Beginning January 1, 2024, a new city of Milwaukee sales and use tax rate of 2%, alongside an increase in the Milwaukee County sales and use tax from 0.5% to 0.9%, went into effect as part of the shared revenue deal negotiated by Wisconsin’s Legislature and Governor Evers in 2023. This change raised the combined state, county, and city sales and use tax rate to 7.9% in Milwaukee and 5.9% in the rest of the county. These changes came after Milwaukee leaders complained for years that Republicans cut shared revenue and legislative Republicans failed to subsidize Milwaukee governments. As part of Wisconsin’s most recent budget legislative Republicans increased Milwaukee’s shared revenue and allowed them to raise sales taxes in both the city and county. Milwaukee leaders celebrated.
However, as reported by Fox 6 now, the anticipated revenue boost has not materialized, leading to a projected $19 million budget deficit for Milwaukee County.
The deficit, identified by the Milwaukee County Comptroller’s Office, is attributed to several factors. A significant one is slower-than-expected retail sales, which have resulted in lower-than-anticipated sales tax collections. “Our sales tax budget assumed a 3% increase over last year’s numbers,” explained Cynthia “CJ” Pahl, Financial Services Manager for the Milwaukee County Comptroller’s Office. “When we’re not hitting that, and we’re not even hitting last year’s budget, that’s when we’re in trouble.”
Pahl blamed other increased expenses, including overtime costs for the Milwaukee County Sheriff’s Office, a costly food contract at the Community Reintegration Center, and a $2.5 million payment for the American Family Field funding fix.
Milwaukee County officials, including Supervisor Steve Taylor, are concerned about the financial outlook. “It’s not good,” Taylor remarked. The County’s Office of Strategy, Budget, and Performance is actively exploring options to mitigate the deficit, potentially by reallocating funds from other departments. A comprehensive plan to address the budget shortfall is expected to be presented in September.
The sales tax applies to a wide array of goods and services in Wisconsin, including tangible personal property such as clothing, computers, office equipment, and even electricity and gas. Certain services, like admission to events, cable television services, landscaping, and more, are also taxable unless specifically exempted.
The hope among county leaders is that a rebound in retail activity will help bridge the revenue gap. However, the post-pandemic economic landscape has proven challenging, with business owners like Brian Burghardt of Burghardt Sporting Goods noting a slowdown. “There was a ton of pent-up demand,” Burghardt said. “I think that we’re flattening out a little bit right now. Business is still strong, but we’re not enjoying the same trend as we have in the previous couple years.”