Common Council

Vehicle Registration Tax

I've heard from many residents with questions and concerns about the proposed $40 a year Vehicle Registration Tax (aka Wheel Tax) in the 2020 Operating Budget. This post will hopefully help provide some answers.

(I will be posting more details on the overall 2020 Budget, including a post about public safety in the near future).

I'm not a fan of the proposed vehicle registration tax. In an ideal world, there would be another way to fund city services residents have come to expect as well as continue important investments in our city/infrastructure. 

I remain open to dialog with residents and my colleagues on exploring ways to reduce or eliminate the vehicle registration tax, but I'm not hopeful. The State of Wisconsin has strict limits on our ability to raise revenue, including limiting how much we are allowed to raise via property taxes. The vehicle registration tax is an alternative method the state allows us to raise revenue. Revenue from this tax must be dedicated to transportation, but the good news is it allows us to free up some of the funds in the budget that went to transportation and put them towards other services.

This year's budget is incredibly challenging: the operating budget started in a $11M deficit just continuing services as is from 2019 to 2020. There is very limited options to fill that gap without large cuts. The vehicle registration tax helps avoid cuts as well as address the demands of our growing city.

I want to share some information from documents that help provide more details on where revenue from the tax is going to go. You can see the full documents here:

• Fact Sheet Regarding the Municipal Motor Vehicle Registration Fee from City Attorney's Office
• Vehicle Registration Fee Presentation from 10/10/2019 Budget Meeting | Vehicle Registration Fee 2 Page Detail Sheet
• 2020 Operating Budget Overview | 2020 Operating Executive Budget

Madison provides an unsustainable subsidy to Metro Transit every year. The $40 vehicle registration fee will generate $7.8 million which will replace a portion of the subsidy the City of Madison provides Metro. This frees up property tax revenue to support 3 priorities.

1. $1.5 million to begin addressing south side service and BRT prep. 
2. $2.7 million to sustain Metro operations and provide passes. 
3. $3.6 million to prevent cuts to critical services such as police, fire, public works, and parks. 

Graphic Details (via a PDF):

As part of the Mayor's Executive Budget, we were offered some example alternatives (via PDF):

The full fact sheet regarding the municipal motor vehicle registration fee from City Attorney's Office is worth checking out, but here are some Q&As from it:

What vehicles are subject to a municipal vehicle registration fee?

An automobile or a motor truck registered under 8,000 lbs. gross weight and customarily kept in the municipality or county that enacted the tax. This includes:

• Automobiles, vans and Sport Utility Vehicles (SUVs) that qualify as a passenger vehicle.
• Motor trucks and dual-purpose motor homes (trucks that can be equipped with a slide-in camper unit) registered at a gross weight of 8,000 lbs. or less.

What vehicles are exempt from a municipal vehicle registration fee?

Vehicles exempt from municipal vehicle registration fee are:

• Buses, motorcycles, mopeds, motor homes, low-speed vehicles and trailers.
• Trucks registered at more than 8,000 pounds or registered as Farm or Dual Purpose Farm.
• Vehicles registered as Antique, Collector, Driver education, Historic military vehicle, Hobbyist, Human service vehicle, Low-speed vehicle, Medal of honor, Municipal, State-owned, Special X and one vehicle with Ex-prisoner of war registration issued to any qualified individual.
• Any vehicle with registration issued by a Wisconsin Indian tribe or band.
• Vehicles displaying Dealer, Distributor, Finance company or Manufacturer plates.

Does the City have the authority to waive the fee?

No. State law does not allow for exemptions or waivers to municipal vehicle registration fees, other than those stated above. Since the fee is subject to state law, the City does not have the authority to waive the fee. Hence, the City cannot waive the fee based on income or need. 

If approved by the council, this fee would begin after 90 days notice. (If passed before the end of October, it would start in February 2020. If passed before the end of November, it would start in March 2020.)

If you have any additional questions for me, feel free to reach out (district19@cityofmadison.com). I remain open to discussions and suggestions on budget changes. If you have an idea on how to eliminate or reduce the vehicle registration tax, let me know!

-Keith F