May 11, 2023 at 12:05 p.m.
State Republicans gear up to give local governments more money
Evers wants even more; says too many strings attached
The $1.5-billion program would be paid for by earmarking 20 percent of the state's sales tax collections for a new local government aid fund called the "Local Government Segregated Account." The program includes $l billion for the current shared revenue program and other existing local government aid programs, $227 million in new aid funding for local governments, and $300 million for a new Innovation Fund.
The $227 million would be split, with $50 million for counties and $177 million for cities, villages, and towns and must be directed to law enforcement, fire protection, emergency medical services, emergency response communications, public works and transportation.
The legislation would boost state aid to every local government in the state by at least 10 percent - many would get a lot more - and create a $300 million innovation fund to promote government efficiency and savings.
Because the new aid would be tied to a percentage of the state sales tax, yearly payouts would increase as state sales tax collections increase, though they would decrease if state tax collections dipped.
Under the bill, local governments would have to meet maintenance of effort funding for police and fire and EMS, that is, committing at least as much funding as in the previous year or suffer a penalty. Notably, however, the legislation does not prevent local governments from supplanting already allocated local dollars with those new state dollars, allowing local governments to shift those local dollars to other programs and services.
For Milwaukee county and city, both entities would be able to enact a local sales tax if approved in a referendum. The revenue would have to be used to pay down pension liabilities and public safety. It would also prohibit spending on the Milwaukee trolley, while increases in personnel and programs would require a two-thirds vote of the governing body.
Once in a generation
One of the lead authors of the bill, state Rep. Tony Kurtz (R-Wonewoc), called the legislation historic.
"This bill lays out the framework for the largest increase in aid to local governments in a generation, including historical reforms and directing new funding to law enforcement, fire, and EMS services," Kurtz said.
Historic or not, Gov. Tony Evers immediately said he would veto the plan in its current form. Evers is on board with increasing shared revenue dollars using 20 percent of the state's sales tax collections but says more money is needed and that the Republican bill has too many strings attached. The governor also criticized the fast-tracking of the bill, which he said was negotiated behind closed doors and went to public hearing a mere two days after it was introduced.
Evers cited numbers from the Legislative Fiscal Bureau showing that, since 2011, state aid to communities has been cut by more than 9 percent while public safety costs have increased by more than 16 percent.
In a taped video statement, Evers said there's good reason that talk about increasing shared revenue has been a major feature of the state's political landscape since he has been governor.
"Our communities - whether it's a county, whether it's a city, whether it's a township - they do the hard work, public safety, public health - you name it - public libraries," Evers said. "And for a decade, we have not increased any of that money that goes to these folks in any meaningful way. We need more money for our communities - their constituents expect it, and we expect them to do this work. So, it's a top priority for me - and has been since I became governor."
Evers said he was on the same page with the Legislature with that thinking, but he said the state needs to do more than the GOP is offering.
"But the state must step up more than what I've seen," he said. "It's why I can't support the Republican plan as is - and frankly, I'll veto it in its entirety. It is not enough resources. We have the resources to do it. Let's increase the money that's going to the locals."
Evers also called for the legislature to remove the many restrictions on local governments contained in the bill.
"Here, in one way, we want to bring them more money, and in another way, we want to take more control away from them," he said. "It doesn't make sense. Send me a clean bill that talks about the money that we are going to give to the municipalities. Let's work together to make it happen, and I know we can get it done."
However, a joint statement by Assembly speaker Robin Vos (R-Rochester) and majority leader Devin LeMahieu (R-Oostburg) cast doubt on the governor's hope to work together. The two Assembly leaders said they were disappointed with the governor's message.
"After several weeks of meetings and negotiations with all parties involved - Democrats, Republicans, towns, villages, cities and counties - we reached a shared revenue proposal we believe the public will support," Vos and LeMahieu said. "It's very disappointing to come so close to the finish line only to have the governor publicly issue veto threats because he wants to spend more money."
Vos and LeMahieu said the most pressing issue was actually the bankruptcy Milwaukee would face if the bill didn't pass.
"This is a disappointing move by Gov. Evers," they said. "He should reconsider and work with us before the bill is brought to the floor of the Assembly."
