County Has A History With the Sales Tax

Chris Abele, Theodore Lipscomb, Sr., Chris Larson and David Crowley.

More than 15 years ago, elected officials in Milwaukee began agitating for an increase in the local sales tax. And it now appears the proposal is closer than ever before to realization.

When Gov. Tony Evers announced his 2024-2025 biennial budget proposal, he included language that would increase the local sales tax for Milwaukee County and the city. Whether such a proposal will look the same after it passes through the Republican-controlled state Legislature remains to be seen. But recent statements by powerful Assembly Speaker Robin Vos suggest a softening among GOP lawmakers on the issue that has long been a conservative non-starter.

Milwaukee County and the City of Milwaukee are both staring at an impending financial catastrophe. The county has projected that by 2027, there will be no local revenue for county services that are not mandated by the state, like parks and the transit system. A major contributor to this situation is that state shared-revenue payments have been frozen for more than a decade, while costs increase annually with inflation. A result for the county is that it lost out on $455 million in uninflated dollars from the state as of 2021, a number that has undoubtedly increased since then.

For about just as long as the county has been faced with frozen state aid, there’s been a debate about raising the sales tax.

The struggle for the sales tax has its roots in the Milwaukee County pension scandal more than two decades ago. This infamous pension policy, including the lucrative backdrop that turned some employees into millionaires, helped wreck the county’s finances in the years that followed, and by 2008 the county board was looking for additional revenue. An advisory referendum was placed on the ballot asking local voters if they would support increasing the county’s sales tax by .5% to 1% in order to fund parks, transit, and emergency services and to reduce property tax burdens.

The board had to override a veto by then-County Executive Scott Walker to get it on the ballot. It saw just 52% of residents supporting the tax increase. But in order to levy such a tax, the county needed enabling legislation from the state. To date, such a law has never been approved.

While some of the names associated with the battle over the local sales tax have changed, the coalitions are largely the same. Democratic politicians allied with the local business lobby are for it; Republican lawmakers at the state level are against it. A 2008 column from longtime Wisconsin political journalist Matt Pommer paint a picture of just how long ago the sides in this debate were formed. In it, he described Walker as someone “who may take a stab at running for governor,” noting that opposing the tax is “wonderful Republican politics.”

State Sen. Chris Larson was a supervisor on the county board when the referendum was approved by Milwaukee voters. Eight years later he would make the sales tax part of his campaign platform in a 2016 run against incumbent Chris Abele for county executive.

While Abele would later endorse the idea of a sales tax hike, his campaign savaged Larson for the proposal during that bitter 2016 election. The oft-repeated soundbite was that Larson wanted to “triple the tax.” Larson made the case that a sales tax would fund parks, transit, public safety and a reduction in property taxes.

During the Abele years, county politics was marked by an enmity between the board and the county executive that makes recent dustups between the branches look comparably tame. Both sides returned time and again to battle over tax revenues and where, specifically, they should come from. During his 2016 campaign, Larson telegraphed the board’s position, stating, “Just like Scott Walker, the current County Executive proposes an unrealistic budget that cuts services and claims to freeze property taxes, then he waits for the County Board to fix it. Months later, he embraces the higher property tax and the charade starts anew.”

But when Abele would seek to pull other levers available to the county for new revenue, the board typically refused. Increases to the county’s Vehicle Registration Fee, or VRF, or pejoratively, the wheel tax, were shot down by the board when Abele proposed them, though the board finally agreed to a smaller increase than he wanted.

In 2016, a staffer from Larson’s failed county executive bid, Brian Rothgery, would become the new communications director for the county board. In that role, he began offering the sales tax as a talking point and a third way for then-Board Chair Theo Lipscomb and the board to outflank Abele during budget battles and advised Lipscomb to needle Abele over using his wealth to lobby for more power but not to lobby for more revenue for the county. Early into his tenure Abele lobbied the Legislature successfully for a law that knocked supervisors down to part-time, took away some of their staff and stripped them of any authority over non-park land owned by the county.

Three years later, in 2019, Lipscomb and Abele seemingly buried the hatchet and formed a workgroup to come up with solutions for the county’s revenue troubles. Called the “Fair Deal,” one of its main policy proposals was a 1% sales tax for Milwaukee County.

“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,” Lipscomb said at the time. In 2020, Abele was telling Larry Sandler for a feature in Milwaukee Magazine that a sales tax increase was the most viable political strategy for fixing the county’s revenue trouble.

Less than a year later, both Abele and Lipscomb would be gone from county government and a new generation of political leadership in Milwaukee would take over. It began with the election of former County Executive David Crowley in 2020, during which the necessity of brokering a deal with the state to fix the county’s finances was a top issue. Crowley, who was coming off of three years in the Assembly, emphasized that the county needs to “raise our own revenues and fix our own problems.” He also said the county needed to recontextualize the revenue problem not as a Milwaukee County issue, but as a statewide challenge facing local governments.

Once elected county executive, he picked up where the Fair Deal group left off with a new coalition called Move Forward MKE. The group is composed of the traditional sales tax coalition including the local business lobby and Democratic officials.

Crowley would be joined in the effort by newly elected Mayor Cavalier Johnson in 2021, and the effort to remake Milwaukee’s relationship with the Republican-controlled Legislature would begin emanating from both the courthouse and City Hall. In the summer of 2022, top Republican lawmakers came to Milwaukee to meet with Crowley and Johnson. In an interview with Urban Milwaukee following those meetings, Johnson said he was optimistic about the sales tax. “I think it does help that we are new generation of leaders,” Johnson said.

Whether that’s true remains to be seen. But recent comments by Vos and other Republicans suggest this idea, formed in the tempest of Milwaukee politics, may be closer to reality than ever before.