A new model for fiscal regionalism: greater Racines plan for overcoming fiscal disparity.

AuthorFiacco, James M.

In recent years, observers of urban management have paid increasingly close attention to the governance of metropolitan regions. In a 2002 book on this topic, scholar and former municipal manager David Miller suggests that "there is a movement, albeit painfully slow, toward regional solutions to public problems in ... metropolitan areas. (1) Interestingly, Miller points out that while local governments in metropolitan areas are becoming even more diffused, they are also coming together more often to tackle issues of common concern. This increased collaboration no doubt owes itself to a recognition of the interdependency of metropolitan governments and the potential of cooperative solutions to difficult regional problems.

A strong case in favor of regionalism is eastern Racine County, Wisconsin, where leaders signed a landmark intergovernmental agreement on April 25, 2002. In one of the most comprehensive intermunicipal agreements ever negotiated in the state of Wisconsin, the City of Racine and six villages and towns set the framework for how the area will develop over the next 50 years. The agreement includes provisions for the sharing of costs for a major wastewater treatment facility expansion and upgrade, sharing of costs for cultural amenities, and one of the largest municipal property tax revenue sharing plans in the country. The agreement has set the course for a shared vision of future expansion that will serve the entire region, and has charted new territory for intermunicipal cooperation.

A CITY AND ITS SUBURBS

Racine County is located on the western shore of Lake Michigan, approximately 65 miles north of Chicago and 25 miles south of Milwaukee. Like many areas with a large central city, eastern Racine County has been characterized by large fiscal disparities and competition among municipalities for property tax base. The City of Racine has a high tax rate and low fiscal capacity relative to that of neighboring communities. This has resulted from a combination of factors over the last four decades. In recent decades, Racine's industrial base has eroded, as many businesses lost jobs to foreign competition. The majority of new job growth and related residential development occurred in the surrounding communities. Racine's share of the area's manufacturing and commercial property values fell 12 percent between 1990 and 1998, from 62 percent to 50 percent. Between 1990 and 2000 the city also lost 2.9 percent of its population. Racine now has 81,855 residents, down from a high of 95,162 in 1970.

While Racine lost population and its tax base, the towns of Caledonia and Mount Pleasant and the Village of Sturtevant grew at a rapid pace. Sturtevant's population grew by 39 percent between 1990 and 2000, while Mount Pleasant (15 percent) and Caledonia (12 percent) also experienced impressive gains. With high property taxes, aging real estate and infrastructure base, and high crime rates, Racine found itself at a competitive disadvantage to these municipalities in terms of attracting high-value commercial and residential development. By 1998, even the poorest community in eastern Racine County had a per capita equalized property value that was 73 percent higher than that of Racine.

Yet even as its economic vitality declined, Racine continued to provide infrastructure and amenities enjoyed by the entire area. Growth in the surrounding municipalities was supported by Racine's policy of extending water and sewer infrastructure without requiring annexation to the city. Racine was also providing approximately $1.3 million in annual funding to the Racine Public Library, the Racine Zoological Gardens, and the Wustum Museum of Fine Arts--facilities that are enjoyed free of charge by all county residents. In summary, the city of Racine was shouldering the financial burden for almost all of the "quality of life" institutions in eastern Racine County. However, the city's ability to fund these facilities through increased residential, commercial, and industrial taxes was severely limited. Not only that, but its generous policy of extending sewer and water service without annexation was feeding the growth of the very suburbs it was...

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