Unified Coalition of Milwaukee-Area Leaders Propose 1% Sales Tax Increase
The increase would raise an estimated $160 million in the first year that would go toward funding critical services, capital expenditures and a property tax cut.
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A group of Milwaukee area leaders from the State Senate, State Assembly, Mayor’s office, County Executive’s office, Milwaukee Common Council, Milwaukee County Board, the region’s largest business organization, and all 19 municipalities within Milwaukee County are proposing a sales tax increase.
The end goal of this new unified coalition -- Move Forward MKE -- is to increase the sales tax by one percent. This would bring in an estimated $160 million in its first year, the group said in a release, that would go toward “the reduction of property taxes; investments in municipal facilities, community assets and services; and addressing capital projects and deferred maintenance.”
Milwaukee has one of the lowest sales tax rates of any major U.S. city. Of the 115 largest American cities, Milwaukee has the 111th highest sales tax rate at 5.6 percent, according to the Tax Foundation. Raising the sales tax by one percent would only move the city up to 98th overall.
There is a daunting list of things that Milwaukee, particularly Milwaukee County, needs to pay for.
The conclusion of a three-year, five-part series by the Wisconsin Policy Forum, the local gold standard in public policy analysis, showed how infrastructure needs in Milwaukee are approaching crisis levels (as covered extensively here in a recent column).
The scope of the challenges the City and County (mostly the County) face is massive, and includes: more than $225 million for backlogged capital projects, hundreds of millions needed to replace lead service lines, a desperate need for a new Safety Building (at an estimated cost of $300 million), an aging fleet of buses, and more than half of city streets in need of repair.
This new coalition -- which features “unprecedented unity,” said Theodore Lipscomb, Sr., chairman of the Milwaukee County Board -- would not be able to able to vote on its own to raise the sales tax.
Milwaukee County citizens would not be allowed a vote to make this decision for themselves, either. That is, unless the Wisconsin State legislature acts.
Under Wisconsin state law, local counties or municipalities can not raise their own sales tax independently of the state. In this case, it means that Milwaukee County can not raise its own sales tax -- or hold a referendum vote to raise its own sales tax -- without enabling legislation passed in Madison.
With Republicans having majority control both chambers in the state legislature, a straight tax increase doesn’t seem palatable for the party of tax cuts.
But even back in January, when I first reported on talk of a sales tax increase for WisBusiness, County Executive Chris Abele mentioned an interest in cutting property taxes as part of a larger potential proposal.
Business community leaders Julia Taylor of the Greater Milwaukee Committee and Tim Sheehy of the Metropolitan Milwaukee Association of Commerce both highlighted the importance of property tax cuts in today’s release, with Taylor noting that Milwaukee has “the highest municipal rate of property tax as percentage of local tax revenue amongst all our peer cities in the country.”
Will a property tax cut be enough to win over enough Republicans at a time when many in the party have taken anti-Milwaukee positions? We shall see.
The goal going forward would be to “introduce a local option sales tax to the Wisconsin State legislature this fall, and bring the referendum to voters in Spring 2020,” the group said.
Read the full official release from Move Forward MKE below.
MILWAUKEE AREA ELECTED OFFICIALS AND COMMUNITY LEADERS PROPOSE A NEW REVENUE SOLUTION TO INVEST IN OUR COMMUNITIES
An unprecedented partnership will move forward to pursue the authority to generate new revenue and provide property tax relief to residents through a local option sales tax
Representative Evan Goyke and Senator La Tonya Johnson, in partnership with Milwaukee County Executive Chris Abele, Milwaukee Mayor Tom Barrett and local business leaders and elected officials, today announced plans to move forward and pursue a new partnership with the State. The proposed bill would allow Milwaukee and local municipalities to pursue a binding referendum for a 1 percent local option sales tax that would be reinvested into the community through property tax relief, and countywide priorities.
The proposed plan could bring in an extra $160 million in the first year, with more than 25 percent of this income projected to come from visitors and non-residents. The additional revenue is expected to be used for local priorities including: the reduction of property taxes; investments in municipal facilities, community assets and services; and addressing capital projects and deferred maintenance.
“For years we have been doing more with less as state aids continue to decline, and having the option to generate local revenue represents a watershed moment for us to not only sustain ourselves, but to thrive for generations to come,” said Milwaukee County Executive Chris Abele. “This plan is the best way forward for us to give Milwaukee County taxpayers the services and programs they deserve.”
