MADISON, Wis. (AP) — Wisconsin has handed cash-strapped Milwaukee a lifeline to stave off bankruptcy, allowing the city to raise sales taxes without voter approval as part of a larger local government and K-12 schools funding plan, according to a bipartisan deal announced Thursday Democratic Gov. Tony Evers and Republican lawmakers.
Evers called it a “transformative” deal that will rescue Milwaukee from the threat of bankruptcy, “something that would have devastating consequences for communities in every corner of our state and our state economy as a whole.”
As part of the deal, the GOP-controlled Legislature agreed to spending an additional $1 billion on K-12 schools, along with increasing payments to families whose children attend taxpayer-funded private voucher schools. Evers, a former state superintendent of education in the first year of his second term as governor, has made spending more on education a cornerstone of his time in office.
The much-discussed local government funding plan has taken on urgency in the Legislature this year. Milwaukee officials have warned about dire consequences and deep cuts as the city faces bankruptcy by 2025. Milwaukee Mayor Cavalier Johnson warned lawmakers of “catastrophic budget cuts" if a deal for more funding wasn't reached.
Milwaukee, the state’s largest city and a Democratic stronghold, faces an underfunded pension system. 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.
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The largest sticking point in reaching a new funding deal had been who would determine whether Milwaukee city and county can raise the local sales tax to pay for pension costs and emergency services.
Milwaukee officials, Senate Republicans and Evers wanted the decision to rest with local governing boards. But Assembly Republicans passed a bill last month that would require voters to decide whether to raise sales taxes.
Under the deal announced Thursday, local governing boards in the city and county could approve raising the sales tax with a two-thirds majority vote. Milwaukee is the only city of its size in the country that is not allowed to have its own sales tax.
Roughly $1.6 billion in aid to local governments— known as shared revenue — would be paid for by tapping 20% of the state’s 5-cent sales tax. Aid would then grow along with sales tax revenue.
The plan would increase funding to counties, cities, towns and villages with under 110,000 population by at least 20%. That could only be spent on police and fire protection, emergency medical services, emergency response communications, public works and transportation. The city and county of Milwaukee would see a 10% increase, but could ask voters to raise the local sales tax for more money.
Shared revenue to local governments has remained nearly unchanged for almost 30 years and was cut in 2004, 2010 and 2012.
The bill would also cut aid to communities that reduce the number of police officers and firefighters and ban public health officials from ordering businesses closed for more than 30 days, with the local governing body able to extend that once for another 30 days.
It would also ban local advisory referenda questions on everything except those for certain projects that would be funded with property tax money. The bill would not allow questions on hot-button issues like whether voters support abortion rights or legalizing marijuana.
The agreement also calls for spending $50 million more on reading and literacy programs in schools, increasing special education funding by 33% and spending $30 million on mental health in schools.
The deal was announced a month before the 10th anniversary of Detroit's filing for bankruptcy, the largest municipal bankruptcy filing in U.S. history. Detroit emerged from bankruptcy in December 2014, having restructured or wiped out $7 billion in debt. The city was forced to follow a state-monitored spending plan and has been able to build cash surpluses.
Wisconsin state law does not allow for cities to declare bankruptcy, which means the Legislature would have to vote to allow Milwaukee to take that step if the city were to run out of money.
Senate Majority Leader Devin LeMahieu and Assembly Speaker Robin Vos issued the following statement Thursday afternoon:
Gov. Tony Evers issued the following statement:
Gov. Evers Announces Tentative Agreement Reached with Republican Leaders on Shared Revenue Compromise with GOP includes over $1 billion for K-12 education, $30 million in school-based mental health services, 20 percent increase in support to local communities statewide, staves off fiscal cliff for Milwaukee and Milwaukee County MADISON — Gov. Tony Evers today announced he, Majority Leader Devin LeMahieu (R-Oostburg), and Speaker Robin Vos (R-Rochester) have reached a tentative compromise regarding shared revenue, one of the most significant sources of funding provided by the state to local governments, contingent upon several provisions detailed below, including a historic investment in K-12 schools and education. Gov. Evers and Republican leaders negotiated throughout much of last night to reach a compromise on shared revenue that includes a 20 percent increase in support to communities of every size statewide.“For too long, our communities have been asked to do more with less, and this agreement is critical to ensure our local partners have the resources they need to meet basic and unique needs alike. After working through much of last night, I have reached a tentative agreement with both Majority Leader LeMahieu and Speaker Vos on major provisions of a compromise on shared revenue that will mean historic increases in support for our local communities across Wisconsin,” said Gov. Evers. “This compromise will be transformative for our communities and our state, and coming to an agreement in principle on major parts of this proposal is a significant milestone in my negotiations with Republican leaders over the past few months.”Importantly, the compromise reached by Gov. Evers and Majority Leader LeMahieu and Speaker Vos also contains provisions ensuring the city of Milwaukee and Milwaukee County are enabled with the tools, flexibility, and resources to avoid insolvency, including requiring a two-thirds vote by the City of Milwaukee Common Council and the Milwaukee County Board of Supervisors to implement a local sales tax of 2 percent for the city of Milwaukee and 0.4 percent for Milwaukee County.“One of the most important priorities in my conversations with Republican leaders has been not only investing in communities of every size statewide, but also the importance of ensuring the city of Milwaukee and Milwaukee County do not face an imminent fiscal cliff—something that would have devastating consequences for communities in every corner of our state and our state economy as a whole,” continued Gov. Evers. “It’s why it has been especially important for me that this compromise provides the city of Milwaukee and Milwaukee County the critical opportunity to avoid the imminent possibility of bankruptcy.” Finally, in addition to making historic investments in local communities of every size across Wisconsin, the tentative agreement also builds upon Gov. Evers’ work to do what’s best for kids with historic budget investments in K-12 education statewide by: “What’s best for our kids is what’s best for our state, and I will never stop trying to do the right thing for our kids,” said Gov. Evers. “This compromise ensures we make a historic investment in this budget for K-12 schools and education, providing more than $1 billion that can be used for our kids in the classroom, while also working to improve literacy and reading outcomes and support school-based mental health services statewide.”
