OPINION — What does a penny buy these days? When it comes to the state budget, you might be surprised.
First, a bit of background
The state of Wisconsin levies a 5% tax on retail sales – a rate unchanged since 1982. This state sales tax rate works out to five pennies on every dollar of most goods that are sold here.
Gov. Tony Evers has proposed giving one-fifth of sales tax revenue (that would be one of those five sales tax pennies) directly to counties and local municipalities as shared revenue in the 2023-25 state budget. By his office’s estimate, that penny would generate $576.2 million per year. The governor also wants much of that shared revenue to be spent on public safety – cops, firefighters, EMTs, as well as courts and district attorney’s offices.
That penny sure adds up, right?
There’s more to look at. In Racine County, the state sales tax generates about $150 million to $175 million annually, according to the state Department of Revenue (DOR). That means the governor’s one-penny proposal would send $30 million to $35 million per year to the county and its cities, villages and towns.
The governor and DOR Secretary Peter Barca – in Racine last week to tout the idea – reported that the proposed one penny of sales tax would be worth $12 million annually for the City of Racine’s public safety budgets.
That potential revenue is especially critical for the city, which spends about $46 million of its $86 million annual budget on public safety. Meanwhile, the City of Racine receives about $27 million annually in shared revenue from the state – an amount that has decreased over the years.
The City of Racine isn’t alone by any means. State law restricts the amount of money that local municipalities can raise via property taxes. Cities, villages and towns that haven’t experienced much new construction growth find themselves strapped to pay for police, fire and other services.
In some municipalities – such as the Village of Caledonia in the upcoming April 4 Spring Election – voters are being asked to raise their property taxes to hire, train and equip more police officers and firefighters/paramedics.
It doesn’t have to be that way.
More than a half-billion dollars ($30 million to $35 million in Racine County alone) could be annually sent back to local municipalities WITHOUT raising anybody’s taxes. This sales tax – those five pennies per dollar – is ALREADY being collected. That single penny, which collectively translates to millions and millions of dollars every year, would go a long way in providing a stable, long-term funding source for local public safety budgets. It just has to be redirected from the state back to the locals.
The State Legislature’s Joint Finance Committee (11 Republicans, five Democrats) would be wise to include this proposal to return one-fifth (that’s one out of five pennies, folks) to local municipalities in the 2023-25 state budget.
And that, friends, is what a penny can buy!
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