User fees make up a very significant proportion of the revenue collected by local governments in Wisconsin. Local governments have broad powers to implement user fees, which are supposed to reasonably cover the costs of their operations. There are more than 500 different user fees charged by local governments all over the state.
User fees differ from taxes because taxes must be authorized by the state legislature. User fees generate nearly a quarter of the revenue realized by most local governments, nearly as much as the revenue generated by property taxes.
User fees generally fall into three categories: fees that fund necessary services, such as utilities; fees that fund services that add to the quality of life, like parks and recreation facilities; and user fees that fund administrative and regulatory items such as licenses and permits.
An example of the first kind of user fee, to fund necessary services, would be the fees you pay to a municipality for your water and sewer service, garbage pickup, and so on. An example of the second kind of user fee, to enhance quality of life, would be the fee you pay to use a park shelter, dog park, or swimming facility. An example of the third kind of user fee, to fund administrative items, would be the fee you pay to a municipality to get a building permit or a license to vend food.
Local governments can require developers to pay fees to cover the costs associated with growth, such as putting in streets, curb, and gutter; and putting park facilities in subdivision developments.
The state has a variety of user fees. Court costs are user fees; the cost of your driver’s license and auto registration are user fees; the fee the state charges for a hunting license, boat registration, and many others are all user fees. These fees have become an increasing source of state revenue, not only because of the need of state government to raise funds to meet budget deficits, but because politicians are loathe to “raise taxes”. Nonetheless, they increase revenue by increasing or creating new user fees which are not technically taxes.