State Sen. Mary Felzkowski (R-Tomahawk), a lead Senate author of the bill, said it would revitalize communities through an overhaul of the old, broken shared revenue formula.
"We've held our communities frozen since 2004, requiring them to cut fat in their budgets and find efficiencies," Felzkowski said. "Many have fulfilled that request, and are now at the point where they cannot cut anymore - because there's simply nothing left to remove."
Felzkowski said the bill would close the gap between winners and losers that currently exists in the old shared revenue formula, while ensuring that every community receives a significant inflationary increase. She also stressed that the bill would have a maintenance of effort on the state's larger communities to ensure that they're providing adequate public safety services, and not defunding police.
"Throughout our negotiations, we've worked hard to set parameters that would require this new money to go toward necessary services like police, fire, EMS, and roads," she said.
Felzkowski added that the bill would give Milwaukee County and the city of Milwaukee tools to fix their pension problems through an increased sales tax, thus sparing Wisconsin taxpayers. An increased local sales tax would allow the city and county of Milwaukee both to help pay off their unfunded pension liabilities and to meet law enforcement and firefighter maintenance of efforts, the senator said.
"Milwaukee County and the city of Milwaukee have made some poor financial decisions regarding their pension over the last few decades, and it's resulted in a fiscal cliff that's about to drop out from under them," she said. "While I appreciate the newly elected leadership for stepping up and having these tough conversations, I fully expect them to use the tools in this bill to solve these pension issues on their own, without state taxpayer funding."
Kicking open the door
There was some dissension within the Republican ranks over the Milwaukee provisions.
For one thing, state Sen. Steve Nass (R-Whitewater) called it a bail-out bill for the city and the county, and he echoed Evers's complaint about quick and secret negotiations.
"There are serious issues with both the process used to develop this bill behind closed doors and the actual language of the bill only released publicly on Tuesday, May 2, 2023," Nass said. "Most legislators and the public were not aware of the actual details of the closed door meetings among special interests and a small number of legislators to stitch together this Frankenstein bill with many unrelated parts."
Nass said he supports increasing funds to the shared revenue program and doing so with a new distributional formula that fairly sends the dollars out to all regions of Wisconsin. But he said that could be done without coupling that reform with a bailout for Milwaukee.
"The reform of shared revenue can be met without linkage to a massive bailout of the fiscal incompetence by elected officials in the city and county of Milwaukee for many years," he said. "I also support fixing the Milwaukee problem with serious and binding long-term controls on how Milwaukee spends every dollar they receive from the state or local taxpayers. Such a reform package must prevent the need for another bailout in the near future."
The bill being introduced does not go nearly far enough in that respect, Nass said, because while it might address the pension crisis in Milwaukee, it has only a few binding controls on how the city and county spend money going forward.
"Republicans in this state have long opposed the creation of new local option sales taxes simply to feed the desire of more spending," he said. "Wisconsin still ranks too high in both income taxes and property taxes nationally, but relatively low in the use of sales taxes. By authorizing new local option sales taxes for Milwaukee, we will have blindly kicked open the door to greater use of local option sales taxes for other communities in short order."
What's more, Nass said, if the regressive fiscal policy of creating new sales taxes for Milwaukee advances, it must be approved by a binding referendum vote of the local taxpayers.
It's a monster
While Nass called it a Frankenstein bill with any number of unrelated items, others were similarly calling it a kitchen-sink bill. In addition to the shared revenue and Milwaukee provisions, the legislation veers off into myriad public policy areas that, though they pertain to local governments, have nothing to do with shared revenue.
For example, the bill prohibits a county or municipality from holding an advisory referendum. It also requires the state Department of Revenue (DOR) to annually produce a comparative local government spending report from information the DOR annually collects from counties, municipalities, and public officers regarding the collection of taxes, receipts from licenses, and the expenditure of public funds and to create and maintain a web page on its internet site to display the information contained in the report.
In addition, the bill limits the ability of a political subdivision to place limits or conditions on the operation of quarries from which the nonmetallic materials are used primarily in the construction or repair of public transportation facilities, public infrastructure, or private construction or transportation projects.
