When Milwaukee County officials tried to increase local sales taxes in 2008, they gave the final say on the proposal to state lawmakers. Many now think that was a mistake. Now, the County is back with a similar proposal for a 1% sales tax increase, but the steps to get there are essentially coming in the reverse order.
This time, unlike in 2008, local officials won’t first be asking the public to approve a non-binding “advisory” referendum and then going to the state Legislature for final approval. Instead, they are going first to legislators for permission to hold a binding vote in April 2020. If Madison goes along, the final decision will be left to Milwaukee County voters. Will that be enough?
Tight Budgets and Revenue Shortfalls
If facts and figures were sufficient arguments in themselves, Milwaukee County officials would have an open-and-shut case. Milwaukee Mayor Tom Barrett announced in September that budgetary constraints are forcing him to eliminate positions for 60 police officers after they are vacated by retiring employees. Meanwhile, he and other city officials have estimated they’ll have to find $100 million in the coming years to meet pension obligations for retiring city workers.
Milwaukee County has separately been dealing with annual revenue shortfalls of $20-30 million. Every year, the cancellation of bus routes and curtailment of other services are real possibilities. Beyond that, the county has what the Wisconsin Policy Forum has deemed a “seemingly insurmountable” backlog of possibly more than $500 million-worth of infrastructure projects. The $160 million the proposed 1% sales tax increase would raise in its first year would not only help local officials overcome these shortfalls but also help lower property taxes; a quarter of whatever is raised would be used for this sort of relief.
That would help shift local governments away from what many believe is an over-reliance on property taxes. Largely because of state-imposed limits on both property taxes and sales taxes, Wisconsin municipalities are more constrained than their counterparts elsewhere in their ability to raise revenue. The resulting pinch is being felt not just in the city and county of Milwaukee, but also in places like Franklin and St. Francis. Separately, in a bid to win local support, a quarter of whatever is raised would also be used to lower property taxes.
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Yet, as has been true about so many policy debates in Wisconsin in recent years, the Milwaukee County proposal’s fate is likely to be complicated by national politics. State Senate Majority Leader Scott Fitzgerald—a conservative Republican now running for the congressional seat held by retiring U.S. Rep. James Sensenbrenner—has already decreed the “Fair Deal for Milwaukee County” proposal “dead on arrival,” and other Republican lawmakers will no doubt be reluctant to buck their party’s usually adamant stance against raising taxes, even if no increase could be passed without the approval of the voters.
Mayor Barrett’s hopes lie with the public. In a city and county where crime is a perennial concern, residents are unlikely to take the loss of 60 police positions sitting down. “For the fifth or sixth year in a row, the budget for the Milwaukee Police Department is larger than the entire property tax levy for the city of Milwaukee,” he said. “That’s totally non-sustainable.”
Overcoming Republican Obstruction
Milwaukee County officials recognize getting the Fair Deal proposal through the Republican-controlled Legislature will not be easy. Some hold out hope that Democrats can join with Republicans representing the Milwaukee area and form a coalition that will have enough votes to get the plan adopted. Others have noticed encouraging signs among voters. At a series of 12 public hearings held throughout the county, Theo Lipscomb, chairman of the Milwaukee County Board of Supervisors, said he has found that people generally recognize a need for something like the Fair Deal proposal.
“Everybody sees shortcomings,” he said. “Even in places where they aren’t necessarily concerned about spending on parks and transit, there are maybe roads or a bridge or something in their neighborhood that needs work. So it’s something for everybody.”
Lipscomb also noted that, even with a 1% increase, local sales taxes would remain lower than in many other Midwestern cities. Assuming the local 0.1% sales tax used for the construction of Miller Park ends next year, the Fair Deal proposal would bring the local rate to 6.5%. (The state now has a 5% tax and the county a 0.5% tax.) Pittsburgh and Indianapolis both collect sales taxes at a rate of 7%. Chicago is tied for having the highest rate in the country: 10.25%.
But Milwaukee County officials know that they can’t make a compelling case simply by arguing that “people have it worse elsewhere.” They also note that, by relying more on sales taxes and less on property taxes, they would be getting more money from people who commute into the county for work but may not own any taxable property here. A quarter of the revenue raised is expected to come from people living outside the county, and since Milwaukee’s sales tax is not collected on groceries, pharmaceuticals, medical equipment and other goods deemed essential, it is considered “progressive” and not especially burdensome on people of restricted means.
Rob Henken, president of the Wisconsin Policy Forum, declined to say whether he and his colleagues usually refrain from publicly endorsing policy proposals like the Fair Deal for Milwaukee County, but there’s no doubt, he said, that something is needed in response to some real deficiencies. “There’s a fundamental structural problem facing local governments that will require some type of solution if we wish to both avert significant service cuts going forward and fully take care of infrastructure needs,” he said.
Lipscomb noted that the process being used to pass this latest sales tax proposal is not the only thing that differs from what was seen in 2008. This time around, the 1% increase has the support of a large number of groups, including the Metropolitan Milwaukee Association of Commerce, which had been opposed to the previous attempt.
But even with that support, Lipscomb and other Milwaukee County officials acknowledge what they are proposing won’t be easy to carry out. Even if they do manage to persuade state lawmakers, they will still have to make their case to the voters. “I’m not naïve to the fact that this is a big lift,” he said. “It’s also that important. We are reaching the end of the rope. There are just so few other options left, and the alternatives are so dire.”
