Q: How would this idea work?
Pending approval by the Wisconsin State Legislature, Milwaukee County residents will have an opportunity to vote on a binding referendum question during a general election.
Voters would be asked if Milwaukee County should be allowed to increase its sales tax by 1 percent, from .5 percent to 1.5 percent, or, from half a cent per dollar to one and a half cents per dollar. If voters approve, Milwaukee County would be able to start collecting the new revenue within 90 days.
With the collection of an additional 1 percent sales tax in Milwaukee County, 25 percent of that revenue would be set aside for property tax relief. The remaining revenue would be split between Milwaukee County and the 19 municipalities within the County.
Q: Why is state legislation required?
The maximum sales tax rate for Wisconsin counties is set by state law. Current state law limits Wisconsin counties to a .5 percent sales tax. Milwaukee County's sales tax rate is at the .5 percent limit and going beyond that limit requires a change in state law.
Q: How does someone who support this idea get involved?
Q: What is Milwaukee County's current sales tax structure?
Milwaukee County has a combined 5.6 percent sales tax that breaks down as follows:
- 5.0 percent: State of Wisconsin
- 0.1 percent: Miller Park Stadium District
- 0.5 percent: Milwaukee County
Q: How does Milwaukee County's sales tax rate compare?
Milwaukee County's sales tax is one of the lowest in the country.
Wisconsin municipalities have the seventh highest reliance on property taxes. According to the Wisconsin Policy Forum, "No other Midwestern state relies so heavily on the property tax and so little on other taxes to pay for municipal services."
In contrast to a heavy reliance on property tax revenue, Wisconsin municipalities rank 43rd for their reliance on municipal sales taxes.
Source: Wisconsin Policy Forum. “Dollars and Sense: Is it time for a new municipal financing framework in Wisconsin.” February 2019 (See Figure 1 on page 4.)
Q: Isn't a sales tax regressive?
The sales tax is often thought to be inherently regressive because the proportion of an individual's or family's income dedicated to consumer purchases declines as income increases. Those at lower income levels tend to pay a larger share of their income in sales tax.
However, in Wisconsin, sales tax exemptions make our sales tax less regressive. Wisconsin exempts a long list of services and products from the sales tax, such as groceries, medicines, medical equipment, services (like an oil change or a haircut), and many other items, which make the tax less regressive. Additional exemptions include:
Caskets and Burial Vaults; Diaper Services; Drugs prescribed by a doctor or sold to a physician, surgeon, podiatrist, dentist, or hospital; Diabetes Supplies; Durable Medical Equipment; Farm Products sold to person engaged in farming, including tractors and machines; Manufacturing Machinery, Equipment, and Materials; Maple Syrup Equipment; Mobility-enhancing Equipment, and Prosthetic Devices; Most groceries (not soda or candy); Fuel and Electricity; Insurance; Manufactured Homes; Medical Records; Copies of patient health care records; Modular Homes; Motor Vehicle and Alternate Fuel; Occasional Sales such as sales of taxable products or services by persons who do not hold and are not required to hold a seller's permit (such as an oil change or a haircut); Public Benefit Fees; United States and Wisconsin Flags; and Water Delivered Through Mains, among many others.
For a complete list of all sales tax exemptions, click here.
Further reducing the sales tax burden for Milwaukee County residents is the fact that 25-30% of the County sales tax is generated by visitors and non-residents.
Q: How much revenue would be generated by a 1 percent sales tax increase?
A 1 percent sales tax increase is projected to raise about $160 million annually.
Q: How much of the new revenue would go to property tax relief?
Our proposal calls for 25 percent of the $160 million to go to property tax relief, or $40 million.
Q: Why raise the sales tax instead of using other sources of revenue?
Community leaders and policy makers explored many options for generating new revenue, such as a property tax referendum that would be required to raise property taxes beyond current limits set by state law.
Relative to other states, Wisconsin relies heavily on the property tax, and much less on the sales tax, so increasing the property tax would make that imbalance worse.
No other potential source of additional new revenue provides the ability to provide significant property tax relief. Our idea would provide major property tax relief.
Q: When will the Miller Park Stadium Tax end?
The Wisconsin State Legislature is expected to end the 0.1 percent stadium tax by Dec. 31, 2019. A bill to this effect has already passed in the State Assembly.
Q: Where did this idea come from?
Milwaukee County Board Chairman Theodore Lipscomb, Sr. and County Executive Chris Abele launched the Fair Deal Workgroup in 2018 to explore new revenue options to address the structural deficit. In conjunction with state and local community and business leaders, the Fair Deal Workgroup proposed recommendations that included allowing local control to generate new revenue and reduce the current reliance on property taxes through a binding referendum process.
More information about the Fair Deal Workgroup can be found here.
Q: Why not just tighten our belts and cut budgets further?
Milwaukee County, the City of Milwaukee and other municipalities have endured years of budget cuts due to an imbalance between allowable revenue and the rising cost of continuing to provide services.
In Milwaukee County, for example, inflation currently causes the cost of providing services to rise more than twice as fast as allowable revenue. Due to the structural deficit, Milwaukee County has cut a cumulative $278 million out of its budgets since 2012, or an average of $30 million each year. In the same time frame, the County has moved out of 1.6 million square feet of office space, significantly reduced staff, increased energy efficiency and streamlined operations—but cuts of this magnitude are unsustainable.
Milwaukee County will cut another $28 million in expenditures in order to balance the 2020 budget; by 2023 the County's structural deficit is projected to grow to $80 million, meaning $80 million in cuts will be necessary to balance the budget.
The City of Milwaukee’s total of shared revenue and expenditure restraint payments from the state are $21.1 million less in 2019 than 2003 in real dollars, and well over $100 million less in inflation adjusted dollars.
The City of Milwaukee had an annual structural deficit of $18.3 million in 2018, which is expected to grow in future years despite City efforts in the past decade to significantly cut positions, City efforts to achieve health care cost savings and City savings realized by requiring employees to cover employee-related pension costs. The savings on health care and pensions have run their course and will no longer be a benefit to the City moving forward, and detrimental cuts to police, fire and other important services could be realized.
Q: Does the business community support this idea?
There is support for this proposal from both the Greater Milwaukee Committee (GMC) and the Metropolitan Milwaukee Association of Commerce (MMAC). Businesses place a high-value on certainty.
The GMC and MMAC believe this proposal gives Milwaukee the certainty to plan for and execute a sound fiscal future that will make greater Milwaukee an even better place to invest capital, create jobs, and attract and retain talent. Giving the cities and county the capacity to invest in their future, alleviating debt and the backlog of critical infrastructure improvements, is good business practice.