Levy Limit Exception for Unreimbursed COVID Expenditures
Staff for the Wisconsin Counties Association kindly shared with us a memo that they sent to their membership last week highlighting a levy limit exception that applies to unreimbursed expenses associated with declared emergencies. Relevant parts of the WCA memo are pasted below.
The levy limit statute (Wis. Stat. sec. 66.0602) provides certain exceptions for categories of expenses that are not subject to the levy limit calculation.
Section 66.0602(3)(e)8. contains an exception that, until now, has not been frequently utilized. This exception provides that the levy limit does not apply to:
The amount that a political subdivision levies in that year to pay the unreimbursed expenses related to an emergency declared under s. 323.10, including any amounts levied in that year to replenish cash reserves that were used to pay any unreimbursed expenses related to that emergency. A levy under this subdivision that relates to a particular emergency initially shall be imposed in the year in which the emergency is declared or in the following year.
Based upon this language, the levy limit exception applies to (1) unreimbursed expenses, (2) related to an emergency declared under s. 323.10, (3) in the year in which the emergency is declared or the following year.
1. Unreimbursed Expenses. The COVID-19 pandemic has created
significant unanticipated expenses for local governments. Many of you have submitted claims for reimbursement under the Routes to Recovery Grant program, which is funded through the CARES Act. Nonetheless, there may be expenses that your local government has incurred that will either (1) not be reimbursed through Routes to Recovery; or (2) be deemed ineligible for funding under Routes to Recovery. The levy limit exception in sec. 66.0602(3)(e)8. is not related to the Routes to Recovery program. In other words, your municipality is eligible to claim an exception to the statutory levy limit for expenses attributable to the declared emergency without regard to the municipality's eligibility for
reimbursement under Routes to Recovery.
2. Declared Emergency. We have operated under a state of emergency
declared under Wis. Stat. sec. 323.10 (declaration by Governor) in the
following time periods in 2020:
- March 12 to May 11
- July 30 to present (set to expire November 21)
3. Timing of Levy Limit Exception. The declared state(s) of emergency occurred in 2020. According to the statute, any expenses incurred this year are eligible for the levy limit exception in setting the levy for 2021 or for 2022. The Department of Revenue (DOR) has not had an opportunity to interpret and apply the levy limit exception found in Wis. Stat. sec. 66.0602(3)(e)8. Based upon WCA's discussions with DOR, the exception has, until now, been used in natural disaster situations involving FEMA funding. Nonetheless, the statute is not limited in its scope or application to natural disaster or FEMA-qualifying events.
Read the full Wisconsin Counties Association memo here.
