Following the city of Milwaukee's lead, Milwaukee County has voted to substantially increase its sales tax, a measure designed to prevent a looming financial crisis. This decision comes just two weeks after the city implemented its own sales tax increase as part of a collaborative effort to avoid bankruptcy.
Both the city and county, comprising Wisconsin's most populous region, were on the brink of exhausting their funds, jeopardizing essential services like police and fire departments, park upkeep, and libraries. This dire situation prompted Milwaukee's leadership to collaborate with a statewide coalition, successfully lobbying the Republican-led state legislature for increased funding for local governments. The approved plan, signed by Governor Tony Evers, provides an additional $275 million and links future increases to state sales tax revenue.
This legislation also empowered Milwaukee County and the city to generate additional revenue through local sales tax increases. Earlier this month, the Milwaukee Common Council greenlit a 2% sales tax. Now, the county board has approved a 0.4% increase, almost doubling the existing 0.5% rate. When combined with the 5% state sales tax, the total rate within Milwaukee city limits will reach 7.9%, effective January.
Leaders from both the city and county emphasized the severe repercussions if the necessary funds weren't secured through these tax increases. The additional revenue will address underfunded pension systems, with Milwaukee County facing a $760 million pension liability. Without this intervention, officials warned of service reductions, including cuts to bus routes, the potential sale of public parks, decreased snow removal, possible library closures, and layoffs affecting hundreds of police officers and firefighters.
The Milwaukee skyline. (AP Photo/Morry Gash, File)
The county anticipates the increased sales tax will generate an extra $82 million in its first year, transforming a projected $18 million deficit into a surplus. However, despite this influx, a $13 million funding gap is projected for 2026.
The plan has faced criticism, with some arguing that it disproportionately burdens lower-income individuals. Opponents also object to conditions attached to the state's increased funding for Milwaukee, such as restrictions on spending for diversity, equity, and inclusion initiatives. County Supervisor Ryan Clancy voiced concerns that the sales tax increase wouldn't have passed a public vote, citing opposition from working-class and low-income residents. He unsuccessfully advocated for postponing the vote until a more comprehensive spending plan was developed.
The county board ultimately approved the sales tax increase with a 15-3 vote, surpassing the required two-thirds majority. The legislation mandates that the generated revenue be allocated to pension debt and public safety, with the tax expiring once the pension liability is resolved. It's important to note that Wisconsin state law currently prohibits cities from declaring bankruptcy, necessitating legislative action for such a step if a city's funds are depleted.
