Milwaukee Leaders Plead for 1% Sales Tax

It was the first formal committee hearing on the budget squeeze faced by Wisconsin cities, towns and villages in years, and members of the Assembly Ways and Means Committee heard some sobering numbers:

*By 2023 – no matter who is elected mayor on April 7 – what the City of Milwaukee must budget for pension costs will double, going from $70 million to $165 million

*In 2015, for the first time, the budget for the City of Milwaukee’s Police Department – $300 million – was more than the $291 million the city could levy in property taxes. “That’s going to continue,” Mayor Tom Barrett said. In the current budget, “I didn’t want to cut 60 cops.”

*Whoever is elected Milwaukee County Executive on April 7 faces budget shortfalls – the gap between property taxes and other sources of revenue and the cost of critical services – of between $25 million and $30 million a year, retiring County Executive Chris Abele told legislators.

*In 2018, Milwaukee County sent state government $2.41 billion in income taxes, sales and utility taxes and lottery profits – a $569 million, or 31 percent increase from 2009. Over that same period, shared-revenue aid to local governments statewide fell 7 percent, from $889 million to $827 million.

Abele said about 125,000 people commute to mainly “white collar” jobs in Milwaukee but live outside the city, and 95,000 live in Milwaukee but commute to jobs outside the city. But “outflow” workers have lower-paying retail, service and entry-level jobs, he added.

Milwaukee city and county officials, and City of Milwaukee legislators, want the Legislature to let Milwaukee County hold a binding referendum on this question: Should a 1 percent sales tax be collected in Milwaukee County to give local governments more revenue and cut property taxes?

“We want to control our destiny,” Rep. Evan Goyke (D-Milwaukee) said. “Let our constituents decide their own fate.”

Sen. LaTonya Johnson (D-Milwaukee) noted that the sales tax in Chicago is 10 percent; Minneapolis, 8 percent, and Des Moines, 7 percent. Nobody will “refuse to come” to Milwaukee County if it had a local 1 percent sales tax, she said.

Without a 1 percent sales tax in Milwaukee County, Johnson added, non-resident visitors to Fiserv Forum, Summerfest, the County Zoo and other attractions “avoid paying their fair share” for emergency and other services, Johnson added.

Milwaukee-area officials say an additional 1 percent sales tax would raise $160 million more per year that would be divided this way: 25 percent for cutting property taxes, 7 percent for public health and safety, 34 percent to Milwaukee County, and 34 percent to local governments based on their populations.

Goyke said the state’s 5 percent sales tax was last raised in 1982 and is now one of the lowest in the nation.

However, 68 or the state’s 72 counties – including Milwaukee County – have a local-option sales tax of 0.5 percent. Milwaukee County would continue to collect that 0.5 percent local-option sales tax, under the plan that got a public hearing.

But the Ways and Means Committee hearing came after the Assembly adjourned for the year, so Milwaukee County’s plan for a 1 percent sales tax referendum is dead.

Still, Committee Chairman Rep. John J. Macco, (R-DePere), said the squeeze on local governments whose leaders say they have no choice but to rely too heavily on the property tax deserves calls for a compromise.

“It’s easy for us to sit and say, ‘No,’ and call it a day,” said Macco.

But any negotiations must include how both Milwaukee city and county are going to resolve pension-fund shortfalls of about $2 billion each, Macco added. “That’s going to be a big deal.”

Revenue Secretary Peter Barca warned that local governments statewide are “facing the same kind of problems” as Milwaukee city and county governments.

Curt Witynski, assistant director of the League of Wisconsin Municipalities, agreed, so local officials statewide hope Macco follows through on his promise to work on what Barrett called a “new partnership” with state government.

Other Republicans opposed letting Milwaukee County enact a 1 percent sales tax, however.

It would be a “straight-out tax on the people who can’t afford it,” said Republican Rep. Kevin Petersen, of Waupaca. “People aren’t going to stay here, and they’re going to move away.”

“Wisconsin is No. 4 in how it taxes its people,” added Republican Rep. Tim Ramthun, of Campbellsport. “We’re not in a good place.”

Steven Walters is a senior producer for the nonprofit public affairs channel WisconsinEye. Contact him at stevenscotwalters@gmail.com