Should Milwaukee Add Jackpot Tax?

Here’s a new idea to address Milwaukee’s looming pension issues: a 1% tax on jackpots at Potawatomi Hotel & Casino.

“The long and short is that at the City of Milwaukee we have to look under every rock, every inch of society to find additional revenue,” said Alderman Mark Borkowski to members of the Judiciary & Legislation Committee Monday afternoon.

To satisfy a legal obligation to fully fund its pension, the city faces the need to raise at least $50 million annually starting in 2023. Without it, Milwaukee could need to lay off 24% of its workforce by 2026.

“We are at a stage where every idea that affects revenue needs to be presented,” said Borkowski.

The idea, which Borkowski credits to former alderman Jeff Pawlinski, would apply to anyone who wins more than $1,200. Under federal law, Potawatomi already reports winnings at or above that amount as income to the state and federal government.

In 2020, Potawatomi reported an average of 220 taxable jackpots occurred at the casino every day.

Borkowski is asking the city’s Intergovernmental Relations Division to investigate the feasibility of instituting the tax.

“I commend Alderman Borkowski for thinking outside the box,” said Ald. Robert Bauman. But he said getting the money might be an issue. “I think there is going to be a litany of problems. This is essentially going to be a city income tax on the winner of jackpots.”

State law prevents Milwaukee from instituting its own income tax.

Borkowski said he thought Potawatomi could pay it themselves even if the law wasn’t imposed.

“I just want to make sure that the committee understands we do receive $5.7 million from the Potawatomi,” said city lobbyist Brenda Wood.

“Do you know they gross $360 million a year?” said Borkowski.

An agreement with Potawatomi has the city set to receive $5.75 million in 2022, part of an annual payment in lieu of taxes from the casino to the city. Potawatomi also pays property taxes on its non-casino properties. The hotel complex alone yields $2.5 million in property tax revenue and is the fourth most valuable property in the city.

Potawatomi, via a request from Urban Milwaukee, declined to comment on the proposal.

The committee, at the request of Ald. Michael Murphy, held the item to hear Potawatomi’s feedback on the matter.