After months of negotiations, Wisconsin legislators have come to a deal over the future of the state’s shared revenue program. But for many, discussions about the program have been confusing. So what is it, and why does it matter? Philip Rocco is an associate professor of political science at Marquette University, and he explores this question and the controversy surrounding the current negotiations.
What is Wisconsin’s shared revenue program?
Simply put: The shared revenue program is a way of collecting taxes from communities throughout Wisconsin and redistributing them back to these communities, but the way it does that is a bit more complicated. The program was first created in 1911 when Wisconsin became the first state to institute a progressive income tax.
Rocco explains, “What the state did when it created that income tax is it pre-empted local governments from using the income tax as well, and it also exempted a number of forms of property from taxation.”
The program has changed substantially over the last century, but the concept had remained the same: Unrestricted funds collected from Wisconsin communities and redistributed back to the communities to be used in any way they see fit.
Shared revenue is not like a gift that the state gives to local governments... it’s actually part of this overall bargain between the local governments and the state about how they’re going to share access to those sorts of revenues.Philip Rocco
Where does this money come from?
This money comes from anyone who buys things in Wisconsin or works in the state. Wisconsin communities are limited in the kinds of taxes they have power over and the state imposes caps on most forms of taxation available to them.
Rocco explains, “Shared revenue is not like a gift that the state gives to local governments because it wants to or it’s a nice thing to do, it’s actually part of this overall bargain between the local governments and the state about how they’re going to share access to those sorts of revenues.”
How does it affect you?
The Shared Revenue Program is one of the main sources of money for local governments in Wisconsin. These funds go toward our parks, libraries, streets, police, EMS, fire departments and many other resources in Wisconsin communities.
How is it changing?
Despite the initial promises of the program, Wisconsin legislators froze the program in 2003, meaning it hasn’t risen with inflation for more than two decades. This new deal changes that, but it also changes the ways these funds can be used. There will be a 20% increase in state funding through the program which is far less than the rise in inflation since 2003. Still, the rise in funding is more than what Republican legislators had initially proposed.
Despite the original promise of the shared revenue program, these new funds come with a lot of strings attached. These funds can only be used for police, fire, and EMS services.
The deal will also allow the Milwaukee County Board and the Milwaukee City Council to vote on a new sales tax, as much as 2% for the City of Milwaukee and an additional 0.4% increase for the county. These funds can only be used for the county’s pension fund and public safety services, like police, fire, and EMS.
Why have negotiations taken this long?
There has been a lot of controversy over how the money will be distributed to communities, and specifically, restrictions on how this money can be used. The central sticking point has been how much money will go to the City of Milwaukee and Milwaukee County, which are both facing financial crises. Republican leaders, like State Assembly Majority Leader Robin Vos, have blamed Milwaukee County and the City of Milwaukee for the fiscal cliff these communities are facing. But Vos and his Republican colleagues have been the driving force behind keeping the shared revenue program frozen. They have also failed to give Milwaukee greater control of its finances, in stark contrast with nearly every other major city in the U.S.
Neither of the initial plans laid out by Legislative Republicans or Gov. Evers provided enough funding to match inflation since the freeze in 2003, but Evers’ initial plan would have given much more funding for education and would not have included the same restrictions on how these funds can be used.
