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Tuesday, January 25, 2022

Madison residents would pay a total of $153 in vehicle registration fees if the city were to introduce the $40 tax.

Madison wheel tax to close budget gap, would be highest in state

Madison’s Finance Committee delayed action for a second time Thursday on a proposed $40 vehicle registration fee that would be the first in city history.

The fee itself, alternatively known as a wheel tax, is an annual charge applied to cars and some trucks, collected by the Wisconsin Department of Transportation when a vehicle is registered or its license is renewed. The money is then returned to the city or county as an additional source of revenue.

Mayor Satya Rhodes-Conway introduced the fee as a way to close an almost $2 million gap in the 2020 operating budget. The tax would bring in approximately $7.9 million in 2020 alone, which would go toward projects like Rhodes-Conway’s Bus Rapid Transit.

But a $40 vehicle registration fee for the city would make it the highest wheel tax in the state — Madison residents would pay a total of $153 in vehicle registration fees. 

Counties and municipalities can collect a vehicle registration fee in addition to the state’s $85 fee, which was just raised $10 over the summer. Dane County already has a wheel tax in place of $28.

There are some alternatives to passing the tax, according to the Finance Department: cutting all department funding by 2.5 percent, closing a fire station and eliminating 18 police officer positions, eliminating a pay increase for city employees, cutting new city jobs or laying off 12 positions.

The clock is ticking for City Council to adopt the ordinance — the state requires the city to provide notice of the fee three months before it’s enacted.

Ald. Mike Verveer, District 4, doesn’t see any other option to close the funding gap the tax would fill.

“It seems quite inevitable,” Verveer said. “Unfortunately, we just don't have a lot of options to keep the budget balanced given the continuing cost of our operation.”

Verveer has previously been opposed to a wheel tax, voting against it as recently as a year ago when former Mayor Paul Soglin suggested the fee at a fraction of the current proposal.

In 2018, City Council rejected Soglin’s proposed vehicle registration fee of $17 in committee. Similarly to Rhodes-Conway, Soglin offered the fee as a way to provide more money for transportation-related services.

“This is something that's been proposed off and on over the years but the city has never chosen to use this tool because it is such a regressive tax where clunker car is valued at the same amount as a brand new Tesla,”  Verveer added. “If I [wanted] to remove the wheel tax or reduce what the Mayor's proposing, it would create a gaping hole in the budget that would be impossible to fill.”

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The tax also affects low-income residents more than those well off. The fee is not based on ability to pay or even the model of car. And while $40 more a year is a steep, unprecedented increase, the money would go toward a more accessible and efficient metro system.

The Finance Committee will make a final decision on the fee at their Oct. 21 meeting.

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