Gov. Evers proposes allowing local governments to raise taxes

MADISON, Wis. - Gov. Tony Evers wants to allow counties to be able to double their existing sales tax and allow larger municipalities to impose a new half-cent sales tax, if local voters approve.

Evers on Friday announced that his state budget plan will include the tax increase option for those local governments, additional money the governor said could be put toward local roads, services, maintenance, public safety and public health.

The Democratic governor's proposal will be submitted to the Republican-controlled Legislature on Tuesday, which has to approve of anything before it would become law. The Republican co-chairs of the Legislature's budget committee, Sen. Howard Marklein and Rep. Mark Born, did not immediately return messages seeking comment on the proposal.

"From the unexpected costs of the COVID-19 pandemic to the years of neglect and underfunding from the state, communities across Wisconsin have been under immense budgetary pressure, and they’ve been doing more with less for far too long," Evers said in a statement announcing the plan.

Evers' proposal would require approval of a referendum in the affected county or municipality before the local sales tax could be increased. Evers said by doing that, those who live in the area and would be affected by higher taxes could decide if they want to impose it on themselves.

Current law allows counties to impose a half-cent sales tax. Evers' plan would allow them to double that. All but four of the state's 72 counties currently impose the tax.

Under the plan, municipalities with 30,000 or more residents could impose a half-cent sales tax for the first time. That would apply to more than two dozen cities across the state, including Milwaukee, Madison, Green Bay, Kenosha, Racine, Appleton, Eau Claire, Oshkosh, Janesville, La Crosse, Wausau and Beloit.

The state sales tax rate is 5%.

The proposal won support from groups representing local governments. The Wisconsin Counties Association said the sales tax option would relieve the reliance on property taxes to fund local services and state-mandated programs.

"Wisconsin counties have very few options for funding local services," said Wisconsin Counties Association leader Mark D. O’Connell. "This announcement has the potential to provide meaningful and long-term property tax relief to Wisconsinites."

Evers has announced several budget proposals ahead of the release of his plan next week. That includes accepting federal Medicaid expansion to help pay for $150 million in mental health programs; legalizing medical and recreational marijuana; lowering prescription drug costs;creating a $500 caregiver income tax credit as part of a $600 million investment in long-term care; and expanding programs to benefit agriculture and rural Wisconsin.

Milwaukee leaders welcome proposal

Business and government leaders in the city of Milwaukee and the county also heralded the proposal.

"What Gov. Evers' proposal allows for the city to do is diversity its revenue options," said Milwaukee Common Council President Cavalier Johnson.

Johnson, along with 12 other Common Council members, back the plan -- seeing it as a way to cut property owners some slack on their taxes while helping support other city services like infrastructure and the health department's pandemic response.

The funding would, in turn, come from pennies spent every day -- including those from commuters, visitors and tourists to the city.

"We're not asking the state, we're not asking the Legislature, for a dome of more money," Johnson said. "We're only asking for them to provide an opportunity to us to be able to raise money locally, to take care of issues we have on a local level."

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"This could lead to a new way to move Milwaukee forward with a more balanced fiscal structure and make the investments necessary to keep metro Milwaukee a region of choice," said Tim Sheehy, president of the Metropolitan Milwaukee Association of Commerce.

Opposition to proposal

Groups like Wisconsin Manufacturers & Commerce, though, say the plan takes more money from taxpayers.

"Wisconsinites are still reeling from the worst economic downturn in a generation, and the governor’s response is to make it more expensive to purchase everyday items," said Scott Manley with WMC.

While the hope is more dollars will be spent as the pandemic is hopefully under control, the proposal's future is unclear in the Republican-controlled Legislature.

Statements on the governor's proposal

Joint statement by the Milwaukee Common Council

"As part of his 2021-23 biennial budget that will be introduced in full next week, Governor Tony Evers today announced a proposal that would allow counties to impose an additional 0.5 percent sales tax if approved by referendum. The proposal would also allow, if supported and approved by referendum, municipalities with populations in excess of 30,000 to impose a 0.5 percent sales tax.

"We appreciate and thank Governor Evers for recognizing the financial constraints that exist in local communities, and proposing this measure that would give residents the ability to decide whether they feel more resources should be allocated to support essential services locally.

"The benefits of this proposal are abundant. The ability to raise additional revenue via sales tax would allow Milwaukee to become less reliant on property tax dollars, capture new revenue from tourists and commuters who visit our great city, and help support investment in city services, infrastructure and other local priorities, among other benefits.

"In the coming weeks as discussions occur, we would ask the Legislature to maintain this proposal as part of the budget. We strongly believe it is in the best interest of Milwaukee, as well as communities statewide."

Wisconsin Manufacturers & Commerce (WMC) Executive Vice President of Government Relations Scott Manley

"Wisconsinites are still reeling from the worst economic downturn in a generation, and the governor’s response is to make it more expensive to purchase everyday items. Our state already has some of the highest tax rates in the country. Now is not the time to make our national reputation as a high-tax state even worse."

"Hard-working Wisconsin families and small businesses have had to make tough decisions about their own budgets this past year. Instead of having similar discussions about how to make government more efficient, this plan just takes more money from taxpayers at a time when they can least afford it."

Metropolitan Milwaukee Association of Commerce President Tim Sheehy

"For more than a decade, MMAC has been working to find ways to restructure our state and local tax systems in a way that encourages economic growth.

"Allowing referenda asking local voters for permission to raise additional sales tax revenue increases local taxpayer control of their own communities’ financial destiny and diversifies the revenue options available to local governments.

"We applaud Governor Evers’ leadership including this measure in his state budget proposal.

"Allowing direct voter input on local taxing decisions makes local governments more responsive to those constituents in their spending decisions. Nearly three decades ago, Governor Tommy Thompson showed the leadership to empower local voters with regard to property taxes. With this budget proposal Governor Evers has shown similar leadership with regard to sales taxes."