A potential increase to vehicle registration fees, or the “wheel tax,” has stalled after the City of Milwaukee’s powerful finance committee postponed a vote that would have paved the way for its inclusion in the 2026 budget.
Last month, Mayor Cavalier Johnson’s administration proposed a change to the city’s vehicle registration through a substitute ordinance that would see the annual fee jump from $30 to $40. That fee would be on top of Wisconsin’s vehicle registration fee, currently $85 for automobiles.
The higher local fee would take effect Feb. 1. The wheel tax also jumped by $10 in 2021.
The increased wheel tax could generate $2.7 million for the city, according to city budget officials. It’s a key piece of the revenue the mayor seeks in his city tax and spending proposal, though the substitute ordinance is separate from the process of voting on Johnson’s budget.
The ordinance drew criticism from council members, who felt any vote prior to finalizing the budget would bypass the city’s democratic budget process.
Ald. Scott Spiker called the move “highly irregular” at the city’s Oct. 8 finance meeting.
“What we’ve been asked to do here really is to pass what is, in essence, a de facto portion of the mayor’s budget before it is adopted, which is crazy,” Spiker said, later adding: “It’s a terrible practice.”
Council members reminded officials from the city’s budget office that the budget is not adopted and does not become law until the mayor signs off or vetoes it, and the Common Council later deals with any possible vetoes. The city’s budget process does not conclude until Nov. 25.
In order for the fee hike to take effect and generate revenue, the increase must be approved and submitted to the state’s Department of Revenue by Nov. 3.
Council members said they were surprised by the quick turnaround and that they hadn’t been shown the fine print of how the mayor had carved out this fee in his proposal.
“It was not our intention to box you into a corner for time,” Nik Kovac, the city’s budget director, told council members Oct. 8, emphasizing that the Common Council had been informed and the state’s 90-day requirement for filing. “We communicated as quickly as we knew … It’s just the reality we live in.”
Kovac added: “We might as well maximize the revenue we’re going to get from it. There’s no point delaying a tough decision. It’s a tough decision either way to increase the fee.”
Not increasing vehicle registrations fees would create a $2.75 million hole in the city’s budget next year, Kovac told council members.
If the council approves raising the fee but misses the early-November deadline, Kovac said the city would be left with a roughly $250,000 gap in the budget.
Spiker fired back, calling the framing “twisted” and that Johnson and his administration have created the hole.
“I just want to be very clear, if we don’t act today, we don’t create a $250,000 hole. The mayor, by acting as he did, created a $250,000 hole in his budget that he’s now asking us to fix for them,” Spiker said.
Ald. Marina Dimitrijevic, who chairs the city’s finance committee, argued that taking such action on a substitue ordinance doesn’t consider any amendments from the Common Council that could call for a decrease or increase to the wheel tax fee.
“We need to balance that with the entire budget,” she said, noting she’s still undecided and that there are still aldermanic town halls and the the city’s Oct. 18 public hearing that have yet to take place. “You’re taking away some of the tools that we have, and that’s not a good feeling.”
Additionally, Dimitrijevic has asked the city’s Office of Equity to carry out an additional equity analysis independent of the one provided by the city’s budget office, which she believed wasn’t thorough enough.
“Having the budget analyze their own equity seem unique to me,” Dimitrijevic told Kovac.
While Ald. Peter Burgelis acknowledged an increase in the fee could help invest in improving Milwaukee’s roads, he said a decision cannot happen at the last moment and without input from constituents.
“I look forward to having those conversations and improving the process through state law changes so that we have a fair distribution of the burden of maintaining our roadways,” he said.
Milwaukee is not alone in seeking to implement or increase a wheel tax to raise local revenue. Suburban communities, including Wauwatosa, Brookfield and New Berlin, have considered a wheel tax to raise revenue for city services.
Milwaukee Common Council pumps brakes on wheel tax vote, as city races against the clock – Milwaukee Journal Sentinel