“Together we are focused on a solution that empowers local voters to decide how our fiscal challenges are addressed,” Milwaukee Mayor Tom Barrett said. “With their approval, we can ease the squeeze on local budgets for police, firefighters, and roads.”
Under this plan, Milwaukee County taxpayers will have the option to raise the sales tax to 6.5 percent, still among the lowest nationwide. The proposed 1 percent local option sales tax will not be added to essential items including groceries, pharmaceuticals and medical equipment.
The State of Wisconsin currently gives local governments the fewest alternatives in the country to levy local taxes alternative to a property tax. According to the Wisconsin Policy Forum (WPF), a statewide nonpartisan, independent policy research organization, Wisconsin ranks seventh in the nation and first in the Midwest for its reliance on property taxes for funding municipalities. A recent report shows that while most states more frequently rely on sales tax to fund operations, Wisconsin’s is the lowest in the Midwest. The report follows up on one from 2017 that suggested the funding structure for Milwaukee was outdated and ineffective. The On the Money report can be found at https://wispolicyforum.org/wp-content/uploads/2018/04/OnTheMoney_Full.pdf.
This effort is supported by an unprecedented level of bipartisan legislative, community and business leaders in Milwaukee County. The plan to introduce a local option sales tax to the Wisconsin State legislature this fall, and bring the referendum to voters in Spring 2020.
“This plan starts to address an outmoded state revenue structure which resulted in Milwaukee having the highest municipal rate of property tax as percentage of local tax revenue amongst all our peer cities in the country,” said Julia Taylor, President of the Greater Milwaukee Committee. “The GMC commissioned the Wisconsin Policy Forum reports in 2016, “Making Ends Meet” and the 2017 “On the Money?” report to look in-depth at our unusual revenue structure with comparisons to peer cities which brought the revenue structure issues to the forefront of the discussion. We are pleased to support these next steps in changing our revenue structure to allow for equitable growth for our neighborhoods, our municipalities and our county.”
“This new partnership is a critical step in moving the Milwaukee area forward. Milwaukee County and its municipalities house 60 percent of the jobs in our metro area,” said Timothy Sheehy, President of the Metropolitan Milwaukee Association of Commerce. “To provide property tax relief, maintain critical services and support our infrastructure, MMAC supports making a case to voters that this is necessary and sound investment in the future of the entire metro area.”
The Milwaukee County Board will vote once legislation passes to determine if the referendum will go on the ballot. Milwaukee Common Council is not required to consider the measure.
“The unprecedented unity among Milwaukee County and its 19 municipalities demonstrates just how urgently we as local elected officials recognize the need for a renewed partnership with State government,” said Theodore Lipscomb, Sr., Chairman of the Milwaukee County Board of Supervisors. “The idea of a new source of revenue responds to the call of citizens across our county who want to see critical investments in transportation, parks and necessary public services in their communities and it gives them the power to make it a reality.”
“Milwaukee has unique challenges but we are also in a unique position to provide opportunities to create economic growth for our region and the entire state,” said Milwaukee Common Council President Ashanti Hamilton. “The current revenue structure constrains our full economic potential. We want to be a part of the solution and be able to stand on our own two feet, and we see enormous opportunity for growth and service enhancement if given the ability.”
Milwaukee County officials including County Board Chairman Theodore Lipscomb and County Executive Abele launched the Fair Deal Workgroup in 2018 to explore new revenue options to address the structural deficit. In conjunction with state and local community and business leaders, the Fair Deal Workgroup proposed recommendations that included allowing local control to generate new revenue and reduce the current reliance on property taxes through a binding referendum process.
The Intergovernmental Cooperation Council (ICC), which includes the elected executive from each of Milwaukee County’s 19 municipalities, voted unanimously to support this initiative. The ICC meets to share best practices in delivery of public services, to discuss ways in which to save tax money and enhance services through cooperative efforts, and to discuss and advocate for change in state and federal law that are of common interest to ICC members.
“This proposal once again shows Milwaukee County elected leaders offering solutions, not pointing fingers,” said Glendale Mayor Bryan Kennedy, Chair and Secretary of the ICC. “The ICC vote today reflects our desire to work together across the county to meet the needs of our residents. I applaud the County Executive and County Board Chair for their vision and look forward to working with them to advance this proposal at the state level."
Milwaukee County recently measured local support for a sales tax using Balancing Act, an interactive online tool simulating the process to balance municipal budgets. More than 1,000 residents participated in Balancing Act, which provided direct insight and feedback on the 2020 budget and support for sustainable revenue options including sales tax.
For more information, visit www.moveforwardmke.com.