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FAQ on the Vehicle Registration Fee (also known as the “Wheel Tax”)

There has been a lot of discussion, as well as confusion, about the “Wheel Tax” that the mayor has proposed as part of the upcoming budget. So we thought we’d try to answer some of the questions that have popped up as well as explain why we think that bicyclists should care about it.

What is a wheel tax?

Simply put, it is a local registration fee for your car. Each year you have to renew the registration on your car with the state of Wisconsin, and this is just the same as that registration fee, except this additional fee goes to the city of Madison if your car is registered to an address in the city. You will pay it at the same time as you pay for state registration, and the state will send the money back to the city.

Why is the city doing this now?

The city has a deficit for the upcoming budget year. This means that we either have to reduce spending or raise more revenue.

The state legislature has made it very difficult for cities to raise additional funds for their budgets. There is a cap on how much they can raise property taxes each year. But Madison is growing, and many people would like to have a better transit system. This money will allow the city to both fund basic services (police, fire, parks, garbage pick-up, social services) as well as maintain or expand transit.

Without additional revenue or cuts in other areas, current Metro service would need to be cut. This would mean less frequent buses, shorter service hours, or the elimination of whole routes. Part of the wheel tax revenue would also be used to provide more summer bus passes to youth or bus passes for people with low incomes.

One big project the city wants to undertake is bus rapid transit (BRT), which has been discussed extensively for the last couple of years. BRT is a special type of transit that is faster than regular buses, but cheaper than rail. There’s a lot of details that we can’t cover here, but suffice it to say that transportation planners, elected officials, and other decision makers in the city have decided that this is the best way to improve transit in Madison. You may or may not agree, but if you want more information, go to http://www.madisonbrt.com/

Having a dedicated source of funding to support transit will also help the city get federal funding. We’ve applied for federal funding before, but haven’t gotten it. The federal government likes to see some assurance that a project will go through, and one way to show that is to have a pot of money. We have to compete with other communities that have dedicated funding for transit from a regional transit authority (RTA), a local sales tax, or other dedicated funding.

So, I’ve heard that a wheel tax has to be used only for transportation. But I’ve also heard the mayor and others talk about how this new fee will be used for other city services.

Yes, that is a bit confusing. By state law, local registration fees or wheel taxes can only be used for transportation costs. But right now, we are using property taxes to support transit, walking, biking, as well as driving operations and infrastructure — everything from snow plowing to patching roads and paths, as well as actually running Metro, buying gas for the buses, and paying the drivers. So what we are really doing is moving some of those expenses off the property taxes and moving them to the wheel tax. But ultimately all the money ends up in the same pot, so now we have additional property taxes to pay for those non-transportation things. If we don’t pass the wheel tax, we are going to have to make cuts somewhere else.

So for people that like transit, you can think of this as taxes car owners to pay for transit. If you think transit is not useful to you or the city shouldn’t be spending more money on it — and there are plenty of people out there who feel that way — it’s easier to swallow that the wheel tax will fund things they want to fund.

Isn’t a wheel tax regressive? If you have a junker car you pay the same as someone with a new luxury car.

Yes, that is true. No matter your income or wealth, no matter what car you drive: If you have a car, you will pay the same fee. But we don’t have many choices, given the constraints that the state has put on cities. We can’t use many of the tools that are used in other states, like local gas taxes, an RTA, local sales taxes, or other revenue sources (many of which are regressive as well). This is pretty much all we have. And low-income residents are less likely to have a car or multiple cars in their family than those with more money. And low-income residents are also more likely to be dependent on transit. Improvements to transit will benefit low-income residents (and cuts in Metro service would hit them especially hard). The city is also planning on using some of the revenue to provide support to low-income residents to offset the cost of the fee. We are prohibited by state law from refunding the fee or prorating it by income.

I ride my bike almost everywhere. Why should I care about transit?

Madison needs to move away from depending on cars and get more people using other modes. Fewer cars on the road both directly benefits bicyclists by making the roads safer and more pleasant, and it will free up space for better bike infrastructure, bike parking corrals, and other things we want. But that is only going to happen if we give people alternatives to driving their private cars. Transit is a key piece of that.

And a lot of people who bike also use transit, when they don’t want to ride because of weather, illness, carrying a bunch of stuff, traveling with people who don’t bike, or even just because they are tired. Transit allows us to throw our bike on the bus if we have a flat tire or the weather turns nasty. Transit lets less committed bicyclists or new bike commuters know that they have a back up. It allows more people to bike because they know they won’t be stuck if something happens. Bicyclists should all be out there pushing for more and better transit, because it just makes it easier to bike, even if you never use it.