Milwaukee bankruptcy avoidance plan clears Wisconsin Legislature

MILWAUKEE - The Wisconsin Legislature on Wednesday passed a bipartisan plan to prevent Milwaukee from going bankrupt that also sends more state aid to every community in the state, a long-sought-after funding increase agreed to by Republican lawmakers and Democratic Gov. Tony Evers.

The measure is part of a larger deal struck by Evers and Republican legislative leaders after months of talks that also increases K-12 education funding by more than $1 billion. It was the highest profile deal reached between Evers, in the first year of his second term, and Republicans, who have found little common ground on most issues.

The local government funding bill, which passed both the Senate and Assembly with bipartisan support and opposition, now heads to Evers. The Senate also passed the school funding bill, which the Assembly was expected to approve late Wednesday night.

Milwaukee leaders warned of dire consequences and catastrophic budget cuts as the city faces bankruptcy by 2025. Milwaukee is struggling with an underfunded pension system and not enough money to maintain essential police, fire and emergency services.

"We cannot let our largest city fail," said Democratic Sen. Mark Spreitzer before the Senate passed it on a bipartisan 21-12 vote. The Assembly passed it later on a bipartisan 68-26 vote.

Evers, speaking Wednesday on WTMJ-AM before the vote, heralded the deal as "really, really important" both for Milwaukee city and county but also children due to the increase in funding, including more for mental health.

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"We’ve met the issue square on," Evers said. "Each side gave up on some things that are important to them. That’s how compromise is made."

Both the Milwaukee proposal and the corresponding school funding bill have their Republican and Democratic detractors, despite the bipartisan deal.

Conservatives deride the Milwaukee bill as a bailout for the state's largest and most Democratic city and say local sales tax increases should need voter approval. The state teachers union doesn't like increasing voucher payments to private schools that are a part of the education funding plan and called on Evers to veto it.

"This is no compromise," said Democratic Sen. Lena Taylor, who argued that the deal did not do enough to help Milwaukee. "This is grand theft."

Democratic senators also objected to various parts of the bill that weren’t related to state aid, like a ban on local communities from placing advisory referendums on the ballot and limiting how long local health officials can order businesses closed during a health emergency.

"This Frankenstein monster of a bill should be slaughtered," said Democratic Sen. Chris Larson, of Milwaukee.

Republican Sen. Mary Felzkowski said the bill was not perfect, "but let’s not let perfect get in the way of very, very good."

The deal resolved the largest sticking point over who could determine whether Milwaukee city and county can raise the local sales tax to pay for pension costs and emergency services. Under the bill, that power rests with the Milwaukee County Board and the Milwaukee Common Council. Some Republicans wanted to require voter approval before taxes could be raised.

The long-sought-after proposal to stave off Milwaukee’s bankruptcy also sends more money to all of Wisconsin’s towns, villages, cities and counties.

The roughly $1.6 billion in aid to local governments — known as shared revenue — would be paid for by tapping 20% of the state’s 5-cent sales tax. Aid would then grow along with sales tax revenue.

Shared revenue to local governments has remained nearly unchanged for almost 30 years and was cut in 2004, 2010 and 2012.

Evers and Republicans have praised the deals as transformational wins for Milwaukee and local governors, as well as the state's schools, while conceding that there are elements they oppose.

Evers, a former state superintendent, has long opposed expanding the state's private school voucher system, which allows public school students to attend private schools for free. Under the deal, payments that private schools receive to accept public school students would increase. That would lower costs to allow private schools to expand the number of non-voucher students they accept.

Advocates for voucher schools say the additional funding will help slow the closure of cash-strapped voucher schools. More than 40% of private schools that received vouchers have closed since the program began in Milwaukee in 1990. That was the first voucher program in the country. It expanded statewide in Wisconsin in 2013, but there are enrollment caps that would not grow under the deal.

The plan also calls for spending $50 million more on reading and literacy programs in schools, but it doesn't detail what exactly those programs are. The bill will also increase a reimbursement for special education costs to cover a third of districts’ expenses and dedicate $30 million to address mental health in schools, both priorities for Evers and Democrats.

The Senate passed the school funding bill on a bipartisan 24-9 vote.

