'Then we'll go bankrupt': Milwaukee residents bristle at 2% sales tax path to stave off financial crisis
Scores of Milwaukee residents turned out for meetings with city leaders to voice their opposition to a proposed 2% city sales tax just days before Common Council members are set to take a critical vote on the new revenue source.
"They're telling us if we don't pass the 2% sales tax then we're going to go bankrupt. Well, then we'll go bankrupt," Beverly Hamilton-Williams said to applause at a town hall Thursday evening at Clinton Rose Senior Center, 3045 N. King Drive.
The dominant emotion at the meeting was outrage. Residents castigated the city's negotiating in Madison over the new law that allowed the sales tax but also includes what they see as unfair limits on Milwaukee's autonomy.
And they slammed the prospect of more taxes, especially for those on a fixed income. Speakers encouraging rejection of the sales tax were greeted with applause, while those encouraging council members to vote for the sales tax and avoid cuts were loudly booed.
The frustration residents at the senior center expressed over the sales tax — and the bevy of changes to Milwaukee policies included in the new law that allows the city to enact it — stood in stark contrast to a smaller, more conversational town hall held at the same time by council members from the city's south side.
While about 90 people attended the meeting held by six council members representing the city's north side, about a dozen went to the south side event at the Forest Home Cemetery Chapel, 2405 W. Forest Home Ave.
At the chapel, some of the dozen or so residents raised questions about the city’s management of its finances and why the annual pension contribution has spiked. But they were also amenable to a sales tax, with some providing ideas for how to lessen the impact on low-income residents and others saying afterward that it's needed so the city can maintain the services it provides.
How residents' testimony will ultimately impact council members' votes on Tuesday remains to be seen.
Ten of the 15 council members must vote in favor of the tax in order for it to pass. The state estimates the tax could bring in approximately $193.6 million in additional revenue, which would have to be used for its pension and, over 10 years, increasing the number of police and firefighters the city employs to meet state-imposed minimums.
Proponents of a sales tax argue that its enactment would give Milwaukee a funding source that cities across the nation already have and allow the city to capitalize on the economic activity generated by people who visit for work or leisure as opposed to putting that burden largely on residents.
Opponents have cited concerns, including that sales taxes are regressive, falling hardest on those who can least afford an increase in costs.
The funding is part of a sweeping local government funding bill passed by the Republican-controlled state Legislature and signed into law by Democratic Gov. Tony Evers. Even as the new law provides the opportunity for much-needed funding in Milwaukee, it also increases the city's costs and forces policy changes to police and fire oversight, funding for the city's streetcar and local diversity initiatives, and more.
The policy changes targeting Milwaukee go into effect regardless of whether city elected officials enact a sales tax.
In late June, the council's Steering and Rules Committee recommended approval of the tax, with six in favor and two abstaining after lengthy public testimony in which speakers expressed frustration about the policy changes but nonetheless urged council members to support the new revenue stream in order to avoid deep service cuts.
More: The Milwaukee sales tax bill comes with big strings attached. Here are 5 changes coming to the city.
More: Sales tax could help Milwaukee but new state law also comes with steep costs. Here's how.
At north side town hall, most residents challenge sales tax
At the senior center meeting, city Budget Director Nik Kovac spent the first hour laying out the case for a sales tax to address the city's budget gap and avoid what he described as "borderline unimaginable" cuts.
But residents were mostly uninterested in his pitch.
Regardless of their opinion on the sales tax, attendees universally expressed opposition to the policy changes the local government funding law requires for the city, even if the sales tax isn't imposed.
Hamilton-Williams described the restrictions placed on Milwaukee as "apartheid stipulations." She called on the council to reject the sales tax and demand the state government use some of its record $7 billion surplus to address a spike in the amount the city has to contribute to its pension each year.
Aurelia Ceja, a member of the Milwaukee Alliance Against Racist and Political Repression, implored the council members to take action to repeal the policy provisions in the new law, known as Act 12, and find workarounds for the restrictions placed on them by the state government.
"The sales tax is a Band-Aid solution on the harm Act 12 is going to cause Milwaukee, and it will not stop the bleeding," Ceja told the town hall.
More: Can Milwaukee still expand the streetcar? Here's one approach.
Clarence Nicholas, president of NAACP Milwaukee, spoke against the sales tax because it did not promote economic growth.
Nicholas urged council members to advance a legal challenge to the law, arguing that the new state requirement that school resource officers be returned to Milwaukee Public Schools was an illegal overreach of state authority under the Wisconsin Constitution.
Some attendees did encourage council members to vote in favor of the sales tax, citing the dramatic cuts that Kovac said would be required of fire and police services without it.
Bruce Wiggins encouraged council members to "be political realists" and vote for the tax, a position that was met with a chorus of boos.
