It’s undeniable: The City of Milwaukee is on a tremendous winning streak.
You know the list. You live in this city. You’ve seen what’s been happening in your own backyard. So many big changes that seemed inconceivable or farfetched just a few short years ago have since been realized. Milwaukee is charging toward a triumphant end to a decade that began in recession-induced shambles, but this winning streak is at risk of being washed away. Just as so many lofty plans are coming to fruition and just as impossible goals—like landing the 2020 Democratic National Convention during this of all presidential campaigns—are being achieved, another wave of big, difficult decisions is rising.
Milwaukee County is riding on the coattails of the city’s success. With a series of needed projects in front of them, Milwaukee County’s finances have reached a full-blown crisis point. The Milwaukee Public Museum has to find a new home. The Mitchell Park Domes are crumbling. The County desperately needs a new justice center. The list of repair and replacement needs at Milwaukee County parks grows every year, and the Downtown convention center could be rendered obsolete just as it’s about to reach its highwater mark next July. We don’t want to see the county slow down the momentum we have been experiencing.
Add it all up and costs to pay for these big capital projects and major backlogs could approach $1 billion. Costs for a new justice center alone—which Rob Henken, president of the nonpartisan Wisconsin Policy Forum said is something that “must” happen—is estimated to be more than $300 million. That’s a higher cost than the public funding component of building Fiserv Forum. The Milwaukee Bucks’ new arena is nice to have; a replacement for the Milwaukee County Safety Building is something we need to have, and that’s just the tip of the iceberg. The bills are here; it’s time to pay them.
Broken Revenue Model for Local Government
Sobering as that fact is, there’s good news here. The City of Milwaukee is, indeed, on a winning streak, and it’s in the city, county, region and state’s best interest to keep that streak alive. Paying our bills, reworking a deeply broken revenue model and taking steps to invest in our city and county’s future could do just that. That’s why it’s time to start talking about raising the local sales tax. Sales tax rates in Wisconsin are relatively low, ranking 43rd among U.S. states. In the city of Milwaukee, the sales tax is lower than just about any city of its size. Of the 115 U.S. cities with populations greater than 200,000, Milwaukee is ranked at 111, with a rate at 5.6% (Madison is 112th at 5.5%). If the rate were raised by a single percentage point, Milwaukee would still reach only 98th for local sales tax.
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A sales tax is, however, an inherently regressive tax, since it is the same for everyone regardless of income and therefore taxes lower-income people at a higher percentage of their income. The sales tax in Wisconsin does mitigate that regressive nature by eliminating sales tax from certain essential purchases like food items bought in grocery stores versus restaurants and for pharmaceuticals. At the same time, Wisconsin also has some of the highest property tax rates and state income tax rates in the country, so many economists would argue that the larger taxation formula in the state is out of balance.
The Wisconsin Policy Forum has exhaustively and thoroughly studied the County’s financial picture over the last three years in a five-part series, the last of which will be released later this spring. And put together, it shows deep, structural and seemingly insurmountable financial difficulties that: a) have been deeply damaged by state aid payments remaining flat for many, many years; and b) become further complicated by “these real big infrastructure projects that, even if you had local governments in very sound fiscal condition,” are difficult to manage, said Henken.
So why is a sales tax increase getting so much attention as a possible way to pay some of these bills and improve this condition? One is the state’s aforementioned taxation funding formula with property, sales and income taxes, said Henken, and the other is the ability to “(draw) revenue from individuals who are visitors to the County or the City of Milwaukee, as opposed to just residents.” That means suburban commuters as well as tourists.
“Arguably, there are tens of thousands of commuters from outside Milwaukee County who are coming to the county every day to work and using county and municipal services, he said. “And then there are millions of visitors to various cultural, entertainment and sporting venues throughout the county, and they’re not being taxed at all for their use of city and county infrastructure. A sales tax is one way to get at that.”
No Silver Bullet
Henken stressed that a sales tax certainly would be no silver bullet to solving these problems; no one solution would be. But there is a certain logic to leveraging the part of the city that’s seen the most growth to help pay for the disrepair that other parts of the city and county have been left in.
Besides, is Milwaukee really going to follow this winning streak by folding its public museum? Are the Domes really going to be shuttered with no plans for replacement? Are we really going to talk about the county’s parks like the tremendous regional asset that they are while letting them continue to fall deeper into a state of disrepair? Are we really going to do nothing about a basic necessity of local government like the Milwaukee County Courthouse? Is the city really going to welcome the eyes of the world at its convention center and then fail to modernize and expand it?
In many ways, the list of projects in need of a capital infusion is an extension of the public funding debate that preceded the deal to fund the construction of Fiserv Forum. Beginning in 2013, the Milwaukee Metropolitan Association of Commerce (MMAC) convened many meetings of the Cultural and Capital Needs Task Force to examine what needs could be addressed and how the region could go about paying for them. But what has happened since? The arena got funded while nothing else did. That’s not how you move Milwaukee forward.
What’s also changed since 2013 is that we now have a governor who is not openly hostile to Milwaukee and trying to avoid tax increases like the plague (even if those increases are the only viable way to pay the bills). State legislation is key to this debate, as Wisconsin state law makes it extremely difficult for local counties and municipalities to raise their own sales tax or property tax. Legislation would be required to pass even enabling legislation for the city or county or region to vote in a referendum about raising our sales tax and gaining more local control over our own financial future.
That’s where this could all be headed, and we need to have this conversation now if we’re going to seize the moment Milwaukee finds itself in. July 2020 and the DNC will be here before we know it, and it would be a shame if that was the final chapter in Milwaukee’s renaissance and not the beginning of a bold new era for the city. The next wave for Milwaukee is fast approaching, and it’s time to make some decisions about whether we’re going to ride it to a bold future or watch it swallow us up.
