The Final Word: What the governor did to KRM...

This memo, from the Legislative Fiscal Bureau, is helpful in understanding what was included in the budget re: SERTA and what the Governor's vetoes did to the KRM and BUS legislation originally contained in the Legislature's budget:

June 29, 2009
TO: Senator Robert Wirch
Room 316 South, State Capitol
FROM: Fred Ammerman, Program Supervisor
SUBJECT: Regional Transit Authorities in Southeastern Wisconsin

At your request, I am providing information on how the Governor's partial vetoes of Enrolled AB 75 affected provisions related to the Southeastern Regional Transit Authority, the Milwaukee Transit Authority, and Milwaukee County's ability to levy additional sales and use taxes.

Southeastern Regional Transit Authority

As affected by the Governor's partial vetoes, Act 28 would do the following relative to the Southeastern Regional Transit Authority:

Create a Southeastern Regional Transit Authority (SERTA), a public body corporate and politic, comprised of Kenosha, Racine, and Milwaukee counties. Specify that the jurisdictional area of the Authority would be the territorial boundaries of the member counties. Specify that the powers of the Authority would be limited to those necessary and convenient for the creation, construction, and management of a KRM commuter rail line, defined as a commuter rail transit system connecting the cities of Kenosha, Racine, and Milwaukee. In addition, specify that the powers of SERTA would be vested in a board of directors consisting of the following members:

a. two members from Milwaukee County appointed by the Milwaukee County board chair;
b. two members from the City of Milwaukee appointed by the mayor of the City of Milwaukee;
c. one member from Racine County appointed by the Racine County board chair;
d. one member from the City of Racine appointed by the mayor of the City of Racine;
e. one member from Kenosha County appointed by the Kenosha County board chair;
f. one member from the City of Kenosha appointed by the mayor of the City of Kenosha; and
g. one member, who must reside within the Authority's jurisdictional area, appointed by the Governor.

Specify that a majority of the board's full authorized membership would constitute a quorum for the purpose of conducting the authority's business and exercising its powers and that any action may be taken by the board upon a vote of a majority of the directors present and voting, unless the bylaws of SERTA require a larger number.

Provide the SERTA board the authority to impose up to an $18 per transaction vehicle rental fee in the jurisdictional area of the Authority (the existing Southeastern Wisconsin RTA would no longer have authority to impose the current law $2 fee after the effective date of the budget act). Allow for revenues equivalent to up to $2 of the vehicle rental fee to be used for SERTA administration. Specify that the remaining revenues from the vehicle rental fee could be used for costs related to the KRM commuter rail project, including the planning, engineering, construction, maintenance, and operation of the project. Allow the board to provide for the annual indexing of the vehicle rental fee by the average, annual change in the consumer price index for all urban consumers (the CPI-U) for the twelve months ending on September 30 in the year before the adjustment. Specify that any indexed rate would be rounded to the next highest quarter-dollar amount. Specify that the SERTA board would have to notify DOR of any indexed fee adjustment at least 90 days before it becomes effective and that DOR would have to publish the adjusted fee at least 30 days before it becomes effective.

Provide the SERTA board the authority to issue up to $50 million in bonds, excluding refunding bonds, for the anticipated local funding share required for initiating KRM commuter rail link service. Specify that bonds would mean any bonds, interim certificates, notes, debentures, or other obligations of the Authority.

Specify the following relative to the bonds issued by the SERTA board: (a) the board could secure the bonds by a pledge of any income or revenues from any operations, rent, aids, grants, subsidies, contributions, or other source of funds; (b) neither the governing body of the board nor any person executing the bonds would be personally liable on the bonds by reason of the issuance of the bonds; (c) the bonds would not be debt of the counties within the Authority and neither the counties nor the state would be liable for the payment of the bonds; (d) the bonds would only be payable out of funds or properties of the Authority; and (e) the restrictions under (c) and (d) would have to be stated on the face of the bonds.

