Court strikes government strategy of charging 'fees' to raise revenue

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A judge in Outagamie County in Wisconsin has struck down a town’s strategy to raise its revenue by charging “fees,” when it was limited by state law in the amount of “taxes” it could collect.

According to a report from the Wisconsin Institute for Law & Liberty, it is Outagamie County Circuit Court Judge Mark McGinnis who ruled against the system created by the town of Buchanan to charge taxpayers a “transportation utility fee.”

The ruling held that violated the strict limits set in state law on what counties and municipalities can assess in taxes.

WILL sued the town last year on behalf of the Wisconsin Property Taxpayers Inc., a non-partisan membership organization including thousands of small business, farm, and property owners.

The decision, announced from the bench, will be followed later with a written determination.

Luke Berg, deputy counsel for WILL, explained, “Wisconsin municipalities cannot adopt new fees to circumvent levy limits. The court’s decision makes this clear for the town of Buchanan and all Wisconsin communities considering new fees.”

WILL’s government relations chief, John Jacobson, added, “Levy limits exist for a reason, and today’s ruling is a victory for those families and small businesses in the town of Buchanan whose property tax dollars already fund their local community.”

The town had created its fee program in 2019 “to generate revenue to pay for its roads,” assessing “all developed properties” amounts ranging up to $8,000 to pay for “utility district highways, stormwater management, sidewalk, traffic control” and more.

But WILL pointed out it was simply an unlawful tax.

“Nothing in state law authorizes municipalities to charge a road-use fee; rather, road costs are financed primarily through property taxes, which are subject to strict levy limits and uniformity requirements,” the organization explained.

The Wisconsin Department of Revenue reported Buchanan was at its levy limit of $2.4 million last year. But then officials collected another $850,000 from the “fees.”

WILL filed a notice of claim with the town, and when a resolution didn’t appear, sued.

It’s not the only government to try to manipulate the name of taxes in order to take more money from residents.

Several years ago, Colorado’s legislature, restricted by the state’s constitutional limit on tax hikes, wanted more money and simply adopted a multitude of “fees” mostly on car licenses and other services.

The lawmakers simply called the taxes “fees” and said they were exempt from the state’s constitutional limit. Of course they failed to meet the definition of fees.

A fee for access to a public road would be optional, for example, on a toll road. But the “fees” adopted by Colorado were demanded of every resident to use the state’s roads, but no out-of-stater was charged the “fee” for using the same roads.


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