Unique Coalition Seeks Sales Tax Hike

In an unprecedented act of cooperation, Milwaukee County, all 19 of its constituent municipalities and several major Milwaukee area business leaders have formed a coalition seeking a 1 percent sales tax for Milwaukee County, to mitigate the revenue crisis the county and other local governments are facing.

The coalition will lobby state legislators for authorization to hold a countywide binding referendum on raising the local sales tax from .5 to 1 percent. If achieved and implemented, the funds from the sales tax, estimated to be $160 million in the first year, would be used to reduce local property taxes and provide much needed revenue to local government.

Joining the county is the City of Milwaukee, the 18 other county municipalities, the Greater Milwaukee Committee (GMC) and the Metropolitan Milwaukee Association of Commerce (MMAC), and local state legislators Senator LaTonya Johnson and Representative Evan Goyke.

“The unprecedented unity among Milwaukee County and its 19 municipalities demonstrates just how urgently we as local elected officials recognize the need for a renewed partnership with state government,” Milwaukee County Board Chairman Theo Lipscomb said.

To realize a higher sales tax, the county must lobby the state legislature to give it authority to hold a binding referendum on the proposed 1 percent sales tax. This is where the coalition of local governments, elected officials and business leaders come in. Because in the past, the Republican-controlled Legislature has been hostile to providing Milwaukee County with new revenues or revenue mechanisms, like a sales tax.

The group is hoping to have the referendum on ballots in Spring 2020, so that new revenue could be available for local budgets in 2021. City of Milwaukee Mayor Tom Barrett said the referendum would “empower voters” to make a decision on how to address fiscal challenges and a sales tax would “ease the squeeze on local budgets.”

The crisis facing Milwaukee County is largely due to an imbalance in the state’s shared-revenue program used to fund local government. For at least a decade, state aids to Milwaukee County declined or remained flat. This is despite Milwaukee County sending more revenue to the state year after year, while the cost to operate government rises annually with inflation. All this contributes to Milwaukee County facing a $28 million budget deficit for 2020 and a capital project backlog of nearly half a billion by 2023, which could be a billion by the end of the next decade if left unaddressed.

County Executive Chris Abele said, “For years we have been doing more with less as state aids continue to decline, and having the option to generate local revenue represents a watershed moment for us to not only sustain ourselves, but to thrive for generations to come.”

The impact of the revenue crisis has been felt all over the county. In just the last year, it was announced that 16 bus routes would be eliminated in 2020, the county jail can barely maintain their staff due to low pay, a bus service bringing Milwaukeeans to jobs in Waukesha County was shuttered for lack of funds and concern over the sustainability of the park system is growing.

Earlier this year, Abele and Lipscomb convened a work group of elected officials and business and community leaders to study potential revenue options to address the county’s fiscal crisis. The ‘Fair Deal Work Group’, as it was called, ultimately developed a set of recommendations local leaders could pursue. Among them was increasing the sales tax. And in June, the non-partisan think tank, Wisconsin Policy Forum, released a report suggesting the county might be forced to sell some of its parks to address the county’s desperate revenue needs.

If Milwaukee County gets the referendum and a sales tax is approved by voters, the county estimates it could generate approximately $160 million in the first year. The plan calls for 25 percent, or $40 million, of that to be used to reduce local property taxes. The remaining 75 percent would be split in half, with one half going to the county and the other half being divided among the municipalities based upon population.

Abele said, “This plan is the best way forward for us to give Milwaukee County taxpayers the services and programs they deserve.”

Julia Taylor, GMC president, said the plan is needed to “address an outmoded state revenue structure which resulted in Milwaukee having the highest municipal rate of property tax as percentage of local tax revenue amongst all our peer cities in the country.”

Tim Sheehy, president MMAC, called the partnership between the local governments and the business community a “critical step” for Milwaukee’s future. He noted that 60 percent of the jobs in the Milwaukee County metro area, which comprises four counties, are in Milwaukee County. The other counties in the metro area include Waukesha, Washington and Ozaukee Counties. He said, “To provide property tax relief, maintain critical services and support our infrastructure, MMAC supports making a case to voters that this is necessary and sound investment in the future of the entire metro area.”

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