Evers asks for big shared revenue boost. How would it work?

One of the central issues of this budget is going to be whether the state is going to send some of the $7 billion surplus to local communities that are struggling to make ends meet with property tax increases being limited. And Governor Evers announced this week that he will be asking for a big jump in next week’s state budget.

The governor’s budget creates a new shared revenue appropriation that will provide increased aid to municipalities and counties of $576.2 million GPR in fiscal year 2024-25. Future allocations will grow with sales tax collections. The appropriation’s allocation for each calendar year will be 20 percent of the state’s sales tax collections of the fiscal year ending in that calendar year. As part of the 20 percent, communities will continue to receive existing County and Municipal Aid, Expenditure Restraint, and the county and municipal components of personal property aid; the remaining funds will be divided between public safety aid and general aid to municipalities and counties.

· Public safety aid will be 43.4 percent of the total funds available ($250 million) under the new appropriation. Public safety aid payments can be used to support law enforcement, fire, and EMS as well as courts and district attorneys’ offices and the distribution formula ensures that no government will receive less than $10,000 under the public safety aid distribution.

· The remaining 56.6 percent of the aid will be distributed as general aid with 70 percent allocated to municipalities and 30 percent to counties....

For future distributions under the new shared revenue, no local government may receive less than 95 percent of their prior year’s allocation. Existing shared revenue programs will continue under their current law provisions.

Based on the current amount of shared revenue distributions (outside of road aids), here's a very crude breakdown of how this would work.

Lots of interesting stuff there, starting with Evers using a version of something the GOP Legislature had floated as 2022 ended (and something I also thought was worth pursuing when I first heard of it).

I also like the targeting of $250 million of those dollars to public safety and prosecutors, which is a nice way to sell it to Republicans and Republican voters, and you can tell that it's already tying up the GOP in knots.

In other words, “it’s getting harder to hold up a record surplus & win elections convincing voters Evers is the problem so I’ll put some conditions out there to make munis spend the money how we, the state, want them to. If they don’t then it’s their fault they’re struggling.” https://t.co/J4xlHIOuzk

— Mike Van Someren (@mvsforwi) February 11, 2023

It seems odd that this wouldn't kick in until July 2024, which likely wouldn't help local budgets until 2025, which means that there's one more year where local governments would have to scrape together funds to get by. Maybe what's left of COVID assistance funds can help for next year, but with $7 million in the bank, I don't get why those funds couldn't be released in January 2024, which will have a more immediate impact, and allow for more stability ahead of the 2024 elections.

In addition to the shared revenue boost, Evers also wants to allow local communities to levy and/or boost their own sales taxes, with special provisions for the state’s most populous city and county.

Meanwhile, other counties would be allowed to double their local sales tax to 1 percent. Besides Milwaukee, about 25 cities with populations of more than 30,000 would be able to impose a new 0.5 percent sales tax.

Would have to be approved via referendum.

3/3

— JR Ross (@jrrosswrites) February 7, 2023

We need to admit that Milwaukee (and to a lesser extent, other cities) is in a very specific situation, where the need to staff and pay benefits for police and fire fighters are much higher than pretty much anywhere else in the state. And because Scott Walker/WisGOP exempted police and fire fighters from Act 10's "tools" to limit taxpayer costs for these benefits (as a kickback for endorsing Walker), it's a lot harder for Milwaukee to adjust to those increasing expenses. It seems only fair that visitors to the Milwaukee area that depend on those public safety officers pay those costs.

The one item in Evers' shared revenue proposals that I haven't seen anything on involves the property tax limits that cities, counties and other local governments would be under with his budget. That's been a central part of the crunch that the locals have been under, as not only have they lacked help from the state, but the WisGOP Legislature has refused to allow the locals much of an ability to raise property taxes to pay for things over the last 12 years.

So will Evers allow for property taxes to be raised along with the added state revenue and a possible sales tax? Or will Evers and/or the State Legislature use this extra shared revenue as a reason to reduce/replace property taxes at the local level, which would be its own kind of reform, changing the revenue source for local governments to provide for services.

Lots of moving parts here, and details that need to be dug into over the next few months. But I do think that both parties recognize that the current system of funding local government isn't working, and that will lead to some kind of significant change. And while it's not a sexy issue, it is likely the most important part of this upcoming budget season.