the City Costs for the City Created by Created by

Surrounding Surrounding CommunitiesCommunities

• New development causes an increase in demand for regional facilities.– Library system, courthouse, jail,

hospitals, schools, churches, museums, and major parks.

Costs for the City Costs for the City Created by Created by

Surrounding Surrounding CommunitiesCommunities

• Transportation systems are increasingly burdened by traffic from the surrounding communities.

Costs for the City Costs for the City Created by Created by

Surrounding Surrounding CommunitiesCommunities• Municipal service costs for

regional tax exempt facilities from police protection to snow plowing are being borne by City residents.

Impetus for Impetus for NegotiationsNegotiations

• Expiration of 20-year sewer service agreements; need to renew and to accommodate new development, particularly along IH 94 corridor

• Need for an $80.0 million expansion to Racine’s Wastewater Treatment Facility

• Racine’s ability to impose a sewer moratorium

• Concern by broader community interests over potential economic stagnation (RAMAC)

• The big State stick: Wisconsin’s “little 208” law requiring regulatory decisions about sewerage facilities to be consistent with area wide water quality management plans

Dovetailing InterestsDovetailing Interests• City of Racine

– Fair funding of regional infrastructure and services

– A share of the revenues from development supported by its utility service

• Outlying Municipalities– More self-determination– Extension of sewer service

Nine Areas of Study / Nine Areas of Study / NegotiationNegotiation

• Wastewater Treatment Facility• Racine Public Library• Racine Zoo• Racine Art Museum• Belle Urban Transit System• Racine County Sheriff’s Department• Eastern Racine County Highway

Jurisdiction• Consolidated Dispatch Service• Revenue Sharing

The ProcessThe Process• Leadership by Racine County Executive

• Formation of informal group of chief elected officials (HOG)

• Monthly dinner and discussion meetings

• Private sector venues and meeting sponsorship

• Closed-door sessions

• City of Racine sponsored the work effort

• Ruekert/Mielke carried out the staff work

The ProcessThe Process• Racine County Planning Director and

SEWRPC Executive Director reviewed consultant’s work, facilitated discussion, and helped the surrounding communities to understand that the City’s analyses and conclusions were sound

• Once the heads of government reached conceptual agreement on the issues, the administrators, lawyers, and consultants forged a 100+ page agreement

• Agreement executed by principal parties on April 25, 2002

• Process took nearly four years

Revenue Sharing Revenue Sharing ObjectivesObjectives

• Sharing of commercial / industrial tax base

• Reduction in competition for development

• Equalization of fiscal capacity

• Reduction of disparities in tax rates

• Transfers of revenue from wealthy municipalities to poorer municipalities

WI Statutory WI Statutory AuthorityAuthority

• §66.0301 – Intergovernmental Cooperation

• §66.0305 – Political Subdivision Revenue Sharing

Existing Revenue Existing Revenue Sharing Models: Didn’t Sharing Models: Didn’t

Quite FitQuite Fit• Only a handful of programs nationwide

• Extensive review of academic research analyzing the major programs

• Four programs most similar to our vision:– Minnesota Fiscal Disparities Act of 1971– Hackensack-Meadowlands, NJ– Charlottesville and Albermarle Co., VA– McFarland and Madison, WI

Racine’s Unique Racine’s Unique Revenue Sharing Revenue Sharing

ProgramProgram• Modified the shortcomings of the

Minnesota model

• One of the largest in the U.S.

• Negotiated, not legislated

• Unique formula accounts for commercial and industrial property values and overall fiscal capacity

• Payments always flow from high fiscal capacity to low fiscal capacity communities

How the Racine Plan How the Racine Plan WorksWorks

• 30 years of payments

• Formula includes two components:– The sharing of commercial and

manufacturing tax base.

– The sharing of the overall tax base on the basis of fiscal capacity.

Revenue Sharing Revenue Sharing FormulaFormula

( )

Shared Commercial / Mfg. Tax Base

Shared Residenti

al Tax Base

Local Tax Rate

Shared Revenue

s

Revenues from New Revenues from New Development Development

Effect of $10 Million

New Development

in Mt. Pleasant

Municipality 2003 Payment

New

Revenue Sharing Payment

Increase/

(Decrease)

in Payment

Additional Tax

Revenues Generated

Town of Caledonia $ (194,810) $ (193,956) $ 854

Town of Mt. Pleasant (628,201) (633,726) (5,525) $67,400

Town of Raymond (18,446) (18,432) 14

Town of Somers 1,455 1,467 12

Town of Yorkville (32,938) (32,923) 15

Village of Elmwood Park (2,740) (2,733) 7

Village of North Bay (7,751) (7,744) 7

Village of Sturtevant (84,160) (84,080) 80

Village of Wind Point (48,932) (48,892) 40

City of Racine $ 1,016,523 $1,021,019 $ 4,496

Lessons LearnedLessons Learned• Achieving significant intermunicipal

cooperation is extremely difficult.

• Must have a Win/Win solution where all parties gain something from the arrangement.

• Communities must be open to exploring all of the potential advantages to cooperation.

• Resolving past issues such as boundary disputes or addressing fiscal capacity disparities can foster cooperation on new issues.

• Shared services must provide financial benefits to taxpayers.

“I’m very sure that this agreement will be the most important document I’ve ever signed. I am extremely privileged and proud to do so.”

~Joe Clementi, Chairperson, Town of Mount Pleasant

“I’m very sure that this agreement will be the most important document I’ve ever signed. I am extremely privileged and proud to do so.”

~Joe Clementi, Chairperson, Town of Mount Pleasant