Assembly Speaker Robin Vos (R-Rochester) and Racine County Executive Jonathan Delagrave were part of a press conference on Thursday, April 27, to announce that state lawmakers are close to a deal that would return millions of dollars to Racine County communities through a 10% increase in state shared revenue.
“We will have a greater ability to fund services that are important to the residents of Racine County,” Delagrave said during his turn at the microphone. “This is a big step in helping pay for critical needs like child protective services, mental health, drug and alcohol treatment, and making sure deputies responding to dangerous situations have the equipment they need.”
Evers and Vos mostly on the same page
The state collects 5% sales tax, and Gov. Tony Evers as part of his 2023-2035 budget has proposed taking 20% of that amount — one cent for every five collected — and sending it back to local governments.
Vos and his Republican colleagues first discussed a similar plan last December and last week traveled to four different communities, including Milwaukee, to discuss it more in detail. Vos touted the increase in shared revenue as the “single largest investment in local government in the history of Wisconsin” as a result of a bi-partisan effort between state and local lawmakers that began last summer.
“This is being done in a collaborative, bi-partisan Wisconsin way,” he said. “We had discussions with local partners about what was occurring, especially with regard to local police, local fire, transportation, and services that the public had come to depend on. As the economy grows, the fund will grow.”
This is already money the state collects, and with a state budget surplus of nearly $7 billion, Evers and Vos appear to be somewhat on the same page.
Under both proposals, Racine County and its municipalities could see an extra $30 to $35 million on top of the $150 to $175 million a year the county receives from the state. Racine County does not collect any additional sales tax on top of the state sales tax, according to the state Department of Revenue.
Vos and Delagrave appeared on stage with Milwaukee Mayor Cavalier Johnson, Milwaukee County Executive David Crowley, and other elected officials from counties across south and central Wisconsin at the Wisconsin Center in Milwakuee. At the center of the announcement was a deal that returns annual 10% increases to municipalities to pay for services like police, fire, and EMS and to address infrastructure like roads.
Delagrave said based on his discussions with lawmakers, the bill could potentially head to Gov. Evers’ desk by the end of the summer. Vos said he thinks the deal is about 98% done.
While the City of Milwaukee and Milwaukee County have rules that govern how they spend their money, Racine County has different parameters, Delagrave said after the press conference.
What is state shared revenue?
Shared revenue is one of the largest sources of funding of state money to local governments in Wisconsin. How much communities receive is based on a complicated formula that takes into account a municipality’s population, property wealth, and how local governments generate funds to pay for services such as police and fire protection, emergency medical response, and public works like road construction and repair.
Wisconsin’s state shared revenue program was implemented in 1911, after the state became one of the first in the nation to impose a state income tax, according to a story from the Wisconsin Examiner. Because local governments weren’t allowed to also collect income tax, lawmakers agreed to send a portion of what the state collected back to the communities.
During the press conference last week, Brookfield Mayor Steven Ponto commented that state shared revenue has steadily decreased for the last 20 years. Coupled with strict levy limits, Ponto said local governments are stretched beyond the limit to deliver quality services to their residents. The City of Brookfield received $1 million in 2003 and just $578,000 in 2023.
“Lower quality services will eventually lead people and businesses to relocate to other states with more prosperous and attractive cities. Wisconsin should increase its investments in cities because if cities are not doing well, neither is the state,” he said. “I strongly support devoting 20% of (the state’s) sales tax into a non-lapsable fund for local governments on an ongoing and sustainable basis.”
State shared revenue in Racine County
Racine County governments are feeling the crush from a trifecta of factors: reduced state shared revenue, tax levy limits, and rising inflation.
In 2003, Racine County received $4.1 million in state shared revenue. In 2023, the county expects to collect $2.8 million from the state. The City of Racine is the oldest incorporated community east of I-94 and has the highest population. It received $33.5 million in 2003 and $27.8 million in 2023.
Since 2011, state aid to local governments has been reduced by 9%, according to the state Legislative Fiscal Bureau. At the same time, public safety costs have risen by almost 16%.
The reduction has an impact on nearly every service given the rising cost of doing business, especially when factoring in the rate of inflation; health care, equipment, materials like cement and road salt, competitive wages, and more.
Falling state shared revenue payments combined with strict levy limits enacted over a decade ago have pushed communities to ask their constituents for more money through ballot referendums. Caledonia was the most recent when residents in the April 2023 election approved exceeding tax levy limits by $1.7 million to fund additional police and fire personnel.
When asked why lawmakers don’t just return state shared revenue to previous levels, Vos said the formula will remain unchanged but that a 10% increase based on per capita means there are winners in every corner of the state.
In addition to the $225 million increase in shared revenue payments, Vos talked about a three-year pilot program supported by about $300 million to help local governments “change how they operate.”
Specifically, when local governments consolidate services, the state will support their efforts through financial incentives.
Racine County has operated under a joint dispatch system since 2011, and Delagrave sees additional opportunities in planning and zoning, garbage and recycling collection, and police and fire services.
The South Shore Fire Department operates under the Village of Mount Pleasant’s annual budget but is contracted to provide fire and rescue response to the villages of Sturtevant and Elmwood Park.
Delagrave said there has already been progress toward a closest-car-responds agreement along highways 38, 31, 20, and 11, which means that when a call comes into 911, dispatchers can send the car that is nearest the incident to respond no matter the municipality.
“We have a long way to go, but those conversations are happening,” he said.
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