Murphy’s Law: How State Aid to Cities Has Plummeted

You might call Milwaukee Mayor Tom Barrett a victim of history.

Most major cities in America have other ways to raise revenue besides the property tax. “It’s safe to say we’re one of the only cities in America that doesn’t have another tax — an income or sales or gas tax,” Barrett notes.

Wisconsin’s leaders, however, didn’t want cities using tax rates to gain an advantage on other cities. “The idea was to prevent the balkanization of the state — let’s not have cities compete with each other based on taxes,” Barrett observes.

It was all part of the “Wisconsin Idea,” which made this a unique laboratory for democracy that originated concepts like workman’s compensation and the first state income tax in 1911 (two years before a constitutional amendment created the federal income tax). With the new revenue from the income tax, Wisconsin’s leaders decided, it would return a substantial portion of the revenue raised to localities through “shared revenue,” while prohibiting them from levying their own income or sales taxes.

This left a city like Milwaukee with two main sources of revenue: the property tax, undoubtedly the most hated tax in the state (which makes it difficult to raise) and shared revenue from the state. And that has been plummeting for years.