The Wisconsin State Assembly just passed a bill reshaping the state’s shared revenue system. What’s in it?
The Wisconsin State Assembly just passed a bill reshaping the state’s shared revenue system. What’s in it?
After a dizzying day at the Capitol in Madison, we're breaking down where things stand with this incredibly important bill and assessing what's next.
The Recombobulation Area is a six-time TEN-TIME Milwaukee Press Club award-winning weekly opinion column and online publication written and published by veteran Milwaukee journalist Dan Shafer. Learn more about it here.
The Wisconsin State Assembly voted Wednesday to advance Republican-drafted changes to the state’s policies on sharing revenue with county and municipal governments.
The vote came after only a few short hours after a 21-page amendment to the measure was released for members to examine.
Assembly Democrats voted unanimously against the measure, as did three Republicans, Scott Allen, Janel Brandtjen, and Chuck Wichgers, all of whom hail from Waukesha County.
While the day began with a hint that Republican legislative leaders had reached something of a legislative compromise with Governor Tony Evers, the legislation that ultimately passed the Assembly left the vast majority of the provisions in Republicans’ initial legislation in place.
Minority Leader Greta Neubauer objected to the breakneck pace of the process, arguing that the bill was “not ready for prime time.”
“We need to go back to the negotiating table and get it right,” she said. “We can and must do better.”
But Assembly Speaker Robin Vos wasn’t interested. The Assembly was, in Vos’s words, “done negotiating” on the bill. And so, after a day marked by uncertainty, the sweeping legislation made its way out of the chamber.
Republicans’ initial offer
As The Recombobulation Area has reported over the last several weeks, the initial Republican proposal — Assembly Bill 245 — includes roughly half the amount of aid proposed by Governor Evers and, unlike Evers’ proposal, imposes a host of new restrictions on how local governments spend public money, as well as new restrictions on local governments’ ability to hold advisory referenda.
Under the Assembly Bill’s formula, which is weighted in favor of smaller communities, municipalities containing 74% of Wisconsin’s population would see a smaller increase in aid than they would under Evers’ proposal. And some larger cities, including Racine, Green Bay, and Milwaukee, would see only the bare-minimum increase in aid of 10%. By contrast, some of the state’s smallest communities would see increases in their current shared revenue payments in excess of 5,000%.
The legislation reported out of committee also includes provisions allowing the City and County of Milwaukee to hold a referendum on a sales tax increase.
Unlike the version of the policy advocated by the Evers administration, however, the Assembly bill includes a dizzying array of new top-down restrictions on the state’s largest city and county. In addition to sharply limiting the purposes of new sales tax revenue to outstanding pension obligations and public safety, the legislation imposes new limits on governments’ ability to support nonprofit partnerships and the arts, prohibits any local tax expenditures on Milwaukee’s burgeoning streetcar system, strips authority from the city’s civilian-controlled Fire and Police Commission, and eliminates majority-rule on City and County spending decisions. Under the initial version of the Assembly bill, Milwaukee City and County could only enact new expenditures with a two-thirds vote of their respective legislative bodies.
Soon after seeing the initial draft, Gov. Tony Evers announced his intention to veto the legislation. “The state must step up more than what I’ve seen," Evers said. "It’s why I can’t support the Republican plan as is — and frankly, I’ll veto it in its entirety. "
Yet prior to the floor session Wednesday, Evers released a statement noting that he was “optimistic” about ongoing negotiations with Republican legislative leaders which he hoped would produce a “bipartisan compromise” on an issue Evers believes is “one of the most important that will be taken up during this legislative session.”
The Governor had met with key Republican designers of the legislation to hammer out a compromise on Monday night. State Rep. Tony Kurtz, a Republican from Wonewoc, reported that it was his intention to vote on a revised proposal that reflected those agreements.
Legislating in the dark
Still, by the time the legislation hit the floor Wednesday, the shape of the compromise remained a mystery to all but those hammering it out.
The debate over the legislation – which arrived on the Assembly floor without committee amendments – was scheduled to last five hours. Yet after the discussion of eight memorial resolutions, the Assembly recessed for an extended partisan caucus which lasted the rest of the afternoon. Democratic state Rep. Robyn Vining of Wauwatosa marked time via Twitter:
No bill. 1:50pm. Republicans are going to caucus.
2:50pm—If you’re a social studies teacher, maybe add a section to the curriculum, “How A Bill Becomes A Law: The Wisconsin Chapter.” (Standing by in my office)
Then, shortly after 4 p.m., Republicans released their own amendments to the bill. That meant legislators had only an hour to review a total of 90 changes before returning to the floor for debate and (eventually) a vote on the measure.
Assembly Democrats tried unsuccessfully to send the legislation back to the Assembly Committee on Local Government. When that measure failed on a party-line vote, Democrats attempted to introduce substitute amendments which preserved the aid formula in the GOP but stripped out some of the more onerous restrictions on local governments. Republicans swiftly tabled all Democratic amendments.
State Rep. Evan Goyke of Milwaukee took to the floor to criticize the frantic pace of the amended legislation, whose contents he had been briefed on by the Legislative Reference Bureau only 30 minutes before floor debate.