After speaking, he expressed frustration with the limits Republicans in the Legislature had put on the city, especially on the use of tax money to promote diversity, equity and inclusion initiatives.
At the same time, "as long as the Republicans hold the Legislature, this is probably the best deal that we can get," he said.
After more than 20 speakers expressed their opposition to the sales tax, Fire Chief Aaron Lipski closed the meeting by making one last appeal for council members to support the tax.
Lipski called the choice in front of the council "bonkers and dystopian" but made clear that voting against the tax would "dramatically reduce" the department's ability to keep people safe. He predicted that the department would be forced to close 11 fire stations and shut half of the force's ladder trucks if the tax did not pass.
The meeting was held jointly by Alds. Russell W. Stamper II, Milele A. Coggs, Larresa Taylor, Andrea M. Pratt, Khalif J. Rainey, Mark Chambers Jr.
After the meeting, Coggs, Chambers, Rainey and Pratt all declined to share how they would be voting on Tuesday. All four of them cited the opportunity to listen to their constituents as helpful in making that decision.
In an interview after the meeting, Coggs said that the deep cuts to services without the sales tax detailed by Kovac were "not predetermined," but did not provide an alternative solution.
Earlier this year, the city conducted an analysis of the cuts that would take place if it did not get access to new revenue sources. The departments likely to face the most dramatic cuts are the police, libraries and the fire department, with a 10% to 25% cut in those three departments alone requiring the elimination of between about 355 and 890 full-time staff members.
The city has been sliding into ever-more-difficult budgets for quite a few years and, without significant additional revenue, faces a "fiscal cliff" in 2025.
Its problems have been caused by the state's decision to return a stagnant amount of shared revenue to the city for more than two decades and state-imposed limits on local governments' ability to raise revenue through other means such as sales taxes or by increasing property taxes. At the same time, the city's annual pension contribution is spiking while other costs are rising and reserves are dwindling, including the nearly $400 million Milwaukee received in pandemic aid.
Residents at south side town hall more amenable to sales tax
The south side meeting was decidedly less contentious.
After the meeting, Art Alamo, 61, said he attended out of interest in the future of the city and its services. Maintaining services not only would help keep residents safe but also draw more people to Milwaukee, he said.
Today, he said, services in the city are OK, but the real test comes in how quickly emergency services can respond to a call to 911.
He said the increased costs from a sales tax are "well worth it" to ensure services don't see a massive decline.
Alamo is represented by Ald. JoCasta Zamarripa, who hosted the meeting along with Common Council President José G. Pérez and Ald. Mark Borkowski.
Zamarripa told those gathered that while it was a difficult vote, she planned to support the sales tax on Tuesday.
She spoke about going to Lipski during the last city budget negotiations to ask him not to close the firehouse in her district, before the Common Council reversed the cuts proposed by Mayor Cavalier Johnson in light of the increasingly challenging years on the horizon.
"But we knew we were living on borrowed time and continue to live on borrowed time," she told those gathered.
Will city residents get better services with a sales tax? Not so fast.
That a sales tax will not necessarily go to enhancing services across city departments has been the source of consternation for some council members.
Paris Miller, who lives in Coggs' district, expressed frustration with the deal, especially the fact that any money raised by the sales tax would go toward police and fire staffing levels instead of improving social services.
“The only real winner out of this deal is the police,” he said to nods and applause. Miller described the services that were at risk of being cut as a "hostage" designed to give police more funding.
Before the Steering and Rules Committee vote on June 26, Borkowski raised concerns about blowback from constituents if council members were to vote to implement a sales tax that doesn't enhance city services.
"Current services suck," he said.
Johnson's administration expects that the sales tax would allow the city to maintain current services besides police and fire staffing, which the law requires the city to not just maintain but to increase over the next 10 years.
Kovac told the committee if the new revenue structure works out well, "we'll even have money to increase everything."
"It's possible that scenario will work out, but we certainly have a path to at a minimum maintaining all services and slightly increasing police and fire," Kovac said. "Without the sales tax, it's going to get unimaginably worse."
He also said the sales tax and the shared revenue in the new law are expected to grow with time, unlike the previously stagnant revenue sources that are a major factor in the city's budget problems because they have not kept up with the cost of services over the decades.
Even with the potential for significantly increased revenue next year, however, Kovac anticipated the city would have to use much of its remaining federal pandemic aid to plug a gap in 2024 between the amount of revenue the city expects and its costs to maintain services at their current levels.
Alison Dirr can be reached at [email protected]. Nathaniel Rosenberg can be reached at [email protected].
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This article originally appeared on Milwaukee Journal Sentinel: Milwaukee residents bristle at 2% sales tax path to stave off crisis
