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Tony Evers budget would allow counties, some cities additional sales tax
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Tony Evers budget would allow counties, some cities additional sales tax

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To help counties and cities weather the cost of COVID-19 and other fiscal constraints, Gov. Tony Evers will propose in his upcoming biennial budget allowing counties and some larger cities, including Madison, the ability to impose an additional 0.5% sales tax.

The local sales taxes would need to be approved by a referendum of local voters, and would be in addition to the optional 0.5% county sales tax already allowed under state law.

Cities with populations over 30,000 would also be able to impose their own 0.5% sales tax, but only with the approval of a local referendum. If approved, the additional local sales taxes could be imposed on top of the current statewide sales tax of 5% and the 0.5% sales tax that the vast majority of counties have imposed.

Cities over 30,000 people include Milwaukee, Madison, Green Bay, Kenosha, Racine, Appleton, Eau Claire, Oshkosh, Janesville, La Crosse, Wausau and Beloit.

In a statement, Madison Mayor Satya Rhodes-Conway said she supports increased options for cities to balance their budgets.

“For years, the state has restricted our ability to raise revenue and preempted local control, which has harmed our communities,” Rhodes-Conway said. “I expect our budgets to be difficult for the next several years as we recover from the COVID-19 pandemic, and we are going to need to use every tool available, including increasing efficiency, cutting services and finding new sources of revenue.”

According to the Wisconsin Policy Forum, only four of the state’s 72 counties have not imposed a sales tax: Manitowoc, Racine, Waukesha and Winnebago. The Forum found that county sales tax collections grew by 6% in 2020 to $453 million, slower than the 11% growth registered the year before.

The budget proposal faces an uncertain future in this year’s upcoming state budget process, which the Republican Legislature controls. Evers will unveil his entire budget proposal on Tuesday, but Republicans are likely to author their own version from scratch, like they did two years ago.

A spokesperson for budget committee co-chair Sen. Howard Marklein, R-Spring Green, declined to comment, and a spokesperson for co-chair Rep. Mark Born, R-Beaver Dam, didn’t respond to a request for comment.

Wisconsin has the lowest sales tax and second-lowest population-weighted combined state and local sales tax rate among its Midwestern neighbors. Of the 36 states that allow local general sales tax, Wisconsin has the sixth lowest reliance as a percent of personal income.

In a statement, Evers said the additional sales tax would allow participating cities and counties the ability to spend more on local roads, direct services, maintenance, public safety and public health.

“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.

According to the Wisconsin Budget Project, shared revenue from the state to local governments — a major source of funding for counties and municipalities — declined by 47%, when accounting for inflation, from almost $1.6 billion in 1996 to $830 million in 2020.

While Act 10 — the controversial 2011 law that reduced the power of public-sector unions and required public employees to pay more for health care and pensions — provided local governments with more savings, they still face budget hurdles.

Much of Act 10 didn’t cover police and fire employees, and since such employees make up a substantial share of municipal budgets, that has hamstrung the ability of local governments to effectively handle rising costs.

A Wisconsin Policy Forum report shows police costs continue to rise. Data show municipalities in Wisconsin spent $219 per capita on law enforcement in 2018, which, when accounting for inflation, amounts to a nearly 30% increase since 1986 and more than a 6% increase since 2000.

Ahead of his Tuesday budget address, Evers has already announced a variety of measures he plans to include in his proposal. Those include accepting federal Medicaid expansion to help pay for $150 million in mental health programs; lowering prescription drug costs; legalizing medical and recreational marijuana; and creating a $500 caregiver income tax credit as part of a $600 million investment in long-term care.

See the whole series: The Great Divide: 10 years since Act 10

A decade later, the Wisconsin State Journal looks back at the historic debate and protests over the controversial anti-union law known as Act 10.

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