Philip Rocco on Shared Revenue Shortfall Issues in Wisconsin

Frederica Freyberg:
Wisconsin is sitting on a $4 billion surplus. Some counties would like a bigger piece of that pie through the state’s shared revenue. Back in 2023, a much-heralded bipartisan shared revenue plan for local governments was passed, allowing Milwaukee to raise its sales tax to shore up services, while at the same time boosting state revenue coming to locals across the state. But now the richest county in the state, Waukesha County, is looking at a $5 million budget shortfall in 2025 and is beseeching the state to give more. Marquette University professor of political science Philip Rocco is an expert in all of this, and he joins us now. Thanks very much for being here.

Philip Rocco:
Good to be with you.

Frederica Freyberg:
So I thought that this 2023 shared revenue plan was a great deal for local governments. What happened?

Philip Rocco:
Well, it was a big deal, right? It was the single largest increase in shared revenue that local governments had received since the early 2000. But the reality is that compared to what cities, towns, villages and counties had lost since the early 2000 because the formula wasn’t updated for inflation and because there were several big cuts to shared revenue, it’s really a fraction of what local governments and county governments had lost in inflation-adjusted terms since the early 2000s. And at the same time, inflation has sort of proceeded a pace that raises the cost of services for local governments. And so while it was by no means a small thing, there are still challenges that local governments around the state are facing.

Frederica Freyberg:
Is it striking that a county like Waukesha County, regarded as the wealthiest in Wisconsin, would be in this position?

Philip Rocco:
No, I don’t think it’s particularly surprising, in part because the shared revenue formula is not necessarily designed to advantage counties like Waukesha. It receives one of the largest – err, lowest shares in per capita aid among counties in the state. At the same time, the pressures that are on counties and municipalities around the state are really pretty constant, regardless of their wealth. So, for example, there are inflation pressures which raise the cost of doing things like sidewalk repair and street repair. But at the same time, the property tax levy limit that the state sets has not been adjusted to sort of take account of those inflationary pressures. And that really puts counties and municipalities in a squeeze position.

Frederica Freyberg:
Is it your expectation that the state would do something around those levy limits?

Philip Rocco:
I think that’s possible. I think that that is, if you talk to local officials, both in counties, municipalities, that’s one of their key agenda items. And so I would expect to see movement on that before I would expect to see movement on sort of increasing formula funding under Act 12.

Frederica Freyberg:
So other counties raised their state sales tax to fund needs. And Waukesha wanted to. What happened with that?

Philip Rocco:
I think that was one of the things that helps explain the shortfall and maybe why Waukesha is in this position, which is like a lot of other counties. There was a push to increase the sales tax by 0.5%, but there was, unlike in Milwaukee, where the business community was in favor of that measure both for the county and the city. In Waukesha County, the business community, the Chamber of Commerce, really opposed that. And so the legislation was pulled sort of at the last minute to reevaluate it.

Frederica Freyberg:
Why are counties in particular so strapped?

Philip Rocco:
Counties are important because they really pull double duty in Wisconsin government. They’re both local governments in their own right that offer things on a discretionary basis to their residents. But at the same time, they are service providers and agencies of the state. And so they have a lot of responsibilities that they can’t easily get out of and a lot of their budget is sort of spoken for by the state. And so that especially in conditions where there’s sort of inflationary pressure that can put an additional vice grip, I think, on county finances. And so when you look at what counties are asking for in the 2025 to ’27 budget, what they’re asking for is not additional shared revenue of the sort that that they got under Act 12, but the sorts of special revenue programs or aid programs that help them to support the services that they provide on behalf of the state.

Frederica Freyberg:
What are some examples of those services that they provide on behalf of the state that are different?

Philip Rocco:
So there’s all sorts of mental health services that counties are the sort of main provider of. If you think about the state court system that really operates through counties. Jails, as well, are county functions but mandated in a way by the state. And there’s really a host of additional kind of mandatory programs that counties administer.

Frederica Freyberg:
All right. Professor Phillip Rocco, thanks very much. We’ll be looking at that next state budget to see what it holds. Thank you.

Philip Rocco:
Thank you.