Statement from Milwaukee Mayor Cavalier Johnson

"We have reached an important milestone in the work to resolve Milwaukee’s fiscal challenges. Today’s legislative votes have empowered the City of Milwaukee to overcome financial problems that were decades in the making.

"I appreciate the efforts of Speaker Robin Vos, Majority Leader Devin LeMahieu, and their colleagues. Milwaukee area Democrats including Representatives Kalan Haywood, Sylvia Ortiz-Velez, Christine Sinicki and Deb Andraca, along with Senator LaTonya Johnson thoughtfully voted in support. I also want to expressly thank Governor Tony Evers who was instrumental in advancing this bill.

"I look forward to improving basic municipal functions that will be possible because of this legislation.  We anticipate quicker response times for emergency medical, fire, and police calls for service.  Our libraries will continue to modernize, offering innovative programing and facilities for our residents.

"One more essential step is ahead of us. I ask the Milwaukee Common Council to join me in support of the two-percent city sales tax. Without the sales tax, we have no option to prevent draconian cuts to basic city services.

"I agree with Council members who object to certain provisions in this bill.  I have consistently voiced opposition to the limitations on diversity, equity and inclusion efforts; I have opposed the new limits on the Fire and Police Commission’s work; and, I have repeatedly said the restrictions on streetcar expansion have no place in Wisconsin law.  Regrettably, the infringement on local control is now part of this law irrespective of a Council vote on a sales tax.

"Milwaukee will soon have the opportunity to enact a local sales tax and the ability to resolve its own fiscal challenges, just as its peer cities around the country have. This is a major achievement."

Statement from Senate Democratic Leader Melissa Agard (D-Madison) 

"For more than a decade, Democrats have been strong proponents of supporting shared revenue increases. We’ve heard from local leaders throughout the state that their communities have been starved of the resources necessary to provide basic services to the residents they serve.  

"During his campaign, Governor Evers elevated the issue of shared revenue to a statewide audience, echoing the voices of local government officials across Wisconsin. Thanks to the paradigm shift during the Governor’s campaign - the conversation shifted this session, and our Republican colleagues have finally joined us at the table. 

"Under Governor Evers’ leadership, most local governments will see at least a 20% increase to their shared revenue payments from the state. This will make a significant difference to our local communities as they work to provide essential services to the people they serve, but this is not the finish line, rather a starting point.  

"My Democratic colleagues and I will continue to pursue legislation that empowers local governments and creates communities where all Wisconsinites want to live, work, and raise their families."

Statement from Rep. Robyn Vining (D-Wauwatosa) 

"Like communities across the state, my local governments have been asked to do more with less while shared revenue has remained stagnant. Local municipalities have been forced to cut or consolidate services, and after decades of legislative inaction, they desperately need a lifeline to continue funding services that my constituents rely on. The bill we voted on today goes far beyond fixing how local governments are funded–it contains destructive policies, and that is something I cannot support. 

"In a bill that should provide our local governments the resources they need to salt the roads, rescue children from burning buildings, and protect people from violence, Republicans prioritized adding harmful and hateful policy to secure support from their own members instead of working with legislative Democrats to craft a bill I can support. Prohibiting the use of local tax dollars to promote Diversity, Equity, and Inclusion (DEI) initiatives, prohibiting the use of advisory referendums (allowing the people their voice), and strangling local control are all issues my constituents asked me to oppose, and I listened. 

"I have fought for a clean bill every step of the way, because that is what my constituents deserve. I authored a clean amendment last time we heard this bill in the Assembly, and today I authored another clean amendment that would remove the unnecessary policy items attacking the city and county of Milwaukee, while allowing the Milwaukee Common Council and the Milwaukee County Board of Supervisors to approve an increased sales tax with a simple majority vote, rather than ⅔–which we know is of great concern locally right now. These amendments reflect what the bill should be about–simply funding all our local governments without singling out and punishing the people of Milwaukee and Milwaukee County, and adding hateful additions to our state statutes. 

"Today should have been a day we provided good news on shared revenue to the people of Wisconsin, however instead this day was tarnished by attacks on the very people all of us–Republicans and Democrats–have sworn to serve. Forward, together."

Statement from Van H. Wanggaard (R-Racine)

"The bill creates permanent, sustainable revenue for local governments while maintaining tight control on property taxes. After years of attempts, the personal property tax will finally be repealed.

