Milwaukee Council passes 2% sales tax: What you'll pay and why the vote was ultimately yes

 

MILWAUKEE (CBS 58) -- Milwaukee has joined the ranks of major American cities with its own sales tax. With a 12-3 vote Tuesday, the city's Common Council voted to enact a new 2% municipal sales tax. 

Ten votes were needed for the tax to pass, as part of a bipartisan agreement Gov. Tony Evers signed last month to increase state aid for all local governments.

Mayor Cavalier Johnson said the significance of the council's actions was "probably on par with the vote to adopt the city charter in 1846."

The vote was not without drama. Right as debate began on the sales tax vote, Ald. Russell Stamper called for the council to go into recess.

Alders went behind closed doors for about 40 minutes before coming back into the chamber.

"It was until the very last minute, I know people were struggling," Council President Jose Perez said. "And walking into the building, I didn't know if we had the votes."

In the end, only three alders voted against the tax: Alds. Mark Chambers, Milele Coggs and Andrea Pratt.

In their debate remarks, they noted voters in their districts were against the tax, particularly low-income families and elderly residents on fixed incomes. 

Chambers held up two stacks of postcards while talking to reporters. One of the stacks was slightly bigger than the other, and Chambers said that stack contained the anti-tax messages he received.

"Essentially, I made the decision to go with what my constituents wanted me to go," Chambers said. "And as you can see, my constituents wanted me to go no."

Concerns over the city's financial future won out with most alders swayed by the prospect of massive cuts to all city departments beginning in 2025, when the city is projected to hit a fiscal cliff due to rising pension costs and stagnant revenues.

In a report Budget Director Nik Kovac gave to alders last month, he said without a sales tax, the city would have to eliminate 700 police officer jobs, 250 firefighters and 400 general city positions.

"The alternative was a drastic cut in city services that everybody relies on," Ald. Bob Bauman said. "And I think part of the benefit of the sales tax is it now gives the ability to tax residents who don't live in the city."

With a 2% sales tax, the city will collect $2 on every $100 spent in Milwaukee. According to the city's projections, the tax will cost working-class families about $230 more per year. Median-income families would pay $365 more. 

Under Wisconsin law, sales taxes cannot be applied to essential goods, like food and medicine.

If Milwaukee County approves an effort to increase its total tax to 0.9%, the overall sales tax would be 7.9% on items purchased in Milwaukee. The state has a 5% sales tax.

Fire Chief Aaron Lipski told reporters the sales tax revenue would allow the fire department to consider reopening stations that had been shuttered due to past budget crunches.

"It may sound as if now I should just do backflips and celebrate in some sort of kingdom-building celebration. The opposite is true," Lipski said. "Because the entire city is trying to dig out of a hole right now."

Under the new shared revenue state law, Milwaukee can only use its sales tax revenue to pay down pension debt and fund public safety positions.

The law also places new conditions on Milwaukee in exchange for its ability to levy a sales tax. Those include weakening the city's Fire and Police Commission, requiring Milwaukee Public Schools to bring back school resource officers and banning the city from spending tax revenue on the streetcar or positions dedicated to promoting diversity, equity and inclusion.

Some alders have indicated they're hopeful a new liberal majority on the state Supreme Court will strike down those conditions as a violation of the state's Home Rule law.

As such, the council is considering a lawsuit challenging those provisions. Lipski said he would support such a legal challenge.

"A thousand percent, yes," Lipski said.

Johnson was somewhat vague when asked if he supported a lawsuit.

"I think there are opportunities for us to be able to find ways to have the city's values represented," he said. "Whether that's diversity, equity and inclusion, or whether that's other avenues, I want to find ways to make sure that the city of Milwaukee is able to continue to do the things I value, that the Common Council values, as well."