To wit, a political subdivision wouldn't be able to require a quarry operator to obtain a permit unless a permitting ordinance already exists, and it could not limit the times of day quarry activities could be performed for certain public works projects, such as those that require night construction or emergency repairs.
What's more, under the bill, for projects north of state Hwy. 8, the Department of Natural Resources (DNR) is prohibited from obligating stewardship money and from submitting a stewardship project or activity to the Joint Finance Committee for review unless every affected municipality and county adopts a resolution supporting the project or activity.
The bill also takes aim at the power of local health departments, prohibiting a local health officer from issuing a mandate to close a business to control an outbreak or epidemic of communicable disease for longer than 14 days unless the governing body of the local government approves an extension. However, even then, no extension can be longer than 14 days.
Notably, that provision does not satisfy some business owners who believe that giving a local public health official the power to unilaterally close any business for even 14 days is still too much power for unelected officials, and that closing a business for 28 days would be devastating for many small business owners.
On the other side of the issue, Robin Lankton, speaking on behalf of the Wisconsin Association of Local Health Departments and Boards (WALHDAB) and the Wisconsin Public Health Association (WPHA), called the proposed limitation arbitrary and dangerous, saying that in those rare instances when a local health officer orders a business closure, it's essential to protect Wisconsin businesses and their customers from communicable diseases.
"Hindering the ability of local health officers to take action to address a communicable disease outbreak risks very serious consequences for individuals, businesses, and the community," Lankton said. "Moreover, restricting local health officers' ability to control the spread of a disease to 14 days is arbitrary and dangerous. Communicable diseases have specific time frames for contagiousness and incubation which may exceed 14 days."
While the bill limits public health orders affecting businesses to 14 days, there are a number of diseases in which individuals could be contagious for a longer period of time, or a source of contagion - such as water or food - could take longer to be resolved, Lankton said.
Beyond public health, the bill prohibits a political subdivision, which means a county, city, village, or town, from discriminating against or providing a preference in hiring or contracting based on race, color, ancestry, national origin, or sexual orientation unless it is required to receive federal aid.
The bill also repeals the personal property tax.
In education, the legislation would require public high schools and private high schools participating in a parental choice program to collect statistics related to municipal disorderly conduct violations and certain other crimes - ranging from homicide, sexual assault, burglary, battery, and arson - that occur on school property or on school-provided transportation if it occurs between 6 a.m. and 10 p.m., is reported to law enforcement, and a charge is filed or citation is issued.
Significantly, the bill would repeal the current requirement that if a local government transfers a service to another governmental unit, the levy increase limit is decreased to reflect what it would have cost the government to provide that service. Likewise, if a local government takes on a service from another governmental unit, it can now increase the levy limit by the cost of that service, but that provision would be repealed as well.
Not enough
Despite what Oneida County supervisor and Hazelhurst town chairman Ted Cushing recently called a "spending spree" over the past several years by counties and towns using federal Covid aid, and despite the proposed new allocations, many local government officials paraded before the public hearing last week saying it would still not be enough.
Racine mayor Cory Mason said the bill was well meaning but fell short, especially in providing for public safety.
"And while the bill's intention is to sustain public safety through a maintenance of effort, in its current form this bill is inadequate to address the funding shortfalls needed to keep our community safe," Mason said. "Racine is one of the communities that under the bill in its current form would receive a 10-percent increase in shared revenue. When we compare that to our neighbors receiving twice as much as they receive now, without the same stresses on public safety, it causes real concern and a need for change."
In the last 20 years, Mason said, the amount of revenue distributed to local governments has seen little to no growth and that, if Racine were to receive the same amount of shared revenue adjusted for inflation, the city would receive an additional $20 million today.
"While I appreciate the sentiment behind AB245,1 am concerned that it is inadequate to address the challenges before us today," he said. "If you truly care about funding police and fire, we would need to raise the amount of revenue coming from the state to Racine substantially. ... Clearly this situation is unsustainable, and it threatens the quality of life of all Wisconsinites."
Richard Moore is the author of "Dark State" and may be reached at richardd3d.substack.com.
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