"Police, Fire, and Emergency Medical Services are prioritized, not wasteful spending. Milwaukee’s fascination with trolley cars cannot "hop" ahead, and efforts to "Defund the Police" are stopped in their tracks. And those are just the highlights.

"Permanent tax relief, aid to local government, reining in wasteful spending, and funding police, fire and EMS. This bill is a win-win-win-win. There are wins all around, for just about everybody. In a divided government, this bipartisan bill is a victory for every person in Wisconsin, and I really don’t know why any realistic person would vote against this."

Statement from Senate Majority Leader Devin LeMahieu (R-Oostburg)

"The legislature’s actions this evening are a key step toward the completion of the largest bipartisan agreement in recent memory. When these bills become law, every local government and public, choice, and charter school in the state will see a substantial increase in resources available to them to fulfill their core priorities. Wisconsinites will experience shorter wait times for police, fire and EMS and more Wisconsin families will be able to make the educational choices that best fit their individual needs." 

Statement from Sen. Chris Larson (D-Milwaukee)

"The City of Milwaukee may not go off a fiscal cliff. Milwaukee County may yet live to fight another day. This is unquestionably good news. But today’s action in the Wisconsin State Senate is nothing to celebrate. Today, our public schools were sacrificed in exchange for something that never should have been in question in the first place.

The mouthful of poison that city and county leaders have had to swallow to avoid catastrophe is shameful. Attacking local control should never have become the going rate to avert a crisis that legislative Republicans themselves created. But because of the cruelty and appetite for attacking Milwaukee that motivates state Republicans, these were just table stakes.

Republicans went even further by demanding something not even Scott Walker was able to achieve in his time as Governor - the biggest increase in private school vouchers in 30 years.

Shockingly, the Democratic Governor Tony Evers, a teacher himself who has spent his career fighting for public education, agreed to it. Our public schools are already on a knife edge. Make no mistake, today’s action will draw blood from our schools. Some may not survive the cut. And so, yes, Milwaukee may be in a better position today than it was yesterday, but that does not mean there is any cause for celebration."

Statement from Milwaueke County Executive David Crowley and Chairwoman Marcelia Nicholson 

"Thank you once again to Governor Tony Evers, Senate Majority Leader Devin LeMahieu, and Assembly Speaker Robin Vos for coming to the table and producing bipartisan legislation that helps Milwaukee County address its unique financial challenges. An additional thank you goes out to Senator LaTonya Johnson, Rep. Deb Andraca, Rep. Sylvia Ortiz-Velez, and Rep. Kalan Haywood for taking a difficult, but necessary, vote to avoid the financial ruin of one of the most vital economic engines in Wisconsin.   

"Milwaukee County has unique financial difficulties that other communities across the state don’t have in terms of scale, cost, or impact across Wisconsin. We are grateful for the Governor and leadership in both the Senate and Assembly for learning about those challenges, understanding the devastating impact they would have on our residents, and working diligently with Milwaukee County to identify tools to address them. We are equally grateful for the help of Milwaukee-area legislators in the Senate and Assembly for helping educate their colleagues on the financial crisis and the ripple effect it would have on local economies across the state.   

"Bipartisan legislation often means that not everyone will get everything on their wish list. While our desire for autonomy remains steadfast, it is vital that Milwaukee County, as an arm of the state, acknowledges the fiscal realities that we must confront. Reaching a fiscal cliff is undoubtedly the single biggest threat to improving quality of life for residents and setting up our region for long-term success. There is too much at stake for Milwaukee County, and our entire state, to not take advantage of the opportunity ahead of us to avoid major service cuts and staff reductions across the board.   

"The looming threat puts at risk critical services addressing acute community needs like housing assistance, disability services, youth & family services, public transportation, veterans’ services, and park safety. Reaching a fiscal cliff in a few short years would also mean Milwaukee County will only be able to make the bare-minimum investments into the entire public safety continuum which will delay justice, make communities less safe, and produce worse outcomes for all residents. This is a generational opportunity to secure our financial future and continue offering the services that keep residents healthy and safe.  

"As deliberations on the sole issue of additional revenue turn to local legislative bodies, we look forward to productive conversations with county leaders and encouraging decision-making that aligns with community needs."