Milwaukee Mayor Johnson signs 2% city sales tax legislation following lengthy negotiations

Milwaukee Mayor Cavalier Johnson on Friday signed legislation to levy a 2% sales tax in the city, bringing to a close the most momentous chapter to date in the city's effort to avoid slashing services.

"We've accomplished something huge, something major, something extraordinary for our city," Johnson said during a press conference at the Mitchell Street Library, 906 W. Historic Mitchell St.

Johnson took his time signing the sales tax into law, using more than a dozen pens to each sign one letter of his name.

"So many people worked on this, and I wanted to make sure that everybody got a pen that was used to sign the file," Johnson said.

Surrounding him were officials representing the city's police and fire departments, the police union, various city departments including libraries and the Comptroller’s Office, a handful of ⁦Common Council districts, local tourism and the state Legislature.

His signature comes just days after the Milwaukee Common Council backed the tax on a 12-3 vote, a wider margin than the 10 votes required.

More: Sales tax could help Milwaukee but new state law also comes with steep costs. Here's how.

He credited Common Council President José G. Pérez with getting the necessary votes.

Pérez said the council “accepted the responsibility imposed upon it” and passed the tax.

"The word that comes to mind is 'relief,'" Pérez said during the press conference in his district. "Relief that for the first time in years the city can prepare a budget without a dark shadow over it."

He also acknowledged that many city residents and leaders were frustrated and angry about the deal, both because of the policy provisions attached by Republican leaders in the state Legislature, and because they thought more revenue should have been returned to the city by the state instead of the city resorting to a new tax.

The sales tax offers the city a critical new revenue source after years of angst over increasingly tight budgets that forced Milwaukee to shut down firehouses and allow vacant positions, including in the Police Department, to go unfilled.

Even as those budgets got tighter, it remained far from clear that state legislators would offer the city a lifeline.

But months of negotiation in Madison produced a new law that boosts revenue that flows from the state to the city and allows Milwaukee to levy the sales tax that the state estimates could offer revenue of $193.6 million in 2024 alone.

The law also comes with significant increased costs for Milwaukee's public safety and its pension, in addition to forcing a bevy of policy changes on the city that officials and residents alike reject as a major state Republican overreach into the deeply Democratic city.

Even with Johnson's signature Friday, the work is not over.

"The work begins," Pérez said after the council vote.

Johnson reviewing council legislation

Johnson signed the sales tax legislation but declined to say whether he would also sign legislation the council backed Tuesday seeking ways to push back or blunt the effects of the policy provisions in the new law.

Those policies curtail funding for diversity, equity and inclusion and the city's streetcar while also removing power from the Fire and Police Commission, returning police officers to Milwaukee Public Schools and requiring minimum police and fire staffing under threat of losing many millions of dollars.

Those provisions go into effect regardless of whether the council approved a city sales tax.

The resolutions adopted by the council explore potential litigation, express opposition to the policy initiatives and seek funding for streetcar expansions.

"I'm reviewing those files this morning as we speak," Johnson said.

At a separate Milwaukee Press Club event Thursday, Johnson said efforts to challenge the policy provisions are already being discussed. He has not committed to a lawsuit but said he supports sending the city's lobbyists back to the Capitol to seek the repeal of the policy provisions.

Whether the city pursues a lawsuit depends on the City Attorney's Office's response to a directive the council passed Tuesday for the office to review the legality of provisions that target Milwaukee in the new law, Pérez said.

Top of the list, he said, is finding ways to ensure that council members can make resources available to anyone who is struggling financially in their districts, reflecting a concern by some council members that the sales tax would put an added burden on those least able to afford it.

He also said city leaders need to figure out how to fund diversity, equity and inclusion initiatives.

Further changes to city budgeting could be coming

Even with the influx of funding, Johnson has not committed to avoiding cuts in the 2024 proposed budget he will release this fall.

"I need to continue to have conversations with our Budget Office and dig deeper into the budget process before I make a commitment to that," he said at Thursday's event.

The sales tax is expected to go into effect Jan. 1, 2024.

Milwaukee Comptroller Aycha Sawa, the city's top financial officer, said her staff is analyzing the state's estimate that the city would bring in $193.6 million in revenue from the sales tax. That analysis will play a key role in the development of the 2024 budget.

"We're still working on it and we're still analyzing (the state's) methodology. We don't have a number yet," she said.

The city is also waiting for two outstanding studies that could inform its approach to its finances.

One is an analysis by the Wisconsin Policy Forum of potential service collaborations between the city and Milwaukee County.

A preliminary report laying out areas with the most potential is expected by early fall, with a more detailed analysis potentially taking place in the fall and winter, Policy Forum President Rob Henken told the Journal Sentinel. The goal would then be to have "actionable plans" by the end of the first quarter of 2024, he said.

The second by Ernst & Young is an analysis of the city's finances and operations for ways to more efficiently deliver some services. The effort is spearheaded by the Greater Milwaukee Committee. Joel Brennan, president of the Greater Milwaukee Committee, said the hope is to release the study in early August.

City must 'double down' on efforts to keep police, firefighters

How the city's finances play out in the coming years depends a lot on its ability to maintain police and firefighters.

Johnson said the city would have to double down on its recruitment efforts for both departments, given the minimum staffing requirements in the new law.

Milwaukee stands to lose tens of millions of dollars in state aid if it cannot maintain police and fire department staffing levels — a requirement that comes at a time of a nationwide worker shortage in both fields.

Asked whether he is considering increasing salaries and enhancing benefits to ensure the city doesn't fall below staffing minimums, Johnson said Thursday, "we'll have to take a concentrated look at everything that we can" to encourage police and firefighters to stay at the city.

Alison Dirr can be reached at adirr@jrn.com. Nathaniel Rosenberg can be reached at NRosenberg@gannett.com.

THANK YOU: Subscribers' support makes this work possible. Help us share the knowledge by buying a gift subscription.

DOWNLOAD THE APP: Get the latest news, sports and more

This article originally appeared on Milwaukee Journal Sentinel: Milwaukee Mayor Cavalier Johnson signs 2% city sales tax