In addition, specify the following relative to the Authority's bonds, including refunding bonds: (a) the bonds would have to be authorized by resolution of the SERTA board; (b) the bonds could be issued under a resolution or under a trust indenture or other security instrument; (c) the bonds could be issued in one or more series and could be in the form of coupon bonds or registered bonds; (d) the bonds would have to bear the dates, mature at the times, bear interest at the rates, be in the denominations, have the rank or priority, be executed in the manner, be payable in the medium of payment and at the places, and be subject to the terms of redemption, with or without premium, as the resolution, trust indenture, or other security instrument provides; (e) the bonds would be issued for an essential public and governmental purpose and would be public instrumentalities and, together with interest and income, would be exempt from taxes (specific exemptions for interest income would be created from the state's individual and corporate income and insurance company taxes); (f) the bonds could be sold by the Authority at public or private sales at the price or prices determined by the SERTA board; and (g) if any member of the SERTA board whose signature appears on the bonds ceases to be member of the SERTA board before the bonds are delivered, the signature would remain valid.

Provide the SERTA board the authority to issue refunding bonds for the purpose of paying any of its bonds at or prior to the maturity or upon acceleration or redemption. Specify that the SERTA board may issue refunding bonds at such time prior to the maturity or redemption of the refunded bonds as the Authority deems to be in the public interest.

Provide that the refunding bonds may be issued in sufficient amounts to pay or provide the following: (a) the principal of the refunded bonds together with any redemption premium on the bonds and any interest accrued or to accrue to the date of payment of the bonds; (b) the expenses to issue refunding bonds; (c) the expenses of redeeming the bonds being refunded; and (d) such reserves for debt service or other capital or current expenses from the proceeds of the refunding bonds as may be required by the resolution or under a trust indenture or other security instrument.

Provide that the balance of funds from the existing Southeastern Wisconsin RTA would be transferred to SERTA, no later than the first day of the third month beginning after the budget act's general effective date, to assist in the planning of the KRM commuter rail project.

Specify that SERTA is the only entity in Kenosha, Milwaukee, and Racine counties that could apply to the Federal Transit Administration (FTA) for federal new starts funding for a Kenosha-Racine-Milwaukee commuter rail project. Require that no later than one year after the general effective date of the budget act the Authority would have to submit an application to the Federal Transit Administration to enter the preliminary engineering phase of the federal new starts grant program for the KRM commuter rail line.

Specify that the operator of any transit system in Kenosha or Racine counties that is eligible to receive state mass transit operating assistance must provide copies of all their annual and long-term transit plans to SERTA as they become available.

Specify that SERTA would be an eligible applicant for the southeastern Wisconsin transit capital assistance program that would be created under the budget act.

Provisions Vetoed by the Governor

As passed by the Legislature, Enrolled AB 75 would have created the following additional provisions related to the Southeastern Regional Transit Authority. These provisions were all deleted by the Governor's partial vetoes:

1. Specify that revenues equal to the amount derived from $1 of the vehicle rental fee would be provided both to the City of Kenosha and the City of Racine for their respective transit systems if each city generates new funds to match the vehicle rental tax revenues. Specify that SERTA would only be allowed to provide Kenosha and Racine revenues from the vehicle rental fee if the cities have demonstrated that they have established a new funding source to produce matching funds for those revenues.

2. Specify that no municipality within Kenosha or Racine counties, other than the cities of Kenosha and Racine, would be allowed to have a stop on the KRM commuter rail line unless the municipality provides a sustainable funding mechanism to contribute to the existing Kenosha or Racine transit systems.

3. Specify that any transit system in Kenosha or Racine counties that is eligible to receive state mass transit operating assistance could, by a vote of the municipal governing body, contract with SERTA to provide transit services.

4. Require that the KRM commuter rail project include stops in the City of Milwaukee at the intersection of Lincoln Avenue and Bay Street and at the point where the line intersects National Avenue.

Milwaukee Transit Authority and Milwaukee County Sales and Use Taxes

As passed by the Legislature, Enrolled AB 75 would have created a Milwaukee Transit Authority, which would have been coterminous with the boundaries of Milwaukee County. The Authority could have contracted with Milwaukee County to provide transit services in Milwaukee County. If such a contract had been executed, Milwaukee County would have been allowed to impose 0.5% sales and use taxes. The County would have been required to turn the proceeds from these taxes over to the Milwaukee Transit Authority and would have been prohibited from levying any property taxes for transit purposes. Further, if the county imposed the 0.5% taxes, the County would have been allowed to impose additional 0.15% sales and use taxes to be distributed to municipalities in Milwaukee County for police, fire, and emergency medical services.

The Governor's partial vetoes deleted all of these provisions in their entirety. Therefore, under the budget act, there is no Milwaukee Transit Authority and Milwaukee County does not have the ability to levy any additional sales and use taxes.

I hope this information is helpful. If you have any questions or need additional information, please contact me.