Wisconsin Act 12, signed into law on June 20, 2023, reshaped how the state funds its counties and municipalities by dedicating one cent of the five-cent state sales tax to a new Local Government Fund, repealing the personal property tax on business equipment, and giving the City of Milwaukee and Milwaukee County their own sales tax authority to pay down pension debt. The law also attaches real conditions to that money, including public-safety staffing requirements, restrictions on advisory referendums, and penalties for cutting fire or emergency services.
The New Local Government Fund
Before Act 12, shared revenue to local governments depended on whatever the legislature chose to appropriate each budget cycle. The new Local Government Fund is a segregated account fed automatically by sales tax collections, so aid grows with consumer spending rather than requiring a fresh fight every session.1Wisconsin State Legislature. 2023 Wisconsin Act 12 Act Memo
Local aid now comes in two streams. The existing county and municipal aid payment continues under its old formula. On top of that, a new supplemental county and municipal aid payment began with 2024 distributions.2Wisconsin Department of Revenue. County and Municipal Aid The supplemental payment carries a floor: municipalities other than Milwaukee and Madison get at least 20 percent of their 2024 base aid or a formula amount, whichever is greater, while counties, Milwaukee, and Madison get at least 10 percent.1Wisconsin State Legislature. 2023 Wisconsin Act 12 Act Memo
The money is not unrestricted. Supplemental aid can only be spent on law enforcement, fire protection, emergency medical services, emergency response communications, public works, and transportation. Administrative services are specifically off limits. For 2026, the total supplemental distribution runs roughly $219 million for municipalities and about $72 million for counties, each a 3.4 percent increase over 2024 levels.2Wisconsin Department of Revenue. County and Municipal Aid
Both base and supplemental payments go out twice a year, in July and November.3Wisconsin Department of Revenue. Shared Revenue Estimates The Department of Revenue publishes estimated payment amounts on or before September 15 each year for the following cycle, which is when most local budget work gets built around real numbers.4Wisconsin State Legislature. County and Municipal Aid
The Personal Property Tax Is Gone
Act 12 eliminated Wisconsin’s personal property tax starting with the January 1, 2024 assessment. Business equipment, machinery, furniture, and fixtures used in commercial operations no longer generate a tax bill, and the annual Statement of Personal Property filing (Form PA-003) is no longer required. The last filing was for