Milwaukee County inches closer to sales tax vote as officials and residents weigh in
Even as Milwaukee city officials met blocks away to approve enacting a 2% city sales tax to stave off a fiscal cliff, Milwaukee County supervisors heard a grim picture of the county's own financial health and sort out a timeline for deciding whether to nearly double its own sales tax.
With little public notice of Tuesday's discussion, officials and residents filed into a packed Milwaukee County Board meeting room at the County Courthouse to learn and speak about the fiscal impacts of a proposed sales tax bump.
The legislation would nearly double the current sales tax from the existing 0.5% to 0.9%. In 2022, the current sales tax generated roughly $96.3 million. An additional estimated $82.2 million is expected to be generated in the first year of an expanded tax, according to the county report.
The resolution will be taken up by the finance and personnel committees July 17. If recommended, the County Board will take a vote during its full board meeting July 27.
As it stands, the fiscal health of the county teeters on a precipice, with major service and budgetary cuts to all county departments starting as early as 2025 and the possible elimination of all non-mandated services, including parks and transit.
The increase in shared revenue returned to local governments by the state and the ability to increase the sales tax at both the county and state levels was negotiated after a 30-year freeze on shared revenue increases from the state.
The county could implement the raised sales tax as soon as Jan. 1, 2024 — but only if it is adopted and sent to the Secretary of Revenue by Sept. 1, 2023. The County Board is in recess the month of August.
Failure to meet the September deadline could cost the county close to a quarter of the annual projected bump of $82.2 million, which equates to roughly $20.5 million, according to Joe Lamers, director of strategy, budget and performance, told supervisors during committee.
"This is an opportunity that the county has been waiting for, looking for something to offset the structural deficit that we have and the issues that we are facing in the future," Milwaukee County Comptroller Scott Manske said. "The whole point is that the county would be able to pay off its unfunded liability and the county has been doing ... but this is one way, in essence, to speed that process up, pay off the unfunded liability and have the pension plan be self-sustaining."
The county's current fiscal outlook is grim
As far back as the early 2000s, Milwaukee County has operated with a structural deficit. Even with changes and reforms, the county’s latest five-year fiscal forecast projected a structural deficit in the operating budget of $18.3 million in 2024, which would hit $109.7 million by 2028. The plan also highlighted $1 billion of deferred infrastructure needs.
The Milwaukee County Transit System is hurtling toward a nearly $26 million budget deficit annually, which would see major cuts to more than half of bus routes. By 2028, it's predicted it would reach more than $40 million.
"A deficit of that size would be tantamount to requiring departments to cut 40% of their budgets — including personnel — that would wipe out most, if not all, of the non-mandated services provided by Milwaukee County like parks, transit, and more," according to the comptroller's report.
The Milwaukee County Employee Retirement System also has an estimated $760 million unfunded pension liability resulting in substantial payments from the county to fund over the next several decades, according to the County's latest fiscal impact report.
The financial impact of the proposed sales tax
The county's bump in shared revenue would be $7.6 million in 2024 and is projected to increase by 3% every year going forward, Lamers said. Shared revenue is projected to double by 2028.
Shared revenue could increase every year indexed to projected state sales tax revenue growth. The state legislation known as Act 12 changes a static shared revenue formula for the first time in nearly three decades.
On top of the shared revenue bump, the enactment of a 0.4% sales tax is projected to bring in an additional $82.2 million in revenue. By 2028, the county expects to bring in $92 million in revenue from the additional sales tax.
Voting to increase the sales tax would also lead the county to transition from the county’s pension system to the Wisconsin Retirement System.
With the change, the county would see a roughly $38 million increase in its contribution for 2024. The county could finish 2024 with a $31 million budget surplus, instead of the currently projected deficit of $18 million.
The additional sales tax revenue would also free up roughly $60 million in property tax levy funds currently used for pension obligations to be available for other county services.
Projected deficits return in 2026 even with the sales tax, though at much smaller numbers. For example, with the increased tax in place for 2026, the county projects a $13 million deficit. But without the tax, the deficit would be in that year would be $64 million and grow to $95 million by 2028.
