Cash-starved leaders say their hands are tied by draconian, state-imposed limits on local taxes.

Chris Abele’s pitch to state legislators goes like this.

First, the ninth-year Milwaukee County executive holds up a chart that tracks how much county taxpayers have paid the state since the Great Recession. Up, up it goes, by hundreds of millions of dollars overall.

Then, Abele shows them what the county has gotten back from key state funding sources.

All four are flat, or down slightly. Milwaukee County is giving more and getting less.

Abele says state lawmakers often want to know whose numbers they are. “They’re yours,” he says. From the state Department of Revenue.

But Abele stresses that he doesn’t blame anyone. Not Republicans, nor antipathy toward a metropolis that has long been portrayed as a drain on state resources. This is the result of outdated policy with unintended consequences, he says. And considering the economic engine that Milwaukee has become, “everybody in the state has a stake in fixing this.”

While Abele and other Milwaukee officials plead in vain for more state revenue, the idea of a local sales tax referendum has risen again as the tidiest solution to mounting county and city needs: If the state won’t send more money, the argument goes, let Milwaukee make more money.

Yes, that would require the approval of the Republican-controlled, tax-allergic Legislature. No, that doesn’t seem very likely. But the alternatives are straight out of a post-apocalyptic movie.

You want crumbling buildings? The county had to install nets to catch falling debris at the iconic Mitchell Park Domes conservatory. The County Safety Building was deemed, of all things, unsafe – with asbestos, pests and a layout that funnels prisoners through the same hallways as prospective jurors and victims. If Milwaukee’s aging Public Museum doesn’t find a new home, it risks losing its accreditation and the traveling exhibits that are key to its continued existence. 

The list goes on: A 2016 report found that a quarter of the county’s buses had surpassed a half-million miles – more than 20 times around the Earth. Parks staff has fallen from 1,000 in the 1970s to 200 today, and if you’ve wondered why your local park restrooms are always locked, it’s because there’s nobody left to clean them. It’s a “minor miracle” Milwaukee’s parks are maintained as well as they are, Abele says, but “at some point, there’s a break point.”

The bill for direly needed county capital projects and delayed maintenance has been estimated upward of $1 billion, and yet, because his revenue options are limited, Abele begins every budget in search of $30 million to trim from expenses.

“If we don’t address this eventually, and sooner than people think, most of the tax dollars the county collects are going to be going toward debt, and we’re going to be cutting whole departments and services,” he says.

That’s not to mention the city of Milwaukee, where the police budget has swelled by 27 percent since the start of the decade, tens of thousands of lead water-service lines need replacing and more than half of streets were rated “fair” or “poor” by city engineers. The city likewise relies on state revenues that are declining, relative to inflation, and Standard and Poor’s wrote last year that the city’s credit rating had a “one-in-three chance” of being docked in the near future.

Mayor Tom Barrett says his financial constraints were on display in late May during the NBA’s Eastern Conference Finals, when the plaza outside Fiserv Forum was bustling with revelers buying food, beer and team gear.

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“Because you have thousands of people there, you’re going to need increased police presence, increased presence from the Department of Public Works, potentially an increased presence from the fire department,” Barrett says. “You’re thinking, ‘Oh great, that’s not a problem, because we’re generating all of this additional revenue for the city.’ But Milwaukee, unlike any other city in the country with over 400,000 people, doesn’t partake in it at all.”

That’s because almost all of Milwaukee’s sales and income taxes go to the general fund in Madison, which redistributes them to counties and municipalities statewide without a care from whence they came.

Besides that state aid, Wisconsin’s governments have few local sources of money. They can raise property taxes, but property taxes here are already among the nation’s highest, and they burden residents with the cost of resources used by commuters and tourists.

Counties can also implement a half-cent sales tax, but Milwaukee County already has done so. The only other sales taxes allowed are in a half-dozen “premier resort areas,” and for the purpose of funding Miller Park (a tenth-of-a-cent, five-county tax that is due to sunset next year).

That leaves little else besides fees, like the unpopular “wheel taxes” that Milwaukee residents grudgingly pay to both the county and the city.

The Wisconsin Policy Forum, a Milwaukee-based research nonprofit, has raised alarms in a five-part series of reports on local infrastructure gaps that concluded this summer with a stern warning: “Elected leaders and citizens must come to grips with the reality that a new source of funding will be needed to address the county’s (and quite possibly the city’s) infrastructure needs unless the list of identified capital projects somehow is significantly diminished.”

Most U.S. metro areas enact their own specialized taxes – such as sales, payroll or income taxes – to spur economic growth, weatherproof the budget against fluctuations in other funds, and account for the thousands of people who pour in each day.

