Apparently if equity is too hard to explain to us stupid taxpayers, they abandon their values.
Opening of the meeting
It was a virtual meeting, 19 alders in attendance, Alder Armani Latimer Burris was absent.
Mayor starts off the meeting with her usual remarks about being courteous, there are no disclosures or recusals. There is only one item on the agenda.
Referendum
President Yannette Figueroa Cole motions to approve, Vice President John Duncan seconds.
Substitute motion
The Mayor asked for questions for staff, but City Finance Director Dave tells the mayor that the motion should be for the substitute.
Mayor agrees, no objection that the motion is to adopt the substitute
Questions for Staff on the Substitute
Alder Figueroa Cole asks Schmiedicke to review the substitute for them.
Schmiedicke says the substitute updates numbers in the original resolution based on info provided by the Department of Revenue on August 15th as well as the impact of the city’s debt issuance which was also on August 15th. He sent an email yesterday working through the specific numbers. Generally, the amount of the increase or limits was 2.5% but based on Department of Revenue numbers that has been updated to 2.97%. That is the combination of net new construction and a factor added for half of the increment value of any closed TIF districts. Those two numbers add up to 2.97%. Another change is in the maximum allowable levy under the state limits which is the number in the substitute which is $296,149,162. That reflects the net new construction, closed TIF district along with the debt service change that occurred based on the actual debt service counts from the sale on August 15th. Its still an addition7.4% and then because of the slightly lower maximum levy limit, adding the $22 million slightly changes the total number of the maximum levy limit to #318,149,462. That reflects the substantive changes in the referendum question and in the resolution.
Alder Nikki Conklin asks if now is the time to talk about the substitute that Alder Marsha Rummel is proposing. Mayor says not yet.
Amendment/Second Substitute?
Alder Marsha Rummel moves an amendment to change the $22M to $29M
1. Increase the amount in the referendum resolution and referendum question from $22,000,000 in the Substitute Amendment to $29,000,000.
2. Change the total levy amount in the referendum resolution and referendum question from $318,149,462 to $325,149,462 and the percentage increase from 7.4% to 9.8%.
3. Request the Common Council consider reducing the Urban Forestry Special Charge to $500,000 as part of the 2025 Operating Budget to offset the $7.0 million added to the referendum question.
4. Add the following “WHEREAS” clauses and add and amend the “RESOLVED” clauses to the referendum resolution as follows:
WHEREAS, Section 4.095 of the Madison General Ordinance was created in 2014 to establish an Urban Forestry Special Charge (UFSC) based upon the authority granted the City by Wis. Stat 66.0627, pursuant to Sec. 4.09(13) MGO; and,
WHEREAS, the intent of the UFSC is to recover the costs to the City to maintain and manage the City’s urban forest through its urban forestry program, which provides a service to all real property in the City; and,
WHEREAS, the projected expenses for services provided under the UFSC in 2025 is $7.5 million; and,
WHEREAS, if the City were to recover $7.5 million in expenses through the UFSC in 2025, the estimated cost for an average residential customer would be $91 per year; and,
WHEREAS, if the City were to reduce the UFSC by $7.0 million and transfer expenses to the general fund by increasing the amount in excess of the levy by $7.0 million, municipal services bill for the average residential customer would decrease by $84/year and the property tax levy on the average value home would increase by $73/ year, which would be a net savings of $11/year per residence; and,
WHEREAS, if the 2025 budget maintains the UFSC to recover remaining urban forestry costs, estimated to be $500,000, the average cost per residential customer would be $0.50/month or $6/ year; and,
WHEREAS, property taxes are generally more progressive than special charges because property taxes are a percentage of value, with higher value properties paying a higher share of taxes; and,
Alder Nasra Wehelie seconds the motion.
Mayor calls the amendment a second substitute.
Alder Rummel thanks the council for considering this because on the surface it appears to be asking more when we are hearing alarm from all our residents about a referendum, so she understands their hesitation. In March her journey started on the topic of the special charges and buying them back and she did not come up with the idea and she understands several people also talked with Street Superintendant Charlie Romines who came up with the idea of buying back the special charges because it is more equitable for taxpayers on some level to use the tax levy to pay for services than it is a more regressive special charge tax. Also, it creates opportunities, because we’re not just looking at 2025 but the next 6 years, to create a little more wiggle room in the levy limit and the options that are before it. She thought about it for a long time and decided not to move the 2 special charges, the Urban Forestry charge and the resource recovery. But just the Urban Forestry charge which is just the $7.5M. At first she didn’t realize it was at $7.5M she thought it was just $7M and then talked through what it meant to leave half a million in the special charge. She says Schmiedicke can explain that. And she worked with staff to explain that and she thinks for the average taxpayer it seems kind of odd asking for money but moving the pots of money around they will pay less, but some taxpayers will pay more. The information is in the letter she sent them and to some degree in the fiscal note. She thought she would put this on the table because they went through that process in April about our values and priorities and as you may recall she amended the substitute, and it might not have made sense to you, but I put in there the thing about moving away from non property tax revenues because she thought about how they could manipulate the special charge. She put it before you, its a modest benefit for taxpayers.
