Shifting burden to sales tax would provide property tax relief

    On Sept. 4, the Milwaukee County Board of Supervisors voted to override the county executive’s veto of an advisory referendum on whether to provide $67 million in property tax relief for Milwaukee County residents by shifting funding for mass transit; parks, recreation and culture; and paramedics from the property tax levy to a small increase in the sales tax. 

    The property tax is the most hated tax in Wisconsin and Milwaukee County. Any attempts to reduce the heavy property tax burden should be considered. This advisory referendum will let the public weigh in on whether the property tax levy should be reduced to the lowest point since 1997.

    Under this scenario, all funding for mass transit, parks, recreation, culture and emergency medical services (EMS) would be removed from the property tax levy. For the owner of a $150,000 home in Milwaukee, this would be an approximate $165 property tax reduction.  Owners of property worth higher amounts would save even more.

    Don’t be fooled when County Executive Scott Walker claims property taxes won’t be reduced. The advisory referendum question clearly states property tax relief of at least $67 million, to establish a new tax levy base of approximately $183 million, down from the 2008 level of $250 million. In the future, due to strict limits set by the state, the levy could only increase by 2 percent of that new, lower base (or by the percentage increase in the county’s equalized assessed value).

    Why is this a good deal for county residents? It would reduce the property tax burden, thanks in part to increased revenue generated by visitors. Sales taxes are partly paid by visitors who enjoy Milwaukee County’s amenities but pay no property taxes. It’s only fair that visitors pay a small share for the attractions they enjoy.

    Because a sales tax is spread more evenly to everyone, including those who don’t live here, it’s unlikely the additional sales tax would outweigh your property tax savings. You would save $165 in property taxes for a home valued at $150,000. You would have to spend $16,500 a year on taxable goods and services – groceries and other tax-exempt purchases don’t count – to equal those savings. If your home is worth twice that, and you spend less than $33,000 per year on taxable items, your overall tax burden would also be less than it is today. In this way, the sales tax can be a solution, not a problem.

    We’ve seen examples of this in other cities as well. Chicago and Minneapolis both have higher sales tax rates, but their property taxes are lower. Those cities recognize that sales taxes provide a way to provide more funding without increasing the burden on local residents.

    The County Board approved the referendum by a veto-proof majority after lack of dedicated funding for transit was identified as an urgent concern in a report issued by the Wisconsin Public Policy Forum last month, primarily due to escalating fares, route cuts and declining ridership. Similarly, parks are also suffering, with deferred maintenance costs in excess of $300 million. The Milwaukee County Parks Advisory Commission voted unanimously to recommend a referendum on preserving parks funding while also providing property tax relief. It is also a priority to include emergency medical services and paramedics funding, which are major quality of life services important to county residents.

    The yes-or-no referendum question set to appear on the Nov. 4 ballot reads, "Shall the State of Wisconsin grant Milwaukee County the authority to provide property tax relief of at least sixty-seven million dollars ($67 million) by levying a one percent county use and sales tax to be used to remove the following three items from the property tax levy: parks, recreation and culture, transit and emergency medical services (EMS)?"

    Do voters want to pay one cent more in sales tax to significantly lower their property taxes and save parks and transit from extinction? You decide.

     

    Lee Holloway is chairman of the Milwaukee County Board of Supervisors.

    Get our email updates