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Report: Milwaukee's Uncommon Revenue Structure

The Public Policy Forum just released a comprehensive report on how Milwaukee is supported with public money, compared to other peer cities around the country. The report found that compared to similar cities, Milwaukee is decidedly more reliant on state funds as a result of the city's inability to impose most forms of local taxation.

Wisconsin is very restrictive in the types of taxes local governments are able to levy on their residents, which has left much of Milwaukee's revenue stream reliant on the state government's shared revenue payments. This predicament is very unusual for large cities, which generally have more flexibility in the kinds of taxes they're allowed to employ.

"The City of Milwaukee is highly unique. Number one, in that the property tax is the sole form of the three major types of local taxation - which are property, sales, and income. And also... where there are several states that are quite restrictive in terms of the revenue options available to their local governments, virtually all make exceptions for their largest cities," says Rob Henken, president of the Public Policy Forum.

This presents a problem for a large city like Milwaukee, which hosts thousands of non-residents on a daily and yearly basis.

"When you think of the tens of thousands of people who are in the City of Milwaukee every year - non-resident commuters, visitors, people coming here to do business, people coming here for entertainment and special events - those are all individuals who are using city services, yet there is no form of taxation in which they are actually contributing to their use of those services," says Henken.

Members of the Greater Milwaukee Committee heard from the Public Policy Forum about how the city’s revenue structure could be altered to stabilize the city’s financial picture. Borrowing a page from other cities, Henken says there are ways to maneuver current state laws that would allow the city to gain some much-needed revenue.

"Pittsburgh is actually quite distinctive, in that Pittsburgh uses a very wide variety of local taxation sources," he notes. "So some of the more interesting ones are a so-called 'Local Services Tax.' Every individual who makes more than $12,000 per year and who works in the city of Pittsburgh pays $1 per week, so $52 per year, as a local services tax."

Pittsburgh also imposes a high parking tax, according to Henken, which largely impacts commuters who drive into the city. It also has an entertainment tax and a payroll tax. Other cities use a variety of sales and income taxes, which Milwaukee is currently unable to employ.

Henken cautions that any talk of increasing taxes will result in some push back, not least of which may come from the state officials. "There's no question that this would be a contentious topic in the state capitol, to even consider providing Milwaukee with any type of additional local revenue authority," he says.

But Henken also believes that under the current conditions Milwaukee has little room for growth. "There are so many reasons to examine the current revenue structure and look to see whether it needs to be tweaked for some of the reasons I outlined earlier, that have nothing to do with raising an additional dime of revenue, but have everything to do with ensuring greater balance, equity, and diversity."

Read the article here.

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