Mayor says the Rummel 2nd substitute is before them.
Questions on the Second Substitute by Rummel
Alder Nikki Conklin asks staff what exactly “buy back” means. Can you explain the process more? How will this work?
Schmiedicke says that the amendment would increase the amount of the referendum question by $7M, and it would reduce the special forestry charge by $7M and reduce it to $500,000 and assuming the referendum passes, it would reduce the special charge by $7M and that is $84 per year for an average customer or property owner. Under the amendment, the increase is in taxes would add $73 per year on the average valued home, compared to the $22M substitute amendment. It would decrease the $84 related to the Urban Forestry Charge, that is the idea of the offset. For someone with an average value home would see a decrease of $11, that decrease gets larger for properties that are have a value lower than $476,000 and for properties above $525,000 they would have to pay more. That is because the property taxes is based on a percentage and the Urban Forestry charge is a flat amount put on each Property.
Conklin asks if they ask for $7M more to help with the Urban Forestry charge to alleviate that debt, they will ultimately pay less?
Schmiedicke says the combination o the $7M additional taxes compared to what we are charging now with the Urban Forestry Special charge. For those who have a property that would be valued at or below $525,000 it would be less.
Conklin asks about what he said about homes less than $476,000.
Schniedicke says that is the average value home in the city.
Conklin asks about the $525,000.
Schmidicke says that is where it breaks even.
Alder Bill Tishler asks if the stay with the original referendum, will that make any change to the Urban Forestry charge, its just status quo, right? Also, how does this effect renters, did you crunch those numbers at all for this additional amount?
Schmiedicke, the original substitute assumes that the Urban Forestry charge stays in place and it will go up to $7.M in 2025. On renters, did you mean for the $22M?
Tishler says he is looking for the $29M. He says the estimate, it is a rough estimate, we don’t have as much information on individual apartment units compared to the average value home, so this is a strong caveat. The estimated annual tax on an average rental unit would be $84 or $7 a month. At $29M it is $112 so roughly $27 more and a couple dollars more per month.
Alder MGR Govindarajan asks what a average rental unit looks like? Is that a duplex or multifamily?
Schmiedicke says there are a lot of caveats on this, it is based on information from the Department of Planning, Community and Economic Development that looks at averages for 4-plexes, 8-plexes, a recently remodeled home and new units and takes an average of them
Charlie Romines adds in that renters also pay more in the Urban Forestry charge as well, they pay $153 a year vs the $85. The discount from the special charge would be greater as well.
MGR asks how the charge got spread across the city? For both homeowners and renters.
Schmiedicke says the property owner is charged the fee and how they distribute that to the renters can vary based on leases and what the landlord does. He says that the fee is based on different times of property, residential, multi-family, commercial and industrial and some government customers and storm water parcels that as a class, some owned by the government and some that are vacant land. Less than 2/3 is residential, 10% is commercial and industrial, government is 4% and multifamily is 6% and storm water parcels are 15%. They also looked at the share of properties that are tax exempt. About 11% of the charged revenues come from tax esempt parcels, including government owned parcels.
MGR is asking who this will benefit, is the $153 per customer, per property or per unit?
Schiedicke says he thinks it per parcel but he would hesitate to make that leap to how it would be distributed to each unit in the multi-family unit. They were able to look at the average home value and make that comparison
Alder John Guequierre says that he asked for information not over the next year or so but a longer span over the long range plans. He has been intrigued by this concept ever since Romines mentioned it and thanks Alder Rummel for putting it forward so we could really put some thought into it. But since seeing the alternate, he has been thinking about how this works over the years and that is what brought him to ask the question about the proportion of the fee that goes to tax exempt properties. In year three, 2027 we start to need to increase fees and in that version we look at $10M in fees and the Urban Forestry charge would come back at that time. Once that comes back we start to see the impact on the regressive fees but 89% goes to tax payers and 11% goes to properties that don’t pay property tax. Over time it may overwhelm the savings we have now for low income properties. Do I have that right? Will it overwhelm the benefits of the first couple years?
Schmiedicke says that’s one way to look at it, the 11% that some of that is government owned properties, and while they are tax exempt, they are paying the charge that is paid for by their customers. The special charge on a very basic level, compared to the property tax, there is some difference in progressivity and regressivity because how the special charge is assessed, particularly in residential it is a flat fee and the more valued properties would proportionally pay more compared to the property tax that is based on a percentage. Over the years, the percentage of property tax with the higher preperty taxes might be slightly more progressive than with the lower property tax amount and higher special charge amount because of the mix of revenues moving forward. A lot of this is on the margin, its pretty narrow on the margins, but it does help to be able to have some portion of that revenue from tax except properties even if it is a small share.
Alder Jael Currie, says her brain hurts, she appreciates all the calculations, and she though she had it til Alder Guequierre asked the question, when does the fee come back?
Schmiedicke says it would replace the $7M Urban Forestry charge and its really up to teh council in future budgets. In the amendment, the council would have to decided in the 2025 budget the council would have to reduce the fee, this resolution doesn’t do that, the questions requests the council reduce the charges. In future years, the mayor did describe in July that they would need more unds in the future, but decisions will need to be made if it is new special charges or other approaches, including reductions in services, but that issue will be before council in future years.
