State Near Top In Slashing County Funding

Over the last three decades almost no state in the nation has cut funding more to its counties than Wisconsin, a study by Forward Analytics found. State funding of county services in Wisconsin fell from 46% of total county  revenues in 1987 to 26% in 2019, but “much of the decline occurred between 2009 and 2019,” the study noted.

Only Minnesota and New Jersey cut funding to the counties by a greater rate than Wisconsin during this period, the little-noticed report from 2021 found.

Those cuts were particularly devastating for Milwaukee as Urban Milwaukee has reported. Between 2010 and 2021, Milwaukee County has seen its total state revenue decline significantly. Had annual funding received in 2010 been maintained and kept up with inflation, the county would have received another $455 million over that 11-year period.

Counties are not independent governments, as many taxpayers assume, but operate as the administrative arms of state government, providing services mandated by the state. Much of the state funding goes for health and human services programs, according to the study’s author Dale Knapp, and cuts in that funding have a great impact on counties with more poverty and elderly residents. “And that’s a particular challenge for Milwaukee County,” he notes.

Another category of state funding to the county, mass transit operating assistance, also has more impact on Milwaukee and other big cities who operate bus systems. Considering Wisconsin is among the leaders in America for state funding cuts to the counties, Milwaukee may well be one of the hardest hit counties in the nation.

But all 72 counties in Wisconsin are being squeezed by the decline in state funding. As a result, the counties’ share of funding of its programs — mostly local property taxes paying for state mandated programs — grew from 51% in 1987 to 71% in 2019. The underfunding of state mandated programs has grown so bad for Milwaukee County it now projects that 100% of its spending will go to those programs by 2027, leaving not one dollar of funding for local services like the county parks or buses, as Urban Milwaukee reported.

The decline in state funding to the counties, Knapp finds, was driven by a change in state priorities. In the 1990s, Wisconsin started spending more money on corrections and K-12 education. As a result of “tough on crime” laws, “Wisconsin’s prison population nearly tripled and corrections spending quadrupled,” the study notes. And Medicaid costs began rising rapidly, from 9% of state spending in the early 2000s to 17% by 2019.

The Legislature did pass a law allowing counties to levy a 0.5% sales tax, which Milwaukee County enacted in 1991, but Wisconsin’s limit of 0.5% is the second-lowest among the 31 states that allow a county sales tax, Knapp notes.

Moreover, Wisconsin has one of the strictest property tax limits in the nation — since 2006, counties have only been able to raise property taxes at a rate tied to new construction. All of which has left counties struggling to pay for programs.

In response to a request from Urban Milwaukee, Milwaukee County provided an annual breakdown of state funding received from 2000 to 2010, which shows that funding actually rose slightly — by 15% — during that period though it did not keep up with the rate of inflation, which was 27%. But beginning in 2011, funding began to plummet and that has continued since then.

County Supervisor Sylvia Ortiz-Velez, who successfully pushed for the county to request a federal probe of the decline in Milwaukee County funding, arguing it could be a civil rights violation, told Urban Milwaukee she places much of the blame for funding cuts on former Milwaukee County Executive Scott Walker. “The funding went down after he became governor,” she noted. “He started really sticking it to Milwaukee.”

Certainly, Walker was not an advocate for county funding as governor. But the Republican legislative leaders were in agreement and have continued on that course even as Democratic Governor Tony Evers has pushed for more funding for Milwaukee. Meanwhile Milwaukee County has requested a state Department of Revenue review of how the decline in funding has impacted each county, in response to another part of the Ortiz Velez resolution.

One additional constraint on the state budget that has left less money to spend is the opposition of Walker and Republicans to supplemental Medicaid funding under the Affordable Care Act, which has cost the state $1.6 billion since 2014. That could have paid for a lot of shared revenue to the counties.

That factor is not mentioned by Knapp, a veteran researcher who worked for the Wisconsin Taxpayer Alliance until it merged with the Public Policy Forum to become the Wisconsin Policy Forum. Knapp’s new shop, Forward Analytics, is part of the Wisconsin Counties Association a service and lobbying group for the state’s counties. And the WCA has been careful about how it lobbies Republican legislators.

That said, Knapp’s research is well done and helps dramatize a key statewide problem. And the obvious solution, one pushed by both the WCA and Milwaukee County Executive David Crowley, is for the Legislature to allow counties to increase their sales tax. “Even with a 1 percent increase in sales tax, Milwaukee County would maintain one of the lowest sales taxes in the nation for a community our size,” Crowley tells Urban Milwaukee. “We can utilize our local dollars for local priorities such as mental health, transit, senior services, and maintain valuable assets such as the zoo, and parks. We have and will continue to call on our state legislators to partner with us, providing us the ability to solve local issues with local solutions.”

Note to East Siders: I will be moderating a candidate forum for the Milwaukee County Board Third District race between incumbent supervisor Sheldon Wasserman and challenger Eric Rorholm that will take place on March 22. More details here.