Residents and officials are divided
While in the committee room, Terri King held up signs saying "I rely on MCTS every day" and "Seniors Need Transit."
Cuts to services over the years have taken a toll on King, who has arthritis and now has to take two buses to any grocery store and multiple buses to get to her doctor.
"Without Milwaukee County Transit, I will literally starve to death. I'm not saying it as a joke or exaggeration," King said,
"I'm not necessarily against the tax increase, city or county. I'm not necessarily for it," she said. "I'm for keeping my transit so I can get where I need to go."
Resident Stephani Lohman spoke against the increased tax, voicing her fears about how the decision would affect low-income and working-class residents.
"In a highly unequal society like here in Milwaukee, the poorest people are already paying a larger proportion of their income to support this public infrastructure that we all benefit from," Lohan said. "Here, you all are considering a regressive tax that burdens the working poor even more."
State Senator LaTonya Johnson voiced support for a sales tax bump saying it was the only option the county had before it now to prevent a fiscal crisis.
“The state has not come to our rescue,” Johnson told supervisors. “They’ve made perfectly clear that they will give us the tools to allow ourselves to rescue ourselves. There is no reason for the city or county to be in such dire straits.”
Former Milwaukee County Board Chairman Theodore Lipscomb Sr., testifying in support of the sales tax that he long lobbied for, responded to concerns over the sales tax bump being regressive by arguing that cuts due to budget deficits would also be regressive.
He added that failing to raise the sales tax could return the county to the days of “scrounging for every $10,000 we could grab out of a department.”
“You have to do what you can with what you have in front of you,” Lipscomb said. “Recognize all of the baggage that comes with this, but there is no alternative.”
State Representative Evan Goyke added a personal spin to his support bemoaning the continued closures of wading pools and splash pads as well as playground equipment for his 2-year-old son. He hopes the sales tax bump may help turn things around.
“Without increased sales tax revenue, there will be cuts,” Goyke said. “Whether that's the bus routes on 27th and 55th or reopening the Washington Park pool, or the Highland Park or Harley Park, these are the budget realities that you have without increased sales tax and more challenges in neighborhoods that I call home.”
Public town halls for residents
Prior to Tuesday's meeting, supervisors appeared on the fence about how they plan on voting. When interviewed by the Journal Sentinel in mid-June, only a handful have publicly stated how they would vote with some supervisors wanting to hear from constituents before deciding their vote.
As of Tuesday, a handful of supervisors had formally arranged town halls to better engage with residents about the potential implementation of an additional 0.4% sales tax for the county.
Supervisors Peter Burgelis, Felesia A. Martin, Shawn Rolland, Juan Miguel Martinez and Caroline Gómez-Tom announced a series of town halls, which will have Manske and Lamers as guest speakers:
Mitchell Park Domes, 524 S Layton Blvd, 5:30 p.m. July 13.
Zablocki Library, 3501 W Oklahoma Ave, 11:30 a.m. July 15.
Washington Park Senior Center, 4420 W Vliet St., 5:30 p.m. July 18.
Supervisors Patti Logsdon and Kathleen Vincent also announced two joint town halls.
Greendale Safety Center, 5911 W. Grange Ave., Greendale, 7 to 8:30 p .m. July 18.
Greenfield Public Library, 5310 W. Layton Ave., Greenfield, 10 a.m. to noon July 22.
Supervisor Sheldon Wasserman will host a public forum at 6 p.m. July 25 at 6 p.m. at the Milwaukee Public Library - East Branch, 2320 N. Cramer St., in the Lucile Krug Community Room.
Contact Vanessa Swales at 414-308-5881 or vswales@gannett.com. Follow her on Twitter @Vanessa_Swales.
THANK YOU: Subscribers' support makes this work possible. Help us share the knowledge by buying a gift subscription.
DOWNLOAD THE APP: Get the latest news, sports and more
This article originally appeared on Milwaukee Journal Sentinel: Milwaukee County will likely vote on sales tax bump at the end of July