Currie thanks him for for the reminder and she has a lot of information that is hard to understand and re-explain it to others, it is still confusing. Still, we can’t control 2025 and beyond.
Discussion on Rummel Amendment/Second Alternate
Alder Regina Vidaver thanks Alder Rummel for bringing this forward, its an important discussion to have. It does has us talking about progressive and regressive taxes. She says that there is so much misinformation, the idea off asking for more “than is needed”, even tho it has these impacts, may hurt us more in passing the referendum. So she would love to support this on a theoretical basis, but we have seen that people don’t understand why we need this, they blame us for the structural deficit that the legislature and former governor Scott Walker causes. She’s not able to vote for this at this time because the PR problem is too great. She appreciates the discussion but won’t vote for the increased amount for the amendment.
Alder Dina Nina Martinez Rutherford says she agrees with Alder Vidaver on the fact that it is a hard sell. For regular people this is mind boggling and the misinformation is ridiculous and the disinguity from former leaders has muddied the water as well. Looking at $29 is so daunting even if it s only nominal and for a limited period of time. She is leaning toward no but its wonderful of you to bring this and say we could be less regressiveiy here.
Alder Bill Tishler also thanks Alder Rummel but the timing makes it confusing and the idea to raise taxes to lower taxes is confusing, but the timing is just not good for him.
Alder Marsha Rummel understands the timing, but how many people don’t even know there is a referendum or at what amount, but at some point we have our jobs cut out for us trying to explain not just year, but 6 years. She thanks the Mayor and staf that put together the July information, when you look at with and without a referendum, at some point this means more special charges, but they are coming back or coming forward. Either we have a referendum or we don’t, but people will have to have to pay more money and then the question is – when I went to the pubic meetings, they said we couldn’t just put a band aid on it, and this doesn’t do that, they would have to explain why $29M and most taxpayers will be paying the same if a $27M referendum and the $7M on urban forestry charge. It’s a nominal, but it seems reasonable to her. She is worried it won’t pass in general, but she though this might be a good faith effort to have equity in our approach. The money is just allocated differently, she thinks they are clever people and can explain it.
Alder MGR Govindarajan says he appreciates this coming forward, its a good discussion, but will be no. He understand it is a restructuring of money, and it might save some people money, but he thinks we might just need to show the public we are capable of fiscal restraint and not ask for “more than we need. If we can show that in November, he migh vote for the additional money. There was so much misinformation coming from influential people that can’t be undone.
Alder Isadore Knox says he was inclined not to support this, but when we get into these complex issues, these special charges feels like we are nickle and diming people, even tho it might be equitable, she makes a good point, it simplifies it and she changed my mind, I”m going to support it.
Alder John Guequirre, he says on any day that he said something ton confuse Alder Currie he must not have explained it right because she is an astute person. To simplify in relationship to how taxpayers are impacted on the 11%, over time it tends to eliminate the progressive benefits and have have a more equitable approach over time wears away. It’s money we wouldn’t otherwise collect. It could be a wash or it could be somewhat detrimental on an equity approach to miss the opportunity to get funds form non-property tax payers. He is going to vote against this version, he says if he can’t describe it well here he would have issues with residents of District 19.
Alder Sabrina Madison thanks Alder Rummel for bringing it, she likes the idea, but she thinks it is a difficult sell and we will have a difficult time selling it and getting people to understand what we are saying. We earlier decided not to fund the Information Officer job, but its hard for us to cut back on the misinformation. I am re-explaining the facts to people. We would need to find dollars to educate people and they will think we did a switcheroo, she believes it is a good idea but they are battling disinformation and misinformation. She is voting no on the information piece alone, not the proposal.
Alder Marsha Rummel says that the letter he sent was immensely helped with the PIO officer, and she thinks we can explain this to the taxpayer. She wanted to state that and she thanks the finance staff for helping her understand how to put forward a great amendment.
Vote on Rummel Amendment
Aye: Rummel, Knox
No: Madison, Martinez-Rutherford, Myadze, Tishler, Verveer, Vidaver, Wehelie, Bennett, Conklin, Currie, Duncan, Evers, Field, Figueroa Cole, Govindarajan, Guequirre, Harrington-McKinney
Mayor adds her thanks, says its an important issue and if we can educate people over time that would be for the good of our community.
Substitute Discussion
Alder Bill Tishler says that this is the first time the Common Council has asked to increase the levy, so he wanted to make that point. This is $22M on top of the levy increase, that wasn’t always clear. He is just talking to remind himself what he is voting. Thank you for listening.
Vote on Substitute
Aye: Madison, Martinez-Rutherford, Rummel, Tishler, Verveer, Vidaver, Wehelie, Bennett, Conklin, Currie, Duncan, Evers, Field, Figueroa Cole, Govindarajan, Guequirre, Myadze
No: Knox, Harrington McKinney
Adjourn
There is a space between the $ and 22, Mayor asks for unanimous consent to change that. It passes. Alder Madison moves to adjourn. It’s unanimous
