UW Oshkosh Prof Calls For Municipal Sales Tax Option

Craig Maher, an assistant professor of Public Administration at UW Oshkosh who also serves on the Wauwatosa Common Council, calls on state government to allow municipalities the option of instituting a sales tax. Maher's sugggestion is the result of his years of research on Wisconsin fiscal policy which identifies problems with the state's shared revenue program and demonstrates the limited options available to local officials to raise revenue.

On the basis of one study of the Chicago metropolitan area, Maher claims that municipalities with multiple revenue options act more efficiently and thus end up lowering taxes. I for one would like to see much more evidence before accepting this claim. On the other hand, Maher sensibly wants local governments to examine their budgeting practices before getting authority to raise revenue from more sources. His experience as a Wauwatosa councilor seems to mirror the experience of many Oshkosh officials:

I believe that before such authority is granted, local governments need to reevaluate their budgeting processes. I have served on Wauwatosa’s Budgeting and Finance Committee for two years now and I can tell you that the process is wanting. What seems to matter the most is tax rates. In fact, tax rates have a tendency to drive the entire process. It is not uncommon in Wisconsin communities for the entire budgeting process to be driven by the Council/Board’s comfort level with the amount of tax rate growth. Given the obvious response from policy makers that they want to see minimal growth in the tax rate, Department Heads get their marching orders to hold operation-related expenses to a minimum. Once the requests are received, budget deliberations begin. This is typically a process that lasts several weeks where percent changes in line-items are painstakingly scrutinized. What is missing from most of these deliberations is a discussion of the broader, and I believe, more important matters such as whether services/programs are necessary. How well services are being provided? What are the expected outcomes from programs? How well did the program meet its outcome objectives the previous year? James Rowen wrote an article in the November 20, 1995 MJS Crossroads Section saying much the same. Interestingly, many communities in states throughout the nation have or are developing budgets along these lines. I have tried to move Wauwatosa in this direction since the day I was elected. What I have found is a great deal of complacency among Council members and Administration. It may be that tax limits will force this discussion, but I am not yet convinced.

For me personally, I would have a hard time supporting a regressive local sales tax at the same time the state of Wisconsin continues to provide generous tax breaks to corporations without demanding accountability, has an income tax rate that is essentially flat (and actually regressive if one considers total income paid in taxes after federal itemized deductions), and has yet to even begin a serious discussion of reversing what has now been a 20-year trend of moving the weight of paying for services off the wealthiest citizens and corporations and on to the backs of the middle-class and poor.

Hopefully Maher's work can get started a discussion of tax fairness in our state.