Border businesses brace for city sales tax

 

MILWAUKEE (CBS 58) -- It's a piece of furniture Joel Breen is quick to highlight. The owner of JB's Furniture beams with pride as he lets visitors know about the sectional set his business sold to a Milwaukee Bucks fan favorite.

"If you wanna see someone make this chair look small, sit Bobby Portis in it," Joel Breen announced.

JB's Furniture is at the intersection of N. 76th St. and W. Bradley Rd. The Milwaukee-Brown Deer border is just nine blocks east of Breen's business. Beyond that, it's just a three-minute drive from the store to the Ozaukee County line.

"I guess we'll deal with it," Breen said. "It's coming up in January. So, I guess we'll just figure out what to do."

If the Milwaukee County Board votes to increase the county sales tax to 0.9% later this month, items purchased in the city of Milwaukee will include a 7.9% sales tax, while those same goods bought in Ozaukee County would be taxed at 5.5%.

Wisconsin has a 5% state sales tax, and counties are allowed to charge their own sales tax of up to 0.5%.

The bipartisan shared revenue law, signed by Gov. Tony Evers last month, allows Milwaukee County to increase its sales tax and paves the way for Milwaukee to have a city sales tax.

Milwaukee leaders have warned of a fiscal cliff looming, and nonpartisan reviews of the city's financial picture said, without a sales tax, Milwaukee would have to make deep cuts to all city services, including police and fire.

Under the shared revenue law, Milwaukee can only use its sales tax revenue, which is projected to come in at about $190 million per year, to pay down pension debt and fund public safety efforts.

"We're obviously in Milwaukee, and so, anything we can do to help encourage safety for the community, that's what we like," Breen said.
"So, if that's what it's gonna do, then it's a wonderful thing."

Still, Breen knows not everyone has Bobby Portis bucks. He acknowledged Wednesday it's possible he could lose some business once Milwaukee's new 2% city sales tax takes effect in January.

"This will put a little, I guess, a hiccup in the equation," Breen said. "But we'll adjust, and we'll make it work."

Wisconsin's sales tax laws exempt a number of items, including:

• Drugs (prescription, but not over-the-counter)
• Food (except candy, soft drinks, dietary supplements and prepared food)
• Medical Equipment, such as canes, wheelchairs and prosthetics
• Medical Records

Most goods, however, are subject to sales taxes. At Breen's store, a large canopy bed and drawer set costing $1,800, paired with a $1,200 king-size mattress, will now cost $60 more once the city sales tax kicks in.

On Wednesday, a different Bobby -- Bobby Johnson -- stopped into the furniture store. He bought a king-size bed set and noted this was something he'd classify as a major expense.

"I only buy a bed like this, maybe, once every 15-20 years, so this is a pretty big purchase," Johnson said. "It's just like buying a car almost."

Across the corner, Alex Luckman said he was worried the city sales tax might've broke the used car sale he'd negotiated earlier in the day at Autowise Car Center.

For a used $15,000 SUV, the new city sales tax will add $300 to the bottom line. Luckman said he will often barter a price down by about $500, and he said the new sales tax could complicate those negotiations beginning next year.

"I just had a car that was sold from this business today, and we were able to adjust the price point [down by] $500," Luckman said. "Now, I don't know if that individual would've been able to do that had this sales tax been implemented, like today."

Johnson said he would consider heading toward the suburbs in the future to buy big-ticket items.

"I probably would go outside the city to make the bigger purchases," he said. "You know, to save a little money."

Johnson added, however, he would be supportive of the sales tax if the new source of dedicated public safety funding addressed his biggest concern: safer streets for his seven kids.

"I just would like for them to, you know, utilize the money on, you know, curbing some of this car theft," Johnson said. "And this reckless driving and things like that."

Breen said he was confident the relationships he's built over 19 years in business would keep customers around. He added, after surviving the Great Recession and COVID-19 pandemic, the store could absorb any lost sales.

"As people get used to this new sales tax in the upcoming year, we'll make adjustments, they'll make adjustments," Breen said. "And we'll go from there."