Wisconsin shared revenue, Milwaukee sales tax increase plans unveiled

MADISON, Wis. - Wisconsin Assembly Republicans unveiled a plan to boost shared revenue to counties and municipalities, including a minimum 10% boost to every community in the state.

The general Republican plan is to transfer 20%, or one cent, of the state’s sales tax into a savings account that will fund local governments. From that segregated account, the state will pay out local governments.

Many local leaders, both Republicans and Democrats, from across the state have said the current shared revenue system was failing. It is the money that comes into the state from across Wisconsin and then is sent back to local communities. The current funding formula was frozen in 2004.

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"We know that the shared revenue process has been flawed," said Gerald Derr, Town of Bristol chairman and Wisconsin Towns Association board president. "It's been broken."

"We've lost almost 38% of our state shared funding over the last 23 years. It has a huge impact on our daily, day-to-day business, and that's not even taking into consideration inflation over that time," said Becky Glewen, Beaver Dam mayor. "The local taxpayer understands the problems of losing almost $9 million for a community our size over that time. When you look at roads, when you look at infrastructure, when you look at the support that we can give to our EMS and police, it's critically, critically important."

Republicans announced $50 million in new money will go to counties and $176 million in new money will go to towns, villages and cities. State Rep. Tony Kurtz (R-Wonewoc) explained that money will be restricted to law enforcement, fire protection, emergency medical services, public works and transportation.

"Our locals have not shared in the growth that the state has had. Now, they will be tied to the growth in our sales tax," Kurtz said.

A second new stream of money will be $300 million for three years for a pilot program called the Innovation Fund to encourage local governments to share their resources.

"The whole goal of the Innovation Fund is to have communities work together, and the state will be a partner in that relationship to help spur that innovation to cooperate and try to be innovative on how they're going to share services, and it can be a whole gamut of things. It can be dispatchers. It could be IT services. It could be human resources. It could be fire, police. Whatever the whole goal is to get you to use the option," Kurtz said. "The option, it is not mandated to say, ‘Hey, we would like you to consider joining together.’"

Other new funding will go to emergency medical services. Currently, the state has an EMS funding assistance program of $2.2 million. Kurtz says it will increase to more than $12 million. He also says they will also double the money the state offers for police training. 

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There may be requirements placed upon communities to get the new funding.

"We are making historic major reform in this legislation, which requires compromise, so there are things that end up in bills like this that people will love," said co-chair of the Joint Committee on Finance, State Rep. Mark Born (R-Beaver Dam). "There's things that people will not love. That's how you get broad support – hopefully, bipartisan support – by having a big variety of things."

Assembly Republicans hosted news conferences across the state "to make an exciting announcement today on legislation that will bring historic investments and reforms to the shared revenue system here in Wisconsin," said Born.

However, at a news conference in Madison to unveil the plan, Born did not share specific legislation nor a rough draft of a bill. Kurtz said they hope to have something on paper at the beginning of next week.

The Madison news conference also did not unveil separate plans for Milwaukee and Milwaukee County, which include a discussion of allowing county voters to approve a local sales tax increase. Those plans were shared later Thursday.

These proposals are not finalized.

"Over the last few months there have been substantive, good-faith negotiations between both houses of the legislature and local government stakeholders from across the state," said State Sen. Majority Leader Devin LeMahieu (R-Oostburg). "The Assembly announcement today is the product of those negotiations; however the final details are still being worked out. The Senate is looking forward to continuing to find a responsible way to make a generational investment in local governments throughout the state." 

Milwaukee/Milwaukee County sales tax increase proposed

Right now in Wisconsin, when you spend $1, your state sales tax is five cents. A new plan with bipartisan support that would send one penny of that to a special account for local communities would also include an option for increased taxes in Milwaukee County and the city of Milwaukee.

"The progress we’ve made is notable," said Milwaukee Mayor Cavalier Johnson. "In fact, it is unprecedented in modern history."

The proposed change driven by Democrats and Republicans alike has the same goal of boosting shared revenue, money that goes to the state and is then shared with local governments. The formula has been frozen since 2004.

"Communities across the state have been sounding the alarm the that demand of local services is beginning to outpace their ability to pay for those services," said Milwaukee County Executive David Crowley.

After Wisconsin Assembly Republicans unveiled the plan to transfer 20% of the state’s 5% sales tax into a savings account that will fund local governments and a minimum 10% boost to every community in the state, not all were sold.

Waukesha County Executive Paul Farrow said the plan falls short, not giving his county enough for services to keep people safe.

"I am saying if we're really talking about a historic change, let's set ourselves up to be successful across the entire state for the next 20 years," said Farrow.

Farrow called plans specific to Milwaukee and Milwaukee County a bailout.

"We have made a concession, though, because as the mayor said we’d like to have the ability to start paying off this unfunded pension liability as soon as possible," said Assembly Speaker Robin Vos. 

The legislation would give the city and county the ability to add sales tax if approved by voters. Leaders say that money would go toward addressing a looming pension problem that’s threatening other city resources.

"This puts Milwaukee on path to solve onerous pension obligations," said Johnson.

The city of Milwaukee is looking at a 2% sales tax. The county is looking at a .375% increase.