WCA's O'Connell: "We can attract young and smart talent to Wisconsin if we approve the local option sales tax"

There is significant, bipartisan support for the proposal in Governor Tony Evers's budget enabling counties and municipalities to authorize sales tax referendums. It's backed by business leaders like Tim Sheehy, philanthropic leaders Julia Taylor, city leaders like Bryan Kennedy and statewide leaders like Mark O'Connell.

Mark is Executive Director of the Wisconsin Counties Association, which bills itself as, "the foremost voice of county officials representing all 72 counties in Wisconsin." Mark and I both support the Governor's proposal.

(If you've never heard of this proposal, head over to MoveForwardMKE.com and learn more. Long story short, local governments have very few options to raise local revenue to support local priorities, due to state law. This is why Wisconsin communities have historically relied heavily on revenue from property taxes to fund services. The Fair Deal effort aims to change that.)

Without further ado, here is my conversation with WCA Executive Director Mark O'Connell.

SR: Mark, why do you support the Governor's proposal enabling counties and cities to authorize local sales tax referenda?

MO: Wisconsin has a long history of providing high quality and comprehensive public services. Our citizens have come to expect it and our government has been structured to deliver.

In Wisconsin, we have created a system where counties have become the service delivery arm for state services. In essence, our state leaders identify a need in society, fashion a solution in the form of a program or service, identify the most efficient level of government to deliver the program or service (generally counties), provide state funding for the program, and then have the citizens who need the service or program receive service. There are countless examples of this structure ranging from juvenile corrections to maintenance of state highways to human services.

As demand for a state program or service grows, so too does the pressure on the property tax. When demand for the program or service exceeds the state funding provided to the delivering government, the gap is paid for with property taxes collected at the local level. To add demographic complexity to this situation, we must look at our mix of taxes and which taxes fund local government. Property taxes are the primary source of local government funding providing revenue to the county to supplement state funds in provision of service. Property taxes also fund quality of life programs and services. 

For many years the property tax was actually a progressive tax, meaning the more capacity one had to pay, the more one paid. This is less true today. Our Wisconsin tax structure measures wealth by how much property and the value thereof one acquired or possessed. Individuals would pay a property tax on this perceived wealth with income or wages. However, in 2011, things began to change. The first baby boomer retired, and while we continue to measure wealth by the amount of and value of property one has, the ability for one to pay (income and wages) is lessening as a result of retirement. While the property tax had become slightly regressive years earlier, the regressive nature has accelerated. This leads one to rationally argue that the property tax is not sustainable as the primary source of revenue for local governments in the future. 

To add another layer of complexity to the issue, consider our current and impending workforce shortage. COVID-19 has most assuredly wreaked havoc with workforce, unemployment, and economic models, however, Wisconsin was on the eve of a significant workforce shortage prior to COVID and when COVID is eventually in our rear view mirror, we will find that we are at the daybreak of a workforce shortage. This is important because of the nature of our economy. 

If we are to succeed economically as a state, we need a strong and vibrant private sector - more people making more money engaged in more commerce. If we believe a strong and vibrant private sector is desirable to position our state and communities for future economic success, we must naturally ask ourselves what it is that the private sector needs for such success. To answer this, we look at our changing economy. We are increasingly a knowledge and technology-based Millennial economy, where the primary ingredient for private sector success is smart talent. To perhaps unfairly delineate it - smart young people. 

Our economy and workforce has changed over the years: smart young people are moving to where life is attractive to them and finding a job once they get there. In decades past, people would move to where a job was and live in a community close to employment. This is not the norm today. This illustrates the change from baby boomers who lived to work to Millennials and Generation Z who work to live. If one ascribes to the theory that:

• private sector success is the key to a strong state economy;
• that smart young talent is the primary resource for private sector success;
• that we are at the dawn of a smart young talent labor shortage;
• that smart young talent is moving to where life is attractive to them and finding employment once they arrive;
• and that in today’s Millennial knowledge and technology-based economy businesses can move almost overnight and do so to where the top resource for profit is present...

...then we must ask, what does this demographic of smart young talent find attractive and what can Wisconsin do in this effort? Attracting smart young talent, it turns out, is not as mysterious as one might guess. Continuing education (not necessarily for a degree), walkability of a city, nightlife, diversity, broadband everywhere you can breathe, outdoor recreation, the list goes on as to what is desirable by this smart young demographic.

The list of desirable community attributes is decidedly populated with efforts created and funded by government, and specifically, local government. In other words, to become attractive to the smart young demographic, the primary ingredient to private sector success leading to a positioning of our state for future success, starts with local governments investing in our communities. Of course, therein lies the challenge. Local governments do not have the resources to invest in their communities as resources are currently being allocated to much needed and well-deserved services as determined by the state but oftentimes funded with an already drained and tenuous property tax.

So, what are we to do? If we believe the studies which indicate that as goes the economy of the major metropolitan area of a state, so goes the state’s economy, and if we believe that investment in our communities will make them attractive to smart young talent leading to private sector success and therefore success across our state, we might well consider providing local governments with the ability and resources to invest by allowing for a local option sales tax. The proposal most often mentioned adds the additional element of a local option sales tax first approved by the voters. A local option sales tax is not only about changing the mix of tax collections at the local level, but perhaps even more importantly, it’s about an effort to position our community and our state for future success.

A local option sales tax is not about addressing a challenge of today, but about a vision of tomorrow. To be certain, this is not a short term strategy; this is a long term and visionary approach to improving our state with a strategy resulting in more people making more money and engaging in more commerce, the taxes generated by such to be used to further make our communities and state attractive to private sector success. 

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Help us pass this proposal.

Ready to contact your state legislators and urge them to support the local option sales tax? It's easy to get involved.

1) Find Your Legislator - Open the Wisconsin state legislator search tool, enter your address in the search box, and the interactive map will find your State Senator and Representatives.

2) Contact Your Legislator - Here's a helpful message to get you started on an email or a phone call:

• My name is <Name> and I live at <Address>. I am <calling / writing> to encourage your support a local option sales tax for Wisconsin counties. This legislation will give county voters a voice in deciding how best to reduce property taxes and address the funding challenges facing the county and its municipalities. I support this legislation because <insert your specific reasons / beliefs (for example: enhancing our parks and parkways, lowering property taxes, promoting better health outcomes, etc.>. This legislation is about providing local funding for local priorities and as my elected official, I urge you to support it.

To learn more, visit Moveforwardmke.com.

Sincerely,

Shawn Rolland

Milwaukee County Board Supervisor - District 6, representing neighborhoods in Wauwatosa, West Allis and Milwaukee's westside