WisGOP Legislature replies with their own shared revenue plans

One of the most important parts of the upcoming budget talks and related bills will deal with whether there will be long-overdue changes to Wisconsin’s outdated methods of funding local governments. Traditionally, the state sent sizable amounts of funding down to the locals, with property taxes being paid in to take care of the rest.

Except Madison lawmakers are sending fewer shared revenues to local governments than they were in 2009, before we even account for inflation or increased population in the state. And property taxes have been limited by the WisGOP Legislature to make up the difference, leading to significant strains on communities and their ability to continue doing the same things they did 15 years ago.

In reaction to this, Governor Evers asked for using 1 of the 5 pennies that are paid in state sales taxes in each year, and having that pay for shared revenues to counties and municipalities. It would raise these types of shared revenues from $976.4 million to $1.52 billion a year (an increase of a more than $576 million), and allows for local governments to increase property taxes more than today, if they so choose.

Evers also wanted to allow all Wisconsin cities and counties that have over 30,000 people to put in an additional sales tax of 0.5%, particularly centering on the City of Milwaukee and Milwaukee County, who are both facing budget deficits in the tens of millions of dollars for each of the new few years. And the City in particular has had its hands tied by the lack of shared revenues for the last 2 decades.

2 months after Evers introduced his budget and the shared revenue changes, Republicans in the Legislature are now responding with their plans on how to fund local governments in Wisconsin. Here’s what WisPolitics says is in discussions for the Legislature’s shared revenue package, which is also paid for by diverting some of the state's sales taxes.

Under the framework that Republicans have been discussing, the state would put aside one penny of the state’s 5-cent sales tax for shared revenue. That pot would cover a series of state aids, including payments to counties and municipalities.

The framework also includes allowing a higher sales tax for Milwaukee County, as well as a new one dedicated to the city of Milwaukee. The revenue from those sales tax collections would be dedicated to meeting the county and city’s pension obligations.

[Senate GOP Leader Devin] LeMahieu said Republicans were still working to finalize how large of a sales tax increase would be needed to meet the pension obligations. Still, he supports that approach to helping the county and city cover those costs.

Under the framework, new employees would be added to the state pension system. The sales taxes would sunset once the obligations are covered for current and retired employees. That process could take decades.

I assume the pension items are for Milwaukee only, since both the City and County of Milwaukee have pension systems that are separate from the Wisconsin Retirement System (WRS) that covers most state employees. The City's pension costs have jumped significantly in 2023, and are slated to stay at these unprecedented levels, driven by the large amount of police and fire fighters, who are not subjected to the "tools" of Act 10 that would pass more of these costs onto current workers.

As a WRS member planning to tap that pension some time in the next 10-20 years, you might think this would concern me, as Milwaukee pensions could threaten the WRS’s fully-funded status, and raise the 6.8% of salary that I currently pay in due to Act 10. But I’d welcome it, because it’s a reform that needs to happen, and lessens its significant drag on Wisconsin’s largest City, County and tourist destination.

The WisPolitics story says that as much as $1 billion could be used to offer incentives to (as Assembly Speaker Robbin’ Vos describes it) “municipalities that want to be able to coordinate their services”. Not sure what all that means and if that is a sort of penalty to local communities who have already increased efficiency and/or are comfortable in continuing operations as they do today.

This also has to be combined with the other side of the funding equation, which are the limits on property tax increases that communities can levy - limits that are well below the increase in property values over the last decade. I want to know if this funding package not only allows for more money from the state, but allows local governments to have more resources. That’s not something that WisGOPs allowed for K-12 schools over the last 2 years, even as property values went up, and instead used the higher state aids to cut property taxes.

So keep an eye on whether communities can actually have a better chance of staying afloat under this GOP package. But on the surface, I’m at least in favor of using more state aids and less property taxes to fund both local governments and schools. Link it to a % of sales tax, and those are aids that go up with inflation and growth over the years, and to me, that would be much more important and game-changing in Wisconsin than any cut in income taxes.