Monday, March 15, 2021

So what can Wisconsin govts do with all the money from DC?

One big item that Democrats insisted on for the stmulus bill (aka, the American Rescue Plan Act) is sizable amounts of aid for state and local governments. And Wisconsin's largest city is going to get a lot of help as a result.
Milwaukee is receiving $687 per resident, the 12th highest per capita distribution among the nation's 100 largest cities. The city is receiving more relief funding than some cities with larger populations such as Seattle and Washington, D.C., according to funding data from Senate Democrats of the American Rescue Plan that was signed into law on Thursday.

"It's a significant amount of money but the fact of the matter is for 17 years I've been in this job and I've been fighting cuts from Madison. Now for the first time I've got the federal government that's got our back and recognizes the issues we face as a community as diverse as we are," Milwaukee Mayor Tom Barrett said.

Cities received allocations based on a formula that incorporates how population growth compares to other cities of similar size, poverty rates and the amount of overcrowded housing. Funding for counties was determined largely by population and unemployment rates were a factor in how much state governments received.
Ironically, this is a situation where the economic apartheid that Republicans have worked to impose on the state's largest city benefitted Milwaukee, because the high levels of poverty and unemployment that is concentrated in the city gave it more money under the Rescue Plan's formula.

This helps explain how Milwaukee has barely twice as many people as Madison, but is slated to get more than 8 times as much money as the Capitol City, and Racine will nearly get as much money as Madison will.
In Wisconsin, Milwaukee receives the most — at $406 million. Milwaukee County will receive $183 million, Dane County $106 million, Waukesha County $78 million, Brown County $51 million, Madison $49 million and $47 million for Racine.

Barrett said the city has lost tens of millions of dollars in revenue during the course of the pandemic and indicated some of the new money could help plug shortfalls.
If you go into the text of the Recovery Plan Act itself, filling budget holes is one of the four ways that local communities can use the funding that DC is sending to them (Part C, in particular).
“(A) to respond to the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19) or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality;

“(B) to respond to workers performing essential work during the COVID–19 public health emergency by providing premium pay to eligible workers of the metropolitan city, nonentitlement unit of local government, or county that are performing such essential work, or by providing grants to eligible employers that have eligible workers who perform essential work;

“(C) for the provision of government services to the extent of the reduction in revenue of such metropolitan city, nonentitlement unit of local government, or county due to the COVID–19 public health emergency relative to revenues collected in the most recent full fiscal year of the metropolitan city, nonentitlement unit of local government, or county prior to the emergency; or

“(D) to make necessary investments in water, sewer, or broadband infrastructure.
But one main driver of Milwaukee's budget difficulties is its pension obligations, particularly for its Act 10-exempt police and fire departments. And that's something the Rescue Act says the money CANNOT be used for.
(2) PENSION FUNDS.—No metropolitan city, nonentitlement unit of local government, or county may use funds made available under this section for deposit into any pension fund.
Of course, the federal funds could be directed to take care of other city services and infrastructure, which frees up city resources to be banked for the pension fund, which faces a large balloon payment in 2023.

So this should avoid a lot of concerns and needs for state help for Milwaukee in the short term. But another irony is that it likely gives GOPs an excuse to not pass Governor Evers' request to allow cities like Milwaukee to be able to ask their voters for a local sales tax, use the fiscal issues are temporarily soothed by this help from DC.

While Evers may not get the sales tax part of his budget through, he will get a lot of help for the rest of his budget as part of the stimulus bill. Some of this is already earmarked for specific purposes, but much of it will have no strings attached, similar to last year's CARES funding. I earlier had suggested that Evers could use this money to try to work out another tax cut with Republicans ahead of the 2022 elections, but the stimulus bill makes that unlikely. Along with the ban from using the money to bail out pension funds (not a problem for the state of Wisconsin anyway), there is this additional prohibition on states when it comes to using the billions coming from DC.
“(A) IN GENERAL.—A State or territory shall not use the funds provided under this section or transferred pursuant to section 603(c)(4) to either directly or indirectly offset a reduction in the net tax revenue of such State or territory resulting from a change in law, regulation, or administrative interpretation during the covered period that reduces any tax (by providing for a reduction in a rate, a rebate, a deduction, a credit, or otherwise) or delays the imposition of any tax or tax increase.
So there goes that idea for a income tax cut at the state level, but there is nothing that keeps local governments from using their funds from DC for cutting taxes or fees at home.

With that in mind, I think it would be wise for Governor Evers to use the influx of federal funds to cut property taxes and/or wheel taxes for the next 2 years. This can be done by adding shared revenues to municipalities and combining it with a limit on the property or wheel taxes, or even offering extra street aids to localities that get rid of wheel taxes for the next year and perhaps more years.

It's remarkable to see the difference over the last 6 months. We thought there would be a rough, recession-plagued budget, and instead, not only did the state budget have $1.7 billion to play with, now there are billions more coming our way from DC. So will GOPs in the gerrymandered Legislature choose results over political games in the months ahead? Because there is no reason we cannot fulfill all of our state's many needs while also giving some needed relief on property taxes (especially given that many Wisconsinites cannot write off their property taxes at the federal level due to the GOP Tax Scam), and on their local wheel taxes.

No comments:

Post a Comment