September 27, 2023

🔒 Commentary: Biting the bullet

Tax will increase are by no means excellent news for shoppers or companies. However the 2% gross sales tax enhance not too long ago authorised by Metropolis of Milwaukee officers was realistically the one method the town might keep away from drastic cuts and provides it an opportunity to rectify monetary issues which have been rising for a few years.

Milwaukee County is dealing with related extreme finances issues. The County Board might vote on July 27 to extend the county’s gross sales tax by 0.4%.

Meaning the gross sales tax in Milwaukee might be 7.9%, and the gross sales tax in suburban Milwaukee County might be 5.9% subsequent yr. By comparability, Waukesha County’s gross sales tax is 5.0%; Ozaukee and Washington counties each have a 5.5% gross sales tax.

So, Milwaukee might be a gross sales tax island within the area, which can create a problem for retail companies within the metropolis and an extra monetary burden for metropolis residents. However the tax enhance was authorised overwhelmingly by the Frequent Council vote, and signed by Mayor Cavalier Johnson, as metropolis officers mentioned it was wanted to stop a monetary catastrophe. Town and county have been approaching a fiscal cliff for years as funding returns on their pension fund haven’t been satisfactory to satisfy their rising pension obligations and the state made a number of cuts in shared income to native governments in the course of the previous 20 years. The state has restricted what native governments can do to boost revenues.

Consequently, the town and county have made quite a few cuts for years, every eliminating greater than 1,000 jobs since 2000. The influence of their finances cuts exhibits up in some ways together with gradual police response occasions, run-down parks amenities and streets in want of repairs.

The gross sales tax enhance is predicted to supply $193.6 million in annual income in 2024, an enormous enhance that largely solves the town’s finances disaster, although some cuts nonetheless may be crucial.

Along with permitting Milwaukee to boost its gross sales tax, the state has additionally lastly agreed to extend shared revenues to native governments, which can profit Milwaukee and communities across the state. However the state ought to do much more to assist native governments.

Act 10, signed into regulation by then-Gov. Scott Walker, eliminated most collective bargaining rights for public workers within the state. That helped native governments considerably scale back the price of advantages for his or her workers, leading to an enormous financial savings for taxpayers. However Act 10 has a serious flaw: it exempts cops and firefighters. In a neighborhood like Milwaukee with giant police and hearth departments, that’s a giant drawback. If the Republicans within the state Legislature need to assist native governments reduce prices, they need to get rid of the police and hearth exemption for Act 10.

Regardless, from a finances perspective, Milwaukee’s metropolis and county governments have a brand new lease on life. Native officers must reap the benefits of it and never squander the chance to proper their monetary ship. n