Study shows counties use sales tax revenue for property tax relief

Study shows counties use sales tax revenue for property tax relief
Municipalities tap funds for projects, bills

By Karen Lincoln Michel Gannett Wisconsin Newspapers
MADISON — Four years after a statewide study placed Door and Oconto among counties providing the most tax relief through county sales tax revenue, both continue to use all or most of their sales tax proceeds toward tax relief.

In a report issued last week by the Wisconsin Taxpayers Alliance, the nonpartisan research organization stated that $261 million in county sales tax revenue was generated in the 58 Wisconsin counties that impose a county sales tax.

Unlike the 2002 study where the organization ranked which counties appeared to use their sales tax proceeds for tax relief, the current report by the taxpayer alliance provides only an overview of all forms of sales taxes collected statewide.

Still, counties have a lot of latitude in defining "property tax relief" when deciding how to allocate their county sales tax proceeds, said alliance president Todd Berry.

"The state statute says if a county is adopting this optional sales tax, it is supposed to use the proceeds for property tax relief," said Berry.

"But the problem is property tax relief is in the eye of the beholder."

Some counties rationalize spending their sales tax revenues on projects by saying that if they didn't pay the expenditure out of sales tax money, they would have to take it out of property tax revenue, Berry said.

Door County, which collected nearly $3 million in county sales tax in 2005, uses its sales tax revenues exclusively for property tax relief, according to Door County finance director Shirley Scalish.

Oconto County, which collected about half as much as Door County in 2005 with $1.5 million, puts 60 percent of its proceeds toward tax relief and the remainder toward major equipment or building projects, said Oconto County finance director Terry Hinds.

Scalish said sales taxes collected in Door County are used to offset property taxes and are used in the calculation of the annual budget. Any excess proceeds are put into a reserve account to be used for the next year.

The tax relief appears as a credit on an individual tax bill, and appears as a revenue item in the county budget, she said.

"Every dollar goes back to offset the taxes," said Scalish.

Hinds says Oconto County uses its proceeds, in part, to pay off the principal and interest on money it borrows.

"Our policy is to use the sales tax collections, first of all, to pay off annual debt service payments," said Hinds. "And out of the balance we fund major projects rather than putting them on the tax levy … Basically we're using it for tax relief by not putting certain acquisitions on the tax levy."

Door County is ranked 19th and Oconto County 38th in revenue generated statewide in 2005 through the 0.5 percent, local-option county sales tax, according to figures posted online by the Wisconsin Department of Revenue.

Both Door and Oconto counties report slightly higher figures for 2005, with a probable cause of the discrepancy due to a well-publicized computer error at the revenue department.

Another type of special tax assessed locally is used to fund renovations to Lambeau Field. The Green Bay/Brown County Professional Football Stadium District generated $20.9 million in 2005 from its 0.5 percent sales tax.

The district was established through a 2000 county referendum to pay the debt service on the renovations, and is projected to end in 2014 if liabilities are paid off.

If the Lambeau Field district collected its tax as a county, it would rank third statewide behind Milwaukee and Dane counties in revenue generated last year. Calls to a stadium district representative were unreturned Friday.

Neighboring Kewaunee County has not formally considered imposing a county sales tax, said Kewaunee County administrator Ed Dorner.

"The board has looked at it as a source of potential funds, but it's never been formally discussed in recent years," said Dorner, and it doesn't have any immediate plans to consider it.

Dorner said his county sits in a pocket of Northeastern Wisconsin holdouts, which include Brown, Calumet, Fond du Lac, Manitowoc, Outagamie, Sheboygan and Winnebago counties.

Jon Jarosh, marketing director for the Door County Chamber of Commerce and Visitor and Convention Bureau, said the county imposed sales tax is "extremely important" to Door County.

"It generated a pretty decent chunk of change" last year, said Jarosh. "That's about $3 million in property tax relief that otherwise people would have to be paying out of their own pockets."

Jarosh said a large portion of the sales tax revenue is a "direct or indirect result" of tourism.

The taxpayer alliance report says that regardless of how counties use sales tax revenue, there is no doubt that it has become an important part of their tax base.
Karen Lincoln Michel writes for the Green Bay Press-Gazette.