Milwaukee Journal Sentinel

No push for sales tax referendum

Factors cited for city leaders’ shift away from option

- Alison Dirr

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 financial 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 significant 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 officials to get approval from voters before raising sales taxes. LeMahieu’s move is one Milwaukee officials 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 first 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 effort 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 officials 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 officials. “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 financial 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 Brookfield, was leading that effort.

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 find it difficult to separate the legislatio­n’s non-fiscal policy requiremen­ts and limits on local officials’ 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 officers 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 officials, 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 officials 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 fixed because Milwaukee doesn’t have the tools to fix them,” he said. “So, we are on the precipice of financial disaster.”

He said properly conducting a referendum takes time to educate voters and have the necessary community conversati­ons even as Milwaukee’s fiscal cliff is fast approachin­g.

Time running short for a fix in Milwaukee, Milwaukee County

Milwaukee and Milwaukee County both face fiscal 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 fiscal picture.

“Milwaukee County faces a structural deficit 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.

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