Income and payroll taxes “likely are politically unrealistic,” the Forum wrote, but a new half-cent county sales tax would be worth nearly $80 million per year. If used to support debt on bonding, that would cover all the items on the county’s immediate capital to-do list (including a new courthouse, estimated at $370 million) and possibly additional projects, like replacing the weary Domes.

A previous Forum report found a half-cent city sales tax could be worth $43 million to the city, and a countywide tax might also involve some split between the county, municipalities and a regional capital projects fund.

THE SHARED REVENUE PUZZLE

Wisconsin municipalities – and, to a lesser extent, counties – rely heavily on a state fund known as the shared revenue program. It’s the second-largest contributor to Milwaukee’s city budget, at $219 million – second to the $281 million in property tax revenue. Overall shared revenue has declined in recent years, though Gov. Tony Evers included a 2% increase in his 2019-21 budget proposal. Milwaukee’s cut of that has been flat in recent years, while Milwaukee County’s declined from $31 million in 2012 to $27 million last year.

Abele says his “boring use” of new revenues would be to reduce property taxes and pay off debt, but he’s avoiding prescriptions and leaving the details of any new revenue proposal to state lawmakers.

A half-dozen Milwaukee-area legislators – all Democrats – told Milwaukee Magazine they support a sales tax referendum, and two were working toward related legislation earlier this summer.

It may be notable, though, that area Republicans – River Hills Sen. Alberta Darling and Brookfield Sen. Dale Kooyenga – didn’t respond to a request for comment.

When Milwaukee County launched a “Fair Deal” work group to explore financial solutions last fall, Assembly Speaker Robin Vos, R-Rochester, told the Milwaukee Journal Sentinel in a statement that “No one else in the state feels like Milwaukee County is not getting its fair share, especially with the millions going to schools, road projects, social services and state-run child welfare services.”

And even when Democrats controlled state government, in 2009, Democratic Gov. Jim Doyle vetoed a 0.65 percent sales tax for buses and public safety in Milwaukee County. More recent proposals from Barrett and the business-led Metropolitan Milwakeee Association of Commerce have played to crickets.

Milwaukee Rep. Christine Sinicki says she fears the current effort may be dead on arrival. “Robin Vos controls his caucus with a steel fist,” she says. “He’ll fight to make sure it never sees the light of day. His caucus will follow along.”

But Rep. Evan Goyke believes there’s hope. Not only are Milwaukee’s leaders uniting, he says, but other local governments – like Superior, in the far northwest corner of the state – have expressed similar pressures. “There’s a window,” he says, to make the case to affected conservatives.

And MMAC President Tim Sheehy says Milwaukee can always quote former Republican Gov. Tommy Thompson, who made headlines in 1995 when he told central Wisconsin voters that the Miller Park tax was a way to “stick it to ’em” in Milwaukee.

“We’re tired of going to Madison with knee pads on, and begging for more revenue all the time,” Sheehy says.

In other words: Let us stick it to ourselves.


WITH A NEW HALF-CENT COUNTYWIDE SALES TAX …

One model that caught the attention of Milwaukee County’s “Fair Deal” work group exploring revenue options was the sales tax in Allegheny County, home to Pittsburgh. There, a sales tax is divided three ways between the county, local municipalities and a “regional asset district” that funds capital projects. Milwaukee County estimates it could generate nearly $80 million in 2020 with a 0.5% sales tax. Here’s how that could break down:

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MILWAUKEE’S UNUSUAL TAX PROFILE

At 5.6%, Milwaukee’s 2017 sales taxes were the nation’s sixth-lowest among 116 U.S. cities with populations over 200,000, according to the Tax Foundation. Two – Portland, Oregon, and Anchorage, Alaska – are in states with no sales tax, and another, Madison, is only lower because of the 0.1% Miller Park sales tax imposed on Milwaukee County and four other counties by the state of Wisconsin in 1995. Sales taxes in Chicago, at 10.25%, are nearly twice as high.

A report from Willamette University found that in 2015, Wisconsin’s municipalities got just 1.6% of their funds from sales and income taxes, compared with a U.S. average of 23%. Meanwhile, at 2.6%, Milwaukee’s effective property tax was fifth-highest among 53 U.S. cities analyzed in a 2017 report from the Lincoln Institute of Land Policy. The Wisconsin Policy Forum found that Wisconsin is the only state in the Midwest that allows cities to implement only a property tax, and Milwaukee was the only one of 38 peer cities that didn’t have multiple taxes, according to a 2017 Forum review.


“Will Wisconsin Let Milwaukee Save Itself?” appears in the August 2019 issue of Milwaukee Magazine.

Find it on newsstands beginning July 29, or buy a copy at milwaukeemag.com/shop.

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