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Milwaukee mayor Cavalier Johnson signs 2-percent sales tax hike into law

This decision has been called historic - it's the first time in Milwaukee's history the city is seeing a sales tax like this.

Milwaukee Mayor Cavalier Johnson signed a historic 2 percent sales tax increase, in an effort to save the city from financial pitfalls. On July 11, the Milwaukee Common Council passed the 2 percent sales tax increase. Mayor Johnson is a big proponent of the statewide shared revenue plan the tax hike is connected to.

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MILWAUKEE — Milwaukee Mayor Cavalier Johnson signed a historic 2 percent sales tax increase, in an effort to save the city from financial pitfalls.

On July 11, the Milwaukee Common Council passed the 2 percent sales tax increase. Mayor Johnson is a big proponent of the statewide shared revenue plan the tax hike is connected to.

Milwaukee mayor Cavalier Johnson signs 2-percent sales tax hike into law

This decision has been called historic - it's the first time in Milwaukee's history the city is seeing a sales tax like this.

Back in June the Republican-led Wisconsin legislature and the Democratic Wisconsin governor passed a law that increases the amount of shared revenue cities and counties get across the state. That includes allowing the city of Milwaukee and the county of Milwaukee to enact local sales taxes in order to prevent a looming financial crisis connected to budget deficits (aka the city pensions). Milwaukee Common Council members were given the OK as part of this law to increase the city's sales tax by up to 2 percent with a two-thirds vote. That means the city gets about $190.2 million more every year. Milwaukee County supervisors are meanwhile mulling over OKing a 0.4 percent increase, raising $82.2 million in 2024.

Recent reporting about the sales tax hike and shared revenue:

When does the hike take effect?

The sales tax in Milwaukee will go up 2 cents per dollar starting Jan. 1, 2024

How much more will I pay with the new tax?

Most of the money raised by the new tax will go towards the city's underfunded pension system and to maintaining essential police, fire and emergency services.

An extra two cents on each dollar spent may not be felt as much on small purchases, but it could make a substantial difference on big-ticket items. A $17,000 car would come with an extra $404 in sales taxes. A $43,000 car would cost $1,041 more for Milwaukee residents, under the new tax.

People who live in Milwaukee can’t avoid the bigger tax by buying a car in a neighboring suburb or in Waukesha County, which has the lowest sales tax in the state.

The price difference on say a $1,000 fridge would be about $15 including the state and county taxes. That does not include a potential 0.4 percent bump that Milwaukee County supervisors are expected to vote on.

The high-end products in the $10,000 and over range are where shoppers will really see the increase.

How does Milwaukee's new rate compare to neighboring cities?

The City of Milwaukee currently has a 5 percent sales tax. Milwaukee County meanwhile has a .5 percent sales tax. If both the city and county of Milwaukee sales tax increases pass, a resident of both city and county would be paying a total sales tax of 7.9 percent.

That 7.9 percent sales tax for city of Milwaukee residents is in the neighborhood of the sales taxes in other major Midwest cities. Minneapolis has a 8.03 percent sales tax; Columbus has a 7.5 percent sales tax; and Chicago has a 10.25 percent sales tax.

Why was a sales tax hike needed?

As The Associated Press reports, city of Milwaukee leaders who pushed for approval of the higher sales tax warned of looming deep cuts to core services, including police and fire protection. Opponents objected to strings attached to additional state funding, including curbing spending on diversity, equity and inclusion efforts.

“The wolf is at the door,” Milwaukee Alderman Robert Bauman argued in support of the sales tax on Tuesday. “You can’t chase the wolf away anymore, and we are dealing with some serious challenges that have to be addressed.”

Milwaukee is struggling with an underfunded pension system and not enough money to maintain essential police, fire and emergency services. Milwaukee has increasingly become reliant on federal pandemic aid to fund its essential services, which city leaders have said cost $150 million more per year to maintain.

The state Legislature and Gov. Tony Evers negotiated for months over a deal signed into law last month that gave the city the option to raise the local sales tax to help it avoid insolvency in 2025. The bill signed by the Democrat Evers, and passed by the Republican-controlled Legislature, boosts state aid to local governments by $275 million and ties future aid payments to the state sales tax.

Leaders, including Milwaukee Mayor Cavalier Johnson and U.S. Rep. Gwen Moore, who represents Milwaukee, urged adoption of the higher local sales tax to avoid bankruptcy like Detroit in 2013. They warned of catastrophic cuts including laying off 700 police officers, 250 firefighters and 400 other city workers. They also warned of possible library closures and reductions in other basic services like trash pickup and snow removal.