“It has been my experience,” Goyke said, “that speed and secrecy leads to bad public policy.”
Kurtz, the amendments’ lead draftsman, took issue with that characterization of the process. As Kurtz put it in a floor speech, negotiations with local officials over the legislation began in November of 2022. After months of discussions and deliberation between Republican leaders and local officials, the time had come to “get it done.”
Kurtz had somewhat less to say about the substance of the amended legislation. And, in part because the amendments had been released just prior to floor debate, Assembly Democrats also spoke largely to the provisions that had remained unchanged, as well as to the frenetic legislative process itself.
Many amendments, but little movement on significant issues
Once the details of the amendments came to light, the legislation hardly appeared to be the final version of the compromise Gov. Evers had optimistically described Wednesday morning. In fact, despite the long list of alterations, the Kurtz amendment was perhaps more notable for what it had in common with the original Republican bill.
First, there was the size of the legislation. While Kurtz’s amendment added $34 million to the package, that pushed the total county and municipal aid in the Assembly bill to $311 million, just over half the size of Evers’ proposal. Of that additional $34 million, just over half would go to counties. The remaining $16.3 million would go only to municipalities, primarily to those with populations between 30,000 and 50,000. The distribution formula for municipal aid, weighted towards the smallest municipalities, remained in place.
Along with aid already granted, these mid-sized cities will get an additional share determined by the relative size of their population. Additionally, all municipalities with under 110,000 residents would see a minimum increase in aid of 15% rather than 10%, as in the initial legislation. Only two Wisconsin cities have populations larger than 110,000 — Milwaukee and Madison.
What this all adds up to, as the chart below shows, is that the average increase in municipal aid remains substantially similar under the original and amended GOP plans. Under the bill that passed on Wednesday, municipalities with over 5,000 residents would still see aid increases far smaller than they would under Evers’ proposal. The disparity between the Evers and the GOP plans is especially dramatic for municipalities with over 30,000 residents. Under the bill passed on Wednesday, municipalities with resident populations between 30,000 and 110,000 would see an aid increase that is still, on average, one-third the size they would receive under Evers’ proposal. For municipalities with resident populations over 110,000, the average aid increase under the bill passed on Wednesday is one-seventh the size of the bump they would see in the Governor’s plan.
The Republican amendments also left the initial bill’s “strings” attached. Among other things, the amendments still require local governments to certify that they are maintaining the level of law enforcement that is at least equivalent to that provided in the previous year or else risk losing 15% of their total municipal aid.
The one change here is that the amendments deleted the (illegal) quotas for arrests and moving violations as indicators of local law-enforcement “effort.” Instead, local governments were required to spend at least as much money or maintain at least as many law-enforcement officers as they had in prior years. The revised legislation also maintained a prohibition on local advisory referenda "except for an advisory referendum regarding capital expenditures proposed to be funded by the county property tax levy."
In at least one case, the amended legislation imposed additional restrictions on local governments. For example, under the initial legislation, local public health officials were prohibited from closing any business for more than 14 days following an epidemic or outbreak without approval from the local governing body. The amended legislation imposes a blanket ban on closures of over 30 days, and allows local governing bodies to extend their initial approval of a business closure once, for a maximum period of 30 days.
Milwaukee-specific “strings” remain, too.
Nor did Republicans budge when it came to special restrictions on Milwaukee or Milwaukee County. Rather, many key provisions in the initial legislation remained intact. The changes that did emerge were modest.
Here’s a summary of some of the key issues:
Sales and Use Tax Referenda: No change. In recent weeks, one of the most significant concerns raised by the Milwaukee-based coalition advocating for new local sales taxes is that the Assembly legislation requires public referenda for approval. Local officials are doubtful that such a referendum would pass. As Milwaukee Mayor Cavalier Johnson put it: "I don't want Milwaukee to be in a position where we leave all this up to chance,” he said. Yet the new legislation makes no changes to the referendum requirement.
The morning following the bill’s passing, Senate Majority Leader Devin LeMahieu said the State Senate’s version of the bill would not include the same referendum requirements, the AP reported. Vos responded by saying “That could kill the bill.”
Strings on sales and use tax revenues: Still tied tightly. Under Republicans’ initial legislative proposal, revenues raised through new sales and use taxes in the City of Milwaukee Milwaukee can only be used to pay off unfunded pension liabilities or for public safety. The amended legislation maintains these requirements. It also maintains requirements for Milwaukee to maintain the same level of police, fire, and EMS services. On the one hand, the amendments tighten these requirements by prohibiting the city from counting any staff position funded by state or federal dollars towards its minimum level of service. The amendment clarifies that Milwaukee may use “any reasonable method” of estimating daily staffing levels, as long as it uses filled positions when doing so.
Expenditure caps: No change. Under the Assembly bill, the City of Milwaukee cannot spend more than 5% of its total budget on cultural or entertainment matters or “partnerships with nonprofit groups.” As Larry Sandler reports over at Milwaukee Magazine, there’s been significant confusion over how to interpret the initial bill’s exemptions of the parks, the zoo, the transit system, health services, or private schools operating under city charters, from this cap. The amended legislation that passed on Wednesday did not address these provisions or resolve these questions. Nor did the amended bill alter the clauses prohibiting Milwaukee from using any tax levy money on “developing, operating, or maintaining” its emerging streetcar system.
