GOP leaders say Milwaukee funding could be stripped from local aid bill if deal not reached

In addition, deliberations on Wisconsin’s two-year budget will be put on hold after this week until the Republican-controlled Legislature and Evers come to an agreement on the bill, Assembly Speaker Robin Vos, R-Rochester, told reporters Wednesday.

Hours later, Senate Majority Leader Devin LeMahieu, R-Oostburg, reiterated Vos’ stance that, if Evers doesn’t agree to a version of the bill approved by both chambers, lawmakers will advance a bill that strips provisions that would allow Milwaukee and Milwaukee County to increase their local sales tax revenue to address pension debt.

“Today we made our last, best offer to the Governor,” LeMahieu said in a statement. “If an agreement is not reached today, the Senate will pursue a shared revenue proposal that does not include an option for Milwaukee to raise additional sales tax revenue.”

LeMahieu did not provide details on the new agreement, which comes weeks after he and Vos became divided on the Milwaukee provision in the bill.

“The offer we put forth is fair,” LeMahieu added. “It is a product of months of work and negotiations. The Governor has a chance to save Wisconsin’s largest city and most populous county from bankruptcy. We hope he takes it.”

The hold on budget deliberations, which will begin after the Legislature’s finance committee meets Thursday, comes just a few weeks before the state’s 2023-25 two-year spending plan is slated to take effect. If Evers doesn’t sign a budget effective by July 1, the state would continue operating using spending levels set in the previous two-year budget.

Republicans say discussion on Wisconsin’s two-year spending plan cannot proceed until an agreement is reached on the local aid bill, which boosts state funds to local communities through Wisconsin’s shared revenue program. The budget committee has yet to take up major spending items including K-12 funding and tax cuts.

“We hope to have those negotiations be successful soon so we can continue our work,” said Rep. Mark Born, R-Beaver Dam, who co-chairs the Legislature’s budget committee, adding that the committee can’t sign off on certain requests without knowing how much money lawmakers approve in the local funding proposal.

At its core, the measure would boost local aid by diverting 20% of the state’s 5% sales tax to local communities through Wisconsin’s shared revenue program. If signed into law, future state aid to communities and counties would be directly tied to the state sales tax. Lawmakers on both sides of the aisle have largely supported those provisions of the bill.

But division has surfaced between GOP leaders over a component in the bill allowing Milwaukee and Milwaukee County to increase their local sales tax revenue. Assembly Republicans passed a version of the bill allowing Milwaukee County to increase its 0.5% sales tax by 0.375 percentage points and Milwaukee to impose a 2% sales tax to fund pension debt, but only if voters approve those increases.

Sen. LaTonya Johnson, D-Milwaukee, told reporters Wednesday putting the measure before voters would be a “death sentence” for Milwaukee because it would fail.

Before passing the amended version of the bill in May, Vos declared his chamber was done negotiating on the matter. However, LeMahieu said the following day he wants to strip the public vote measure from the bill and allow the Milwaukee Common Council and Milwaukee County Board of Supervisors to approve the local tax increases — a provision opposed by Vos but supported by Evers and local officials.

LeMahieu said on WISN’s “UpFront” Sunday he didn’t have 17 Republican votes in the Senate to make the change.

“I am hopeful we will be able to find the answer on shared revenue, trying to stick with the parameters close to where the Assembly passed this bill, not having wholesale radical changes to it,” Vos said.

Without an agreement on state funding for local communities in the next few days, Vos said, “We will just focus on the balance of the bill, which is repealing the personal property tax and making sure that every community around the state is not held hostage by Milwaukee’s problem.”

Milwaukee Mayor Cavalier Johnson told lawmakers last month mounting pension obligations have put Milwaukee “on a path to catastrophic budget cuts“ that would have to be made by 2025 if funding is not increased.

LeMahieu didn’t take questions from reporters after the Senate’s floor session Wednesday.

Asked to respond to Republicans’ comments Wednesday, Evers spokesperson Britt Cudaback said the governor’s position on the negotiations hasn’t changed since he said Wednesday morning that he hopes to figure out the proposal “by the end of this week or very soon.”

Wisconsin’s shared revenue program was created in 1911 and initially provided local municipalities 70% of state income tax collections, while counties and the state received the remaining 20% and 10%, respectively.

Shared revenue remains among the state’s biggest programs. But the past few decades it has dropped from 12.5% of the general fund budget in 1994-95 to less than 5% now, according to the Legislative Fiscal Bureau.