This week, I learned that the Southeastern Wisconsin Regional Transit Authority (SERTA) Board will bemeeting on Monday to discuss submitting their application to the federal government for approval of the Kenosha-Racine-Milwaukee (KRM) Rail line. (Click here for Monday's updated power point presentation on the proposal). They will also be discussing whether or not to enact an $18 rental car tax in Milwaukee , Racine and Kenosha Counties .
If you remember from a previous update, I explained that the regional transit authority enabling legislation failed to pass this legislative session. This legislation, Assembly Bill 723, would have regionalized the transit system in Southeastern Wisconsin, increased the sales tax in Milwaukee County and allowed for tax increases in Racine and Kenosha Counties . Its passage was viewed by the unelected, unaccountable board as a necessary step in the process if the Feds were to approve KRM.
The idea behind the legislation was that Milwaukee County would get the extra revenue they needed to fix their bus system, and any extra revenue collected in all three counties could be directed to fund KRM and buses. This legislation failed to pass the Legislature because enough Democrats realized that the majority of Southeastern Wisconsin residents do not want a sales tax increase.
During last year's budget process, an $18 rental car tax was enacted by the Democrats to fund the SERTA Board and possibly provide revenue to the train. It has not yet been enacted. Because it is a very unstable funding source, the Federal Transportation Administration (FTA) does not look favorably on it as an acceptable funding mechanism for rail. And why should they? This article describes rental car taxes as "unfair and discriminatory because they single out a group of consumers and impose an undue financial burden on a segment of the population that does not stand to directly benefit."
A 2005 study on the tax conducted in Kansas City , MO found the tax to be inefficient and inequitable. In Kansas City , a $4 per day tax was enacted. Researchers found that there was a 9% reduction in rental car customers in location where the tax was in effect. It found as much as a 50% reduction in a rental car demand among people living near locations where the tax was in effect, more than an 80% reduction in the days cars were rented, and a decrease in the state's sales tax receipts due to people driving across the border for a car. Imagine what effect an $18 per day tax would have!
A $2 rental car tax is currently being collected - enacted for SERTA years ago to fund their activities - (i.e. to fund the tens of thousands of dollars used thus far for lobbyist costs and public relations campaigns). It is my fear that the board will vote to submit the application vote to start collecting the $18 tax. If the application fails, but the tax is enacted, the SERTA board will just be padding their coffers to pay more lobbyists, launch more public relations campaigns, and maybe even bank some money over the years so that the Feds will see this project as slightly more feasible.
If you happened to listen to Mark Belling's radio show today, you would have heard that a few of my Republican colleagues and I who represent Milwaukee, Racine and Kenosha Counties, sent a letter on Wednesday to Karl Ostby asking for an explanation as to why they would consider bringing up KRM again. It is especially confusing to us since SERTA has publicly acknowledged that approval of a federal "new starts" application would be very hard to obtain with a single funding source like the rental car tax. It is our biggest fear that they are simply doing this to self-fund a larger political machine with taxpayer dollars that will continue to muscle its way toward an unsustainable commuter rail line in Southeastern Wisconsin .
We have not yet gotten a response to our letter, but when we do I will post it to my website for you to read. My hope is that the media attention this meeting receives will shine a public light on it and cause the board to think twice about trying to once again push for a rail project that the people have overwhelmingly said they do not support.