Prohibition on local government workforce diversity hiring: No change. Under the original legislation, the city of Milwaukee was prohibited from using tax levy funds for any position that involves improving the diversity of the local government workforce “on the basis of their race, color, ancestry, national origin, or sexual orientation.” Again, the amendment makes no changes to that provision.
Stripping authority from Fire and Police Commission: No change. The amended legislation left intact a provision that eliminated the authority of Milwaukee’s civilian-controlled Fire and Police Commission—transferring that power to Milwaukee’s Police Chief, eliminating democratic control over public safety decisions in the state’s largest city. The only changes to that section of the law concerned the appointment of members to what is now a purely advisory body.
Police Officers in Milwaukee Public Schools: Additional unfunded mandates. As in the original bill, the amended legislation requires Milwaukee Public Schools (MPS) to maintain minimum staffing for a police force (“school resource officers'') in the city’s schools. The only change is that now MPS must pay for each officer to receive 40 hours of training––a move which will likely increase the cost to the district (which is already estimated at $1 million per year).
Supermajority requirements for local expenditure provisions: Kept, with a clarification. Under Republicans’ original bill, Milwaukee’s city and county governments could only enact new program spending by a supermajority (2/3rds) vote. This provision would essentially direct the city and county to abandon the principle of majority rule in major expenditure decisions. The amended bill clarifies when this new requirement would kick in. Should Milwaukee City or County impose a new sales and use tax, the two-thirds requirement would go into effect.
Making sense of the Assembly Bill
One of the defining features of the Assembly bill is its transformation of Wisconsin’s county and municipal aid system from a more-or-less “general purpose” aid into a “strings attached” program that imposes a new set of requirements on local governments, especially where Milwaukee is concerned.
For Chris Goodman, an associate professor of public administration at Northern Illinois University, who analyzes state-local relations around the country, some elements of the bill are part of a broader political trend. “More conservative legislatures have generally been engaging in more preemption over the past few decades,” he says.
Some of the provisions in the Assembly Bill – including the measure to withhold 15% of local governments’ aid if they do not meet law-enforcement quotas – are what Goodman calls “nuclear preemptions” because they involve not merely a state exerting new authority, but a threat of punishment for local governments who do not comply with a new state standards. The strings in AB245 are, Goodman says, “pretty much on the extreme end” of what he and his colleagues have seen around the country.
One extraordinarily odd feature of the legislative process for AB245 is that organizations that have historically defended local autonomy, the League of Wisconsin Municipalities (LWM) and the Wisconsin Counties Association (WCA), remained curiously absent from public debate about the provisions.
Despite lacking many of the protections for local control and broadened access to local sales tax revenues that the LWM has repeatedly called for over the last decade, the organization registered in favor of the legislation while releasing almost no public comments about the measure. Soon after the passage of the bill on Wednesday, the League’s Capitol Buzz newsletter announced that the organization was “currently reviewing the details” of the amendments.
The other distinguishing feature of the legislation, Goodman suggests, is its distribution formula, which assigns a higher weight to small units of local government rather than using a government’s resident population alone or combination with other factors, such as the government’s tax base. The weights in the formula, which undermine the population or revenue basis for distributing state aid, amount to a “zero-sum game,” Goodman says: “Any preference [given] to any one of these [units of government] means less money for the others.”
On the Assembly floor Wednesday evening, state Rep. Darrin Madison of Milwaukee, agreed.
“Over the past 10 years, the city of Milwaukee and Milwaukee County have contributed over $400 million to the state in taxes,” he said, “And for every dollar the city sends in, it gets only $0.27 back. So to say that we are looking for a handout is ridiculous. We are looking for our fair share. Unfortunately, AB245 does not provide the needed investments in Milwaukee or Milwaukee County.”
What’s Next?
Given the content of the bill passed by the Assembly on Wednesday, it is still unclear what the final version of the legislative compromise will look like.
A day after the Assembly legislation passed, Senate Majority Leader Devin LeMahieu announced that the Senate would hold hearings next week on the original shared revenue bill–without the changes that were made by the Assembly prior to passage. In a press conference, LeMahieu expressed shock at Speaker Vos’s apparent unwillingness to continue negotiations. “I had no idea that a line was going to be drawn in the sand yesterday afternoon,” LeMahieu said.
And so for now, the fate of the legislation now rests in the south wing of the State Capitol Complex.
Phil Rocco is an Associate Professor of Political Science at Marquette University, and a regular contributor at The Recombobulation Area.
He is the author of Obamacare Wars: Federalism, State Politics and the Affordable Care Act (University Press of Kansas, 2016) and editor of American Political Development and the Trump Presidency (University of Pennsylvania Press, 2020).
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This can be seen as part of the GOP’s war on cities as discussed in Paul Waldman’s column today: https://wapo.st/3pSHlvF