September 29, 2023

Viewpoints: Why a gross sales tax for Milwaukee County, and why elected officers ought to vote on it

No two tales are the identical, and whereas they’ve similarities, Milwaukee County’s fiscal disaster is totally different from town’s. Nevertheless, it’s a clear-and-present hazard to the county’s future, and it does have a clear-and-present resolution.

Milwaukee County’s governmental leaders made an ill-informed resolution some 23 years in the past that considerably elevated the price of its pension plan with overly optimistic return assumptions. Regardless of future reforms, these pension liabilities proceed to soak up over 30% of the county’s tax levy.

The county has had structural deficits courting again to the early 2000s, bolstered by stagnant state funding within the type of shared income, basic transportation, primary neighborhood assist and mass transit working help. The county’s funding construction limits income progress to about 1% per yr.

How has the county reacted? It has minimize spending over the previous decade by $380 million. The most important chunk of financial savings got here from a 46% discount in employees – from 7,300 full-time equivalents to three,900. Sadly, to steadiness its budgets it has additionally deferred upkeep and diminished its capital spending, which leaves an $828 million backlog by 2028. The sum of those actions nonetheless leaves Milwaukee County with a deficit in 2024 of $18 million.

Going ahead its pension prices (which have been $60 million in 2015) will peak at over $120 million by 2027. It will assist drive the county’s structural deficit to $109 million by 2028. Whereas all of this appears bleak, if state assist had saved tempo with inflation over the previous decade, the county would obtain a further $83 million in 2023.

The present shared income proposal contained in AB 245 would supply Milwaukee County with a further $7 million in assist on prime of the $47 million it at the moment receives. Whereas that is useful, it is not going to present a path to fiscal solvency and an opportunity to eradicate the continuing structural deficit.

Milwaukee County wants a further gross sales tax of as much as 0.5% to deal with its unfunded pension liabilities for present and previous staff. The objective is to freeze the plan for brand spanking new staff and have these staff funded within the state pension plan. Elevated shared income and a gross sales tax devoted to pension obligations will present the county with higher footing to serve its residents, companies and guests.

Milwaukee County will not be solely dwelling to 928,000 residents, but it surely attracts in tens of millions of tourists to attend the cultural, arts and leisure property that decision Milwaukee County dwelling. Most significantly, it’s the hub of the five-county regional economic system. Some $7.6 billion in private revenue is earned in Milwaukee County by residents who dwell in Waukesha, Washington, Ozaukee and Racine counties. This revenue is exported out of Milwaukee County for these residents to spend on houses, education and different items and companies of their dwelling counties.

The regional economic system depends on the connection of this expertise base and the employers in Milwaukee County. No different county has this interdependence, nor an export of web private revenue. Left unchecked, Milwaukee’s fiscal disaster is not going to be self-contained. The Milwaukee County Board and its county govt are greatest suited to steadiness all of those assorted pursuits, whereas being held accountable for using the gross sales tax. For this reason a gross sales tax is required and why now we have consultant authorities.

Tim Sheehy is the president of Metropolitan Milwaukee Affiliation of Commerce.