- Providing more than $1 billion in spendable revenue for K-12 education to maintain two-thirds funding, including a $325 per pupil increase in each fiscal year on revenue limits;
- Setting aside $50 million to improve reading and literacy outcomes for K-12 students (details for exact implementation of the funding have not yet been determined);
- Providing a per pupil aid increase for choice and independent charter schools;
- Investing $30 million over the biennium to continue the governor’s initiative to support school-based mental health services statewide;
- Reaching 33.3% reimbursement for special education; and
- Increasing the low revenue ceiling from $10,000 to $11,000 per student.
Milwaukee Mayor Cavalier Johnson issued the following statement:
Statement from Mayor Cavalier Johnson on the Pending Sales Tax and Shared Revenue Legislation
“I appreciate all the hard work that has gone into this legislation. As we approach the finish line, our top objective is within sight. We have a proposed remedy to the fiscal challenges Milwaukee faces.
“There are aspects to this legislation that I strongly object to. However, through the give-and-take, no party to these negotiations is completely satisfied with final product.
“The Governor has played an essential role in bringing the legislation to this point, and legislative leaders deserve significant credit.
“To be clear, there are steps ahead before the city’s top concerns are fully resolved. I will work with the members of the Milwaukee Common Council to address their questions and encourage their approval.
“Ultimately, I look forward to signing the appropriate city ordinance to move this forward so that Milwaukee can improve public safety services, fire department response times, and innovative library services for all our residents.”
Milwaukee County Executive David Crowley issued the following statement:
County Executive David Crowley Statement on Historic Local Revenue Reform Deal
Crowley and MoveForwardMKE Coalition Lobbied Since 2020 for additional revenue to avoid devastating fiscal cliff
MILWAUKEE, WI – Today, Governor Tony Evers, Senate Majority Leader Devin LeMahieu, and Assembly Speaker Robin Vos announced a bipartisan deal to increase shared revenue for communities across the state and provide Milwaukee County a revenue generation tool to address its unique financial challenges that threaten the continuation of critical public services. The following is the statement of Milwaukee County Executive David Crowley on the historic local revenue reform deal:
“There is too much at stake for Milwaukee County’s future, and the future of our entire state, to keep kicking this can down the road. The time is now to address local revenues and give communities across Wisconsin the resources they need to keep their constituents healthy and safe.
“Milwaukee County has unique financial challenges that other communities across the state don’t have in terms of scale, cost, or impact across the state. I am grateful for the Governor and leadership in both the Senate and Assembly for learning about our challenges, understanding the devastating impact that would have our residents, and working diligently with Milwaukee County to identify tools to address them.
“When you work on a bill as historic and far-reaching as this one not everyone will get everything on their wish list. Nevertheless, this deal helps our organization avoid the single biggest threat to achieving its goals and sets our region up for long-term success.
“Anyone who wants to see Milwaukee County avoid the reported service cuts or staff reductions and continue its journey to achieve race and health equity should support this deal.”
State Rep. Bob Donovan issued the following statement:
Rep. Donovan’s Statement on New Shared Revenue Agreement
Madison – Today, Representative Bob Donovan (R-Greenfield) gave a statement following an agreement between the Legislature, the Governor, and local Milwaukee officials. Rep. Donovan said:
“I think we can all breathe a sigh of relief finally. After back and forth, an agreement has been reached in regards to shared revenue. This is a win for municipalities across Wisconsin. Although sometimes the debate was contentious, I’m glad that we can deliver real change to Wisconsinites.”
“I’ve said it once and I will say it again. Extra shared revenue only matters if we reinvest in public safety in a meaningful way. Without public safety, we are failing our duties as elected leaders. For years, we have seen the erosion of public safety and it is time to right the ship with this new opportunity.”
“Thank you again to everyone who helped make this a reality and acted in good faith. Finally, I urge the local officials in Milwaukee to take this opportunity to write a new chapter for the city and the county. Leave behind the failed approaches of previous administrations. Be faithful stewards and use this opportunity to forge a new path that will benefit not only Milwaukee, but the state as a whole.”
City of Milwaukee Common Council President José G. Pérez issued the following statement:
Statement from Common Council President
José G. Pérez
With today’s announcement of a compromise agreement from the Governor and Republican Leadership in the Legislature, we look forward to examining the final details of the legislation when they become available. As we have done throughout this process, the Milwaukee Common Council will continue to discuss the proposal with the community as we determine its impact on the future of the City of Milwaukee.
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