Leaders of Wisconsin's Two Largest Government Associations Discuss Shared Revenue System

Wednesday, February 22nd, 2023 -- 12:00 PM

(By Rich Kremer, Wisconsin Public Radio) Leaders of Wisconsin's two largest local government associations say they expect changes are coming for the state's "broken" shared revenue system, they're just not sure what that will look like.

According to Rich Kremer with Wisconsin Public Radio, still, they say bipartisan discussions about the need to address the system that funnels state funds to Wisconsin's counties and municipalities are a big deal because communities around the state, from the smallest towns to the largest cities, are struggling to pay for basic government services.

During his state budget address Jan. 24, Democratic Gov. Tony Evers pledged to send 20 percent of state sales tax revenues back to local governments. Evers' budget proposal also calls for allowing Milwaukee County to impose an additional 1 percent sales tax, with half of those proceeds going to the City of Milwaukee.

The governor's call for dedicating a portion of sales tax income toward shared revenue is similar to one discussed by Republican leaders in the Legislature since December. The Legislature's plan calls for dedicating 1 cent of every 5 cents the state collects in sales tax to local communities.

"The soup hasn't been cooked, but we at least have agreed on the pot that the soup is going to go in," Wisconsin Towns Association Executive Director Mike Koles told Wisconsin Eye's Newsmakers on Monday. "That's tremendous. We haven't been there in a long time."

Wisconsin's system of funding local governments, known as shared revenue, dates back to 1911. That's when lawmakers created the first state income tax in the U.S. The original deal dedicated 70 percent of those tax collections to municipalities, 20 percent to counties and 10 percent to the state.

Since then, the formula has been changed multiple times and the percentages being paid to local governments have dramatically declined, according to an analysis by the Wisconsin Policy Forum.

In 2021, income tax receipts hit a record $9.28 billion while the amount going back to local governments in the shared revenue program were around $830 million, less than what was sent back in 1993.

That disconnect has pushed many municipalities, towns and counties to launch voter referendums aimed at raising property taxes to prevent cuts to police, fire and ambulance services.

It's also led to warnings that the City of Milwaukee is "nearing the brink" due unsustainable revenue levels, diminished capacity to sustain core services and looming costs associated with the city's pension system.

Feel free to contact us with questions and/or comments.