Milwaukee’s Property Tax Heavy Revenue System Needs Change, Researcher Says

Posted on Categories Milwaukee, Public, Speakers at Marquette

The City of Milwaukee stands out among its peers when it comes to the structure for financing government functions. And that’s not a good thing.

A new report from the Public Policy Forum, a non-partisan Milwaukee non-profit that researches government issues, finds that Milwaukee receives a higher share of its revenue to run city government from property taxes than any other city among 39 in America with populations between 300,000 and 1 million. And Milwaukee stands alone by a wide margin.

Other cities have more tools for collecting revenue than Milwaukee, including sales taxes, local income taxes and entertainment taxes, Rob Henken, president of the policy forum, said at an “On the Issues with Mike Gousha” program at Marquette Law School on Wednesday. That leaves Milwaukee overly reliant on two ways of paying for public service — property taxes and state aid payments that have been effectively shrinking.

The system once worked well and might look good on paper. But it’s not functioning well any more, Henken said. He compared Milwaukee’s situation to an investor who hasn’t diversified his portfolio and is vulnerable to problems due to over-reliance on one way of making money.

Other cities – he presented data from Pittsburgh, Cleveland, Minneapolis, and Kansas City – have more flexibility and, among other things, are receiving more income from non-residents who work in their cities or use cultural and entertainment venues in their cities.

Henken said Milwaukee’s reliance on property taxes, combined with state aid to city government that effectively went unchanged from 1995 to 2015, is tying the hands of city leaders as they make budget decisions. The city is well-managed as a whole, he said, but what can be accomplished, even if good management, is becoming more problematic. “This is a structural problem,” he said.

The revenue system is not working well not only for city budget makers, who have raised the possibility of cuts in police officers and other steps for 2018, and for city residents who are getting less, but for the state of Wisconsin as a whole. Maintaining the quality of services in the state’s largest city is of statewide importance.

“If it’s not working for anyone, why aren’t we changing it?” Henken asked.

He emphasized that the forum is not a partisan group (“we are policy wonks,” he said), but it hopes that putting the spotlight on a problem through analysis and comparison to other places can lead to serious consideration of solutions. Henken said there has been a lot of positive reaction to the new report from business and civic leaders.

Change won’t come quickly, Henken acknowledged, but he expressed hope that steps – many of them requiring action by the state legislature — can be taken to allow the city more flexibility in funding essential services.

Video of the program with Henken may be viewed by clicking here. The Public Policy Forum report may be viewed by clicking here.

The Henken program kicked off a new semester of “On the Issues” programs, now in its eleventh year at the Law School. For information on upcoming programs, click here. 

 

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