Wheel Tax under Consideration in Sturgeon Bay

Sturgeon Bay city administrator Josh VanLieshout presents the proposed 2023 city budget Monday while the Sturgeon Bay Common Council meets as the committee of the whole. One possible revenue source discussed to raise additional funds for road work was whether to enact a wheel tax on motor vehicles registered in the city. Photo by Kevin Boneske.

Absent the City of Sturgeon Bay being allowed to impose an additional 0.5% sales tax to raise additional revenue for roads, the Sturgeon Bay Common Council is considering whether to impose a wheel tax on motor vehicles registered in the city.

The wheel tax was discussed Monday when council members met as a committee of the whole with department heads and other city staff members to consider the proposed 2023 budget presented by city administrator Josh VanLieshout.

The city has sought authorization from the state to impose a 0.5% Premier Resort Area Tax (PRAT), which city voters supported during an April 2018 advisory referendum – with nearly 70% support – to raise money for road projects. But because the city doesn’t qualify under state law to impose that additional 0.5% sales tax on recreational items, VanLieshout said the state would need to grant an exemption, which, to date, legislative efforts to accomplish on behalf of Sturgeon Bay have been unsuccessful in doing.

Legislative exemptions were previously granted for the Door County villages of Ephraim and Sister Bay.

VanLieshout said the city could impose a wheel tax on motor vehicles, though that type of tax is regressive for people with lower incomes and those who own multiple vehicles.

“The wheel tax is the next readily available opportunity to raise funds to finance streets,” he said. “You don’t have to create a wheel tax to cover all the streets. That would be really expensive.”

Based on approximately 11,000 motor vehicles registered in the city, the city could raise around $110,000 annually for road work, he said, if the wheel tax were set at $10. The wheel tax would not count against the city’s property-tax levy limit, and the city could start receiving revenue from it about 120 days after implementing it.

Compared to other options for raising revenue, such as the proposal for the city to establish a stormwater utility, council members acknowledged the possible public opposition that a wheel tax could generate. The tax would be added on to a vehicle’s annual registration renewal with the state, which is now $85 per year for an automobile.

“The wheel tax is a little bit dicier, but there’s got to be some give somewhere,” said Mayor David Ward.