Our latest research finds sharp distinctions between the City of Milwaukee and similar-sized cities when it comes to financing the workings of their city governments. This finding and a deeper review of four of Milwaukee’s peers suggest that changes to the City’s revenue structure should be considered to ensure better reliability, balance, and equity.
No other Midwestern state has a local tax structure like Wisconsin’s. Wisconsin is the only state in the Midwest that limits municipalities to the property tax as the sole major form of local taxation, and one of the only whose largest city has the same tax structure as all other municipalities.
State aid is a relatively minor source of revenue for most peer cities. State funding comprised 14% of total intergovernmental and local tax revenues for the median city in the peer group, while it accounted for 48% of Milwaukee’s total in 2015.
Milwaukee is particularly unique in its absence of general and selective sales taxes. Thirty of the 39 peer cities have a general sales tax and each of the remaining eight generates substantial revenue from selective sales taxes and/or other forms of taxation besides the property tax.
Cities with larger populations tend to draw more heavily on the sales tax and less upon the property tax. Because larger cities host greater numbers of non-residents who are engaged in business, employment, tourism, and entertainment, they typically seek to generate a portion of their revenues from those users of city services.