It's time to fix Wis local government funding. And not just in MKE

After elections earlier in November, it's time to look at things in Wisconsin's local communities, who are finalizing their budgets for next year. And let's look ahead to something that re-elected Governor Evers and the State Legislature should deal with when they start their new terms - fixing Wisconsin's broken system of funding local government.

That was the subject of an event held in Milwaukee this week featuring Mayor Cavalier Johnson and County Executive David Crowley. Both the County and City are seeing the one-time boost of COVID aid from DC go away, while these communities are limited in their abilities to raise funds under state revenue caps, and both are calling for the state to allow for an additional local sales tax that would increase the available resources for those communities, and make out-of-towners pay some of the burdens they put on the state's largest target of tourism dollars.

County Executive David Crowley is currently considering the budget that the County Board passed earlier this week, which included reductions to behavioral health and transit as resources were limited in a time of rising costs. Crowley pointed out that giving Milwaukee the ability to raise its own funds wouldn't require any extra state tax dollars, but would give needed flexibility to improve the ability of their community to thrive.

"What we're asking for is something that doesn't have a statewide impact," he said of the tax. "We're just asking for the tools to give us the ability to invest back into our home."

He said in the first part of next year Milwaukee leaders would be going to the state Capitol to talk with legislators from across Wisconsin, trips that will follow a visit by Johnson and Crowley to Green Bay to make their case in recent weeks. The two took to the road not only to seek support of elected leaders there but also to help businesses headquartered in other parts of the state understand how Milwaukee's challenges could affect their bottom lines, Crowley told the Journal Sentinel.

Other communities, too, are facing similar challenges but at a different scale, Johnson and Crowley said.

Their comments followed a panel discussion in which business, real estate and tourism leaders relayed their concerns about how the loss of services, particularly in public safety and parks, would affect their ability to invest and draw people to the area. And Milwaukee Fire Chief Aaron Lipski highlighted the cuts his department has experienced in the last 20 years, including potentially in next year's budget.

This is where I remind you that the City of Milwaukee receives less money in shared revenue from the state than it did 23 years ago, which is a main culprit behind the loss of those services, and the inability to maintain the same levels of police and fire protection.

But Milwaukee is far from the only community that is dealing with these issues, as the Wisconsin Policy Forum documented last week. A sizable number of Wisconsin communities asked their voters earlier this month to allow them to go over their property tax limits just to continue their everyday operations.

...Eighteen of 23 municipal, town, and county referenda (78.3%) were approved this November and an additional 11 passed in other elections throughout the year. The total of 29 local measures approved in 2022 was more than double any other year on record (see Figure 2).

After combining the 18 fall and 11 previous referenda, the $23.8 million in new annual levy authority approved in 2022 is by far the most in a single year and more than triple the amount of the next highest year. Though still a relatively modest part of overall municipal and county levies, which typically grow by $120 million to $150 million per year, these referenda could have much greater effects if taken up by more large communities.

Voters approved fewer than seven measures in each year from the implementation of levy limits in 2006 to 2017. In 2018, however, 14 municipal, town, and county referenda passed in total. Still, the amount of new levy authority approved in 2022 ($23.8 million) is nearly equal to the total amount approved from 2006 until last year ($25.6 million).

In 21 of the 23 referenda on local ballots last week, the questions to voters noted that some or all of the tax dollars would be spent on public safety – police, fire protection, emergency medical services (EMS), or all three. This included all four referenda in cities: Chippewa Falls (police, fire protection, and EMS personnel and wages), Eau Claire (additional police, fire, and EMS personnel), Middleton (additional police, parks, and communications staffing), and Whitewater (fire and EMS staffing). Each of these four referenda passed by at least a 12 percentage point margin and together authorized $4.5 million in additional taxes.

Given that we have a $5 billion budget surplus, and given that inflation has raised costs well beyond what revenue limits accounted for 2 years agpo, you could say that this is a logical time to give a big boost to shared revenues to rebalance the source of funds and reduce the property tax burden. The 2023-25 budget should also adjust revenue limits to make up for the inflation-induced issues of the last couple of years, with a 5-6% annual increase seeming to be in line.

But that's a temporary thing and won't change the basic problem of local governments having limiting areas that they can draw funds from. So why not use the state budget to allow local communities more flexibility to raise their own funds, mostly through permitting additional local sales taxes. And if GOPs want to make sure the sales tax money goes to fund public safety, I'm fine with that.

I'd argue that reforming the method we fund local governments and schools might be the biggest issue out there for the next legislative session. And it's something worth holding up the rest of the state budget for, because this situation can't go on. Especially given that there is unlikely to be any more bailouts coming from DC, and the bills coming due in 2024 and 2025.