Milwaukee Journal Sentinel
No push for sales tax referendum
Factors cited for city leaders’ shift away from option
Milwaukee-area leaders for years called on the state to give local voters the opportunity to raise a Milwaukee County sales tax — but now, with a bill winding through the legislative process in Madison, local leaders are framing such a referendum as one of the least desirable options.
As far back as 2017, then-Mayor Tom Barrett called for a referendum on a local sales tax to fund public safety. In 2019, Milwaukee County’s “Fair Deal for Milwaukee County” workgroup called for sweeping changes to avert a financial crisis, and local leaders announced plans to seek permission from the state for a binding referendum to raise the Milwaukee County sales tax.
But much has shifted since that time. “Common Council members are close to the communities they represent and can make informed and timely decisions on behalf of their constituents to move Milwaukee forward,” Mayor Cavalier Johnson told a state Senate committee Tuesday as it heard testimony on the legislation. “A referendum, though, has a significant element of uncertainty, and next year none of us want to revisit all the work — the hard work — that we’ve been doing.”
As it stands, the legislation passed by the Assembly and now before the Senate would allow the City of Milwaukee to levy a 2% sales tax while Milwaukee County could add a 0.375% sales tax on top of its current 0.5% tax, if voters approve. However, while Assembly Speaker Robin Vos has said his caucus was “done negotiating” on the local government funding bill that applies to communities across the state, Senate Majority Leader Devin LeMahieu said his caucus won’t support a provision that would require Milwaukee officials to get approval from voters before raising sales taxes. LeMahieu’s move is one Milwaukee officials and Gov. Tony Evers would support but that Vos said could “kill the bill.”
To those involved in the negotiations, the shift away from a referendum can be traced to factors including changes in leadership at the city and county, concerns that voters would not approve sales taxes for public pensions and the little time left to boost revenue before local services are slashed.
“It is now three years later, the hole has gotten three years deeper,” Jerry Deschane, executive director of the League of Wisconsin Municipalities, told the Journal Sentinel.
Full leadership turnover at city, county
It was not Johnson or County Executive David Crowley who first pitched the idea of a referendum on a sales tax, and on Tuesday they distanced themselves from the initial push to put the question to voters.
“Maybe if the same people who had talked about a referendum in the past, if they were here now, perhaps they’d be looking for the same thing,” Johnson told the Journal Sentinel after coming out of the Senate hearing. “I don’t know. I can only answer for myself and the reason why we are looking for this.”
Johnson has cited concerns that a referendum would not pass, in part given the complex issue that voters would have to absorb on a very short timeline.
The city and county have seen complete turnover among the top leadership since the 2019 launch of an effort known as “Move Forward MKE” that sought state permission to hold a binding referendum to raise the county sales tax to 1.5% from 0.5%.
At that time officials launched the effort, the two local governments were under the leadership of County Executive Chris Abele, Milwaukee County Board Chairman Theodore Lipscomb Sr., Barrett and Common Council President Ashanti Hamilton.
It wouldn’t be until 2020 that Crowley was elected county executive, Marcelia Nicholson was elected County Board chairwoman and Johnson was elected Common Council president. In 2022, Johnson was elected mayor in a special election after Barrett resigned, and Ald. José G. Pérez was subsequently elected council president.
Crowley contended the overall push has been for a 1% local sales tax as opposed to a referendum.
And while the Move Forward MKE website’s reference to a binding referendum remained until November 2021, the more public push for the tax was only reignited in fall of 2022 when responding to the COVID-19 pandemic began to require less energy.
“For us, it was really about bringing our ideas to the table and then having them meet us halfway,” Crowley said of state elected officials. “As we continue to have negotiations, we have been asking and talking about the fact that ... if you have us go to referendum that’s going to be an uphill battle. But if you want this to pass and you want to make sure we are solving problems for the City of Milwaukee and Milwaukee County, the best route to go would be to do this through enabling legislation.”
Concerns voters would not approve sales tax for pension or separate limits on local decisions
As leadership changed in recent years, so too did the proposed legislation and the city’s financial picture.
“We had a longer runway previously. We did not act on it, and I think that has changed the options that we have, frankly,” said state Rep. Evan Goyke, DMilwaukee, who in 2019 was a lead sponsor on an earlier bill to allow Milwaukee County voters to approve a sales tax.
