The Little Brother

Municipal finance always needs to be viewed in the context of the overall state and local government relationship. That is because the two wings of government are closely tied in theory and practice. Municipalities are creatures of the state, it does not seem to matter how much home rule authority a city has in some states nor how vocal the intergovernmental squabbles. Not only that, sorting out which level of the government is supposed to do what is often not easy, nor is where one level of responsibility leaves off and the others starts up. For example, many local government expenditures are nothing more than pass through of activities mandated by and frequently financed in part by the states. Also, certain local taxes may be nothing more than local add-ons to state-collected revenues.
The City of Lake Mills’ second largest source of revenue is from the state. The economic factors influencing state politics and the nature of the state/city relationship always makes this a tentative revenue source. Many state aids originally replaced local revenues to allow for special exemptions or to install state mandated programs. Local policy makers need to understand the changing political landscape at the state level. The warning trend is designed to inform policy makers about over dependence on state revenues and encourage them to diversify their own revenues rather than become over reliant on the state. The state revenue sources that make up the city’s intergovernmental revenues are primarily sales, gas and income taxes. These revenue sources would generally be considered more elastic than property taxes, but because they are distributed by formula and the state caps the total amount distributed, they cannot be considered elastic to a Wisconsin municipality.