On April 27, Assembly Republican legislators outlined their 2023-25 state budget proposal for “shared revenue,” state tax revenue that is divided among local governments to support various programs and services. The proposal shares some similarities with what Gov. Evers (D) proposed in his executive budget, in particular dedicating one-fifth of the state’s sales tax revenue to fund additional shared revenue payments. At a news conference, Reps. Mark Born (R-Beaver Dam) and Tony Kurtz (R-Wonewoc) of the Joint Committee on Finance discussed key aspects of the budget proposal.

Update: On May 4, following the introduction of legislation to implement the Assembly Republican proposal, Gov. Evers issued a statement promising to veto the bill in its current form. The governor criticized the proposal for not providing enough of a funding increase and for placing some restrictions on how local governments can spend the additional funding.

The Assembly proposal includes the following budget provisions:

• Fund new and existing shared revenue payments through a new, dedicated fund called the Local Government Segregated Account (LGSA). Keep the current level of funding plus an equalization increase of at least 10 percent for all communities. This would establish a new, higher “base” level of funding for shared revenue payments.
• Add additional funding to the LGSA equal to one-fifth (one percentage point) of the state’s five percent sales tax going forward. These funds would be restricted for use on law enforcement, firefighting, emergency medical services, emergency dispatch, public works, and transportation.
• Begin a three-year, $300 million “Innovation Fund” pilot program incentivizing local governments to consolidate services, aiming to promote efficiency and reduce overall costs. The fund would provide a portion of the cost of a consolidated service for several years to encourage consolidation and help to cover one-time costs.
• Increase state aid for emergency medical services to $15 million annually (currently $2.28 million) and increase the law enforcement training fund reimbursement to $320 per officer (currently $160).
• Allow the City of Milwaukee to institute a two percent sales tax and allow Milwaukee County to raise its sales tax by 0.375 percent. These increases would need to be approved by voters via referendum. The funds raised by these additional taxes would be restricted for two purposes: most of the new revenue would be used to retire public employee pension debt, while a portion could be used to help maintain current levels of public safety services. Both taxes would expire once it is determined that Milwaukee’s pension obligations are fully funded.
• Restrict Milwaukee from using any money raised by levying taxes for a trolley/streetcar program. Require Milwaukee schools (public, charter, and private choice schools) to collect and maintain information about crimes and other incidents on school grounds. Require the Milwaukee Public Schools to employ no less than 25 school resource officers at district schools.

According to Senate Majority Leader Devin LeMahieu (R-Oostburg), the Assembly proposal is the result of “substantive, good-faith negotiations between both houses of the legislature and local government stakeholders … however the final details are still being worked out. The Senate is looking forward to continuing to find a responsible way to make a generational investment in local governments throughout the state.” Similarly, Speaker Robin Vos (R-Burlington) recently said that the two houses are “on the cusp of an agreement. But at the end of the day, the devil is in the details.”

A statement from Assembly Minority Leader Greta Neubauer (D-Racine) at the time of the initial proposal expressed cautious optimism, saying also, “We still haven’t seen a bill draft from the GOP, and there is a lot more work to be done to ensure that we have a solution that works for the people of Wisconsin.”

On May 3, Rep. Kurtz introduced Assembly Bill 245, which contains statutory language to implement the above proposals. The bill will receive a public hearing before the Assembly Committee on Local Government on May 4. Rep. Kurtz’s bill includes the following additional provisions that were not announced last week:

• Fully repeal the personal property tax, a longtime priority of many Wisconsin business associations. The language of the repeal has apparently been agreed upon by both houses and the Evers Administration. Last session, Gov. Evers vetoed a bill to repeal the tax, citing technical concerns with how the legislation was drafted.
• Prohibit counties and municipalities from holding advisory referenda.
• Prohibit local health officers from issuing a mandate to close a business in order to control a disease outbreak or epidemic for longer than 14 days, unless approved by the governing body of the jurisdiction.
• Limit the ability of a political subdivision to place limits or conditions on the operation of nonmetallic quarries used for infrastructure, transportation, or construction projects.
• Require the Department of Natural Resources to obtain local government support for projects funded under the Knowles-Nelson Stewardship Program.
• Ease certain requirements related to emergency medical services.

Notably, a Senate companion bill has not been released, but AB 245 was cosponsored by Sens. Felzkowski, Cabral-Guevara, James, and Quinn. According to Sen. Felzkowski, “Despite the introduction of this bill, the Senate and Assembly still have a number of issues to iron out before this legislation will be ready to cross the finish line.”

The Legislative Fiscal Bureau released a memo summarizing a proposed formula for distributing the additional shared revenue. This formula was developed by the Wisconsin Counties Association.

For the latest information about the state budget process, visit the following links:

• Issue update page: 2023-25 State Budget
• Blog post category: State budget
• Article: Finance Committee Begins Voting on 2023-25 Budget Motions, Removing Hundreds of Proposals