County Board Approves Sales Tax

Milwaukee County Courthouse. Photo by Graham Kilmer.

The Milwaukee County Board voted to approve a new 0.4% countywide sales tax Thursday, pulling the county back from the brink of a devastating fiscal cliff.

The vote followed roughly a month of deliberations, public hearings and town halls. But county leaders and policymakers have been discussing the possibility of increasing the county sales tax for more than a decade. And after roughly two hours of debate Thursday, the board voted 15 to three in favor of the new sales tax. Only Supervisors Ryan Clancy, Steve Taylor and Sequanna Taylor voted no.

The sales tax is estimated to generate $82 million in new revenue for the county next year. Under a new state law, Act 12, that funding can only be used to pay down the county’s unfunded pension liabilities or public safety. But the sales tax revenue will also free up an estimated $39 to $49 million in property tax funds that were previously used to pay for pension costs.

The sales tax will be closed in 30 years or once the county pays off its unfunded pension liability, whichever comes first. Additionally, the vote Thursday gave the county the authority to join the state’s pension system, the Wisconsin Retirement System. The county’s own pension system will be soft closed, with new employees joining the state.

With this vote, the board has saved the county from draconian cuts to critical government services and popular amenities. The county was on track for a $109 million budget deficit in 2028, due to declining state aid and rising costs. The sales tax is also effectively a new stream of revenue that can be used to aid the floundering Milwaukee County Transit System, which is facing a budget deficit of $25 million or more in 2025.

Milwaukee County Executive David Crowley and Board Chairwoman Marcelia Nicholson as well Milwaukee Mayor Cavalier Johnson led a coalition nearly the past year made up of local leaders from the local business and nonprofit sectors that lobbied the Republican-controlled Wisconsin State Legislature for the authority to increase the local sales tax.

That effort began in earnest when the latest legislative session began in Madison. The sales tax authority was rolled into a larger legislative package that remade funding for local governments across the state. The Republican-sponsored bill was ultimately passed with a number of new legal restrictions and policy changes for the Milwaukee area, most of them targeted at the City of Milwaukee. The county fared better in that regard. The most onerous change to county policy was aimed at the county board, raising the threshold for creating new spending to 12 votes instead of a simple majority.

Gov. Tony Evers signed the legislation authorizing the county to enact a sales tax increase in late June.

The county has struggled against a structural deficit for more than a decade. A disastrous pension plan approved by the board in 2000 was a major factor. But for more than a decade state aid to the county was frozen, all the while annual inflation drove the cost to maintain the government ever higher.

The county’s deficits are not over and will return in 2026, but when they return they will be a fraction of what they would be without the new sales tax.

Crowley released a statement after the vote saying, “Today, the County Board of Supervisors shaped the future of the Milwaukee County for years to come by avoiding a devastating fiscal cliff that posed to threaten irreparable harm to our community. After years of advocacy, Milwaukee County finally has the additional revenue needed to avert financial disaster.”

Amendment

The board also passed an amendment to the sales tax resolution authored by Nicholson that conditions the board’s approval of the sales tax to a property tax reduction.

Specifically, the amendment requests that the county executive submit a recommended budget for 2024 that reduces the county’s overall property tax levy; increases funding for parks, transit and other services; provides a detailed report on the county’s plan for spending the sales tax revenue, including when the pensions obligations will be paid off; and a plan for preserving the county’s debt reserves to maintain critical services and finance county infrastructure.

The only supervisor to vote against the amendment was Sup. Tony Staskunas, who questioned why the board would commit to lowering the property tax levy.

Paired with a new city sales tax, the sales tax in the city will be 7.9% starting Jan. 1 and 5.9% in the rest of the county.