2013 Wisconsin Act 20 levy limit impacts public fire protection

Within the 2013-2015 budget, the Wisconsin State Legislature passed legislation which became Act 20, or Wis. Stats. Sec. 66.0602(2m)(b). This statute requires a corresponding reduction in the levy limit for certain new fees or increases in certain existing fees for covered services on or after.  The statute applies to covered services funded entirely or in part by property tax revenue before July 2, 2013. The covered services listed include garbage collection, fire protection, snow plowing, street sweeping and stormwater management.

The Public Service Commission of Wisconsin (PSC) worked with the Department of Revenue (DOR) as it relates to public fire protection (PFP).  At this time, the PSC has determined that if any portion of the PFP was billed to the municipality in 2013 and thus recovered through the tax levy, then this statute applies. 

How this statute affects water rate case increases in PFP appears to be an unintended consequence that must be addressed.  Utilities will need to keep the following new rules in mind when filing water rate applications and should discuss the implications with the municipality as well as with the PSC during the rate process to ensure the best solution for the local community.

Implications to utilities

  • If, during 2013, 100% of a utility’s PFP was direct billed to customers on water bills, and you wish to maintain this method, there is no impact.
  • If, during 2013, any portion of a utility’s PFP was billed to the municipality and recovered through the tax levy, the portion of the existing PFP recovered through direct charges can be increased based on the PSC recommendation; however any increase must be offset by an equal decrease in the levy limit.
  • Potential funding options:
    • Maintain the overall funding from direct fees at the 2013 level and have the entire increase in PFP funding provided by the municipality through the tax levy. This option would avoid a reduction in the tax levy, but the entire increase would need to be funded by the tax levy.
    • Increase both the direct charge portion and the tax levy portion. This would require a reduction in the levy limit by the increase in the direct charge at the same time there is an increase in the amount required to be recovered by the tax levy.
    • Have the governing body adopt a resolution stating that the levy limit should not be reduced and then have the resolution approved in a referendum.

Additional information on the implementation of Wis. Stats. Sec. 66.0602(2m)(b) can be found on the Department of Revenue website.

For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team.