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Local wheel tax collections in Wisconsin rose by 12.1% over the past year, marking the seventh year in a row of double-digit growth, according to a report from the Wisconsin Policy Forum.

Local governments in Wisconsin collected $62.8 million in vehicle registration fees in fiscal year 2021 (the 12 months ended on June 30), which was up from $56 million in fiscal 2020.

Revenue from these fees imposed by local governments on vehicles kept within their boundaries has risen more than threefold since 2017, according to the forum report.

The funds must be used for transportation needs such as streets but can offset property taxes, allowing those dollars to be used for other purposes such as public safety, libraries or parks.

Wheel taxes represent one of the few local revenues the state’s city, village, town, and county officials can raise at their discretion. 

Though state road aids have grown in recent years, the state has placed property taxes under strict state limits and kept most other forms of aid relatively flat. As these trends have played out, more and more local governments have turned to wheel taxes in recent years.

As recently as December 2011, only four communities in Wisconsin imposed a local wheel tax and only one – the city of Milwaukee – had more than 85,000 people.

By February 2022, the Wisconsin Policy Forum predicts there will be 44 local governments in Wisconsin with a vehicle registration fee (13 counties, 22 cities, eight villages, and one town). In addition to the state’s largest city, the list now includes Milwaukee and Dane counties and the cities of Madison, Green Bay and Appleton.

The city of Hudson is considering a wheel tax in addition to a “transportation utility” to help pay for road improvements within the city.

The Common Council could vote on the new fees in December, according to City Engineer Dean Chamberlain. In recent weeks, the city has held a number of public meetings to introduce the new fees to the community and to answer questions.

Faced with deteriorating roadways, some not rebuilt for more than a century, Hudson is looking at the proposed two new fees to help provide financing.

The rates for these have not been adopted yet. Chamberlain said the city is looking for an equitable solution to fund the needed road maintenance.

The first proposal is for a transportation utility where all property owners will pay a base fee, similar to an availability charge on water and sewer bills. There would be an additional usage fee based on the amount of traffic generated by the property.

For the usage fee, residential and small office complexes would be at the low end of the scale while big box stores, grocery stores and gas stations would be at the higher end.

There would be a “wheel tax” of $20 per vehicle per year that would be collected when drivers pay their annual registration fee.

The two fees are expected to raise $1.3 million for road construction -- $350,000 by the wheel tax and another $1 million by the transportation utility.

This would be a small percentage of the $127 million estimated to upgrade all of the streets in the city.

“We need to start somewhere,” Chamberlain said. “It’s going to be a long-term program.”

A public hearing on the new fees is scheduled for Nov. 15. The council could vote on the fees in December. If approved, the new fees would take effect next year.

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