Racine Revenue Sharing Program

1. Racine Revenue Sharing Program Presented to the Wisconsin Legislative Council Special Committee on Local Service Consolidation November 10, 2010 Christine Cramer ccramer@ruekert-mielke.com (262) 542-5733

2. The Racine Area Washington Ozaukee Waukesha Milwaukee Racine Kenosha Walworth

3. The Racine Area INCORPORATED MUNICIPALITY UNINCORPORATED TERRITORY (TOWNS) WIND POINT NORTH BAY Raymond Caledonia RACINE STURTEVANT ELMWOOD PARK Yorkville Mt. Pleasant

4. 2000 Population

5. The Racine Experience • Racine extended utility service without annexation in 1960’s • Previous tax base growth depended on annexations • Industry and high-value homes migrated to surrounding towns. • Courthouse, hospital and other tax-exempts stayed in the City • Racine residents supported regional amenities such as the Zoo, Library and Art Museum • City customers carried the cost of water and wastewater capacity to support growth in the towns. • Fiscal capacity of City fell to the point where the tax rates needed to be twice as high in the city.

6. 2000 Equalized Property Values per Capita

7. Impetus for Negotiations • Expiration of 20-year sewer service agreements; need to renew and to accommodate new development, particularly along IH 94 corridor • Need for an $80.0 million expansion to Racine’s Wastewater Treatment Facility • Racine’s ability to impose a sewer moratorium • Concern by broader community interests over potential economic stagnation (RAMAC) • The big State stick: Wisconsin’s “little 208” law requiring regulatory decisions about sewerage facilities to be consistent with areawide water quality management plans

8. Dovetailing Interests • City of Racine • Fair funding of regional infrastructure and services • A share of the revenues from development supported by its utility service • Outlying Municipalities • More self-determination • Extension of sewer service

9. Nine Areas of Study / Negotiation • Wastewater Treatment Facility • Racine Public Library • Racine Zoo • Racine Art Museum • Belle Urban Transit System • Racine County Sheriff’s Department • Eastern Racine County Highway Jurisdiction • Consolidated Dispatch Service • Revenue Sharing

10. The Process • Leadership by Racine County Executive • Formation of informal group of chief elected officials (HOG) • Monthly dinner and discussion meetings • Private sector venues and meeting sponsorship • Closed-door sessions • City of Racine sponsored the work effort • Ruekert & Mielke carried out the staff work

11. The Process (cont…) • Racine County Planning Director and SEWRPC Executive Director reviewed consultant’s work, facilitated discussion, and helped the surrounding communities to understand that the City’s analyses and conclusions were sound • Once the heads of government reached conceptual agreement on the issues, the administrators, lawyers, and consultants forged a 100+ page agreement • Agreement executed by principal parties on April 25, 2002 • Process took nearly four years

12. Revenue Sharing Objectives • Sharing of commercial / industrial tax base • Reduction in competition for development • Equalization of fiscal capacity • Reduction of disparities in tax rates • Transfers of revenue from wealthy municipalities to poorer municipalities

13. WI Statutory Authority • §66.0301 – Intergovernmental Cooperation • §66.0305 – Political Subdivision Revenue Sharing

14. Existing Revenue Sharing Models Didn’t Quite Fit • Only a handful of programs nationwide • Extensive review of academic research analyzing the major programs • Four programs most similar to our vision • Minnesota Fiscal Disparities Act of 1971 • Hackensack-Meadowlands, NJ • Charlottesville and Albermarle Co., VA • McFarland and Madison, WI

15. Racine’s Unique Revenue Sharing Program • Modified the shortcomings of the Minnesota model • One of the largest in the U.S. • Negotiated, not legislated • Unique formula accounts for commercial and industrial property values and overall fiscal capacity • Payments always flow from high fiscal capacity to low fiscal capacity communities

16. How the Racine Plan Works • 30 years of payments • Formula includes two components: • The sharing of commercial and manufacturing tax base. • The sharing of the overall tax base on the basis of fiscal capacity.

17. Revenue Sharing Formula () Shared Commercial / Mfg. Tax Base Shared Residential Tax Base Local Tax Rate Shared Revenues

18. Revenue Sharing Payments: 2003 - 2011

19. Impacts on Fiscal Capacity: 2011

20. Revenues from New Development

21. Lessons Learned • Achieving significant intermunicipal cooperation is extremely difficult. • Must have a Win/Win solution where all parties gain something from the arrangement. • Communities must be open to exploring all of the potential advantages to cooperation. • Resolving past issues such as boundary disputes or addressing fiscal capacity disparities can foster cooperation on new issues. • Shared services must provide financial benefits to taxpayers. “I’m very sure that this agreement will be the most important document I’ve ever signed. I am extremely privileged and proud to do so.” Joe Clementi Chairperson Town of Mount Pleasant