That bill would have allowed voters to impose a 1% sales tax on top of the 0.5% sales tax the county currently imposes.
A quarter of that additional revenue would have gone to “residential property tax relief,” 7% to public health infrastructure and the remaining 68% to the county and its local municipalities for operational and capital expenses, according to a state Legislative Reference Bureau analysis.
Discussions in late 2021 on a potential subsequent bill did not end with legislation. Then-state Sen. Dale Kooyenga, a Republican of Brookfield, was leading that effort.
The bill being debated by the Legislature now includes a higher sales tax than the previous legislation contemplated. It would also move new city and county employees to the state pension system.
Unlike the 2019 legislation, the current bill requires that the funding be used for pension obligations at the city and county, and for public safety services. Questions that would appear on voters’ ballots are expected to be complex, as are the pension issues both local governments face.
Although it’s hard to predict how voters would respond, the size of the proposed sales tax increases and the use of the money may have an impact on the outcome of any referendums, Goyke said.
And, he said, he thought voters would find it difficult to separate the legislation’s non-fiscal policy requirements and limits on local officials’ decisionmaking from a referendum on a sales tax.
Provisions that limit the power of the city’s Fire and Police Commission, return police to Milwaukee Public Schools and mandate the city maintain a minimum number of police officers have read to Milwaukee organizations such as Black Leaders Organizing for Communities as state Republicans as extracting concessions from the city in exchange for much-needed changes to the system that funds local governments.
Angela Lang, executive director of Black Leaders Organizing for Communities, argued that any decision on raising the sales tax should be made by the voters.
“To pass this without the voice of the people, I think it’s heavy-handed,” she said, adding that not allowing a referendum would come on top of the bill’s inclusion of other policy provisions that limit local decision-making in a city in which the majority of residents are Black and brown.
If a sales tax is ultimately imposed, whether through a referendum or a vote by the local elected officials, she said leaders should put in the time to educate residents about it.
State Sen. Mary Felzkowski, R-Irma, who is the lead sponsor of the bill along with state Rep. Tony Kurtz, R-Wonewoc, told the Journal Sentinel that she favors enabling legislation that would put the sales tax vote before the Common Council and County Board of Supervisors.
“I want to give Milwaukee a tool that they can utilize to move forward,” she said, adding that she shares the concern that voters would not approve the new taxes.
She said she had backed a referendum when Gov. Tony Evers proposed earlier this year that voters be asked to approve a 1% county sales tax because she believed that would have passed.
However, she said, as officials dove deeper into the city and county unfunded pension liabilities, the current rates of return and the requirement to close the two local governments’ pension systems, it became clear that the sales taxes would need to be raised by a larger amount.
“To a certain extent ... city leadership got them into this, make them take the vote to get them out,” she said, adding she believed the city has funded “wants” instead of “needs.”
Deschane, of the League of Municipalities, said Milwaukee has done what it can to balance its budget with 20 years of stagnant shared revenue returning to the city from the state and tight levy limits.
“These problems never really got fixed because Milwaukee doesn’t have the tools to fix them,” he said. “So, we are on the precipice of financial disaster.”
He said properly conducting a referendum takes time to educate voters and have the necessary community conversations even as Milwaukee’s fiscal cliff is fast approaching.
Time running short for a fix in Milwaukee, Milwaukee County
Milwaukee and Milwaukee County both face fiscal crises in the coming years, with the city’s fast approaching.
In 2025, the city is facing what some have described as “draconian” cuts.
The state has returned a stagnant amount of shared revenue to the city for more than two decades and limits local governments’ ability to raise revenue through other means such as sales taxes or by raising property taxes. At the same time, the city’s annual pension contribution is spiking while other costs are rising costs and reserves are dwindling, including the nearly $400 million Milwaukee received in pandemic aid.
Milwaukee County, too, is facing a deeply challenging fiscal picture.
“Milwaukee County faces a structural deficit that threatens the services our communities rely on to live and thrive,” Nicholson, the County Board chairwoman, told the Senate committee.
Without a solution, by 2027 the county would have no local funding to provide parks, public transit, emergency services, arts programs, senior services, disability services, youth programs and more, she said.