Staff: transportation utility likely unlawful under state law; city awarded $75,000 stormwater feasibility grant

Staff presented the concept of a transportation utility as a local tool to fund streets by charging property owners based on estimated trip generation rather than property value. Josh told the council a transportation utility would dedicate fees to street maintenance and capital projects and would shift costs toward higher‑trip generators such as commercial properties.

“Transportation utility is a funding mechanism for local streets and related infrastructure,” Josh said in his presentation, explaining the usage‑based model for charging property owners. He told the council the legal outlook in Wisconsin is challenging: the state Supreme Court’s 2023 decision treats transportation user fees as an unlawful tax and subjects them to property-tax levy limits, and several Wisconsin communities that had proposed transportation utilities have paused or shelved them since that ruling.

Because of that legal risk, staff outlined alternative financing options: continue special assessments for discrete projects, consider a wheel tax or vehicle-registration fee (with distributional tradeoffs), increase borrowing within state limits, or pursue a levy increase (which would require a referendum to exceed levy limits).

Josh also delivered a brief update on stormwater: the city was notified the same morning it received a $75,000 grant that covers 50% of the planned stormwater feasibility study. Staff said the grant will lower the city’s up-front cost to study stormwater utility options.

Councilmembers asked about other communities’ experiences and whether legislative or judicial changes could reopen transportation utilities as an option. Staff recommended monitoring developments and continuing to evaluate other tools for long-term street funding.