The sales tax in Milwaukee will go up 2 cents per dollar next year after the Common Council voted Tuesday to raise the rate as part of a bipartisan plan to avoid bankruptcy.
Milwaukee Raises Sales Tax
Ten votes were needed for the tax to pass, as part of a bipartisan agreement Gov. Tony Evers signed last month to increase state aid for all local governments.
Mayor Cavalier Johnson said the significance of the council’s actions was “probably on par with the vote to adopt the city charter in 1846.”
The vote was not without drama. Right as the debate began on the sales tax vote, Ald. Russell Stamper called for the council to go into recess.
Alders went behind closed doors for about 40 minutes before returning to the chamber.
“It was until the very last minute, I know people were struggling,” Council President Jose Perez said. “And walking into the building, I didn’t know if we had the votes.”
With a 2% sales tax, the city will collect $2 on every $100 spent in Milwaukee. According to the city’s projections, the tax will cost working-class families about $230 more annually. Median-income families would pay $365 more.
Under Wisconsin law, sales taxes cannot be applied to essential goods, like food and medicine.
If Milwaukee County approves an effort to increase its total tax to 0.9%, the overall sales tax would be 7.9% on items purchased in Milwaukee. The state has a 5% sales tax.
Here’s Why
Milwaukee struggles with an underfunded pension system and insufficient 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 said cost $150 million more annually to maintain.
The state Legislature and Gov. Tony Evers negotiated for months over a deal signed into law last month that allowed the city 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.
Tax Should Help Fire Stations
The additional sales tax in the city of Milwaukee will bring in nearly $200 million more in revenue next year, which the city has to use to pay for its pension and increase police officers and firefighters.
Fire Chief Aaron Lipski told reporters the sales tax revenue would allow the fire department to consider reopening stations that had been shuttered due to past budget crunches.
Milwaukee County, which also faces the potential of deep cuts, was also given the power to nearly double the current 0.5% countywide sales tax to 0.9%. The county board was expected to vote on that this summer.
Wisconsin state law does not allow cities to declare bankruptcy, which means the Legislature would have to vote to enable Milwaukee to take that step if the city ran out of money.
Get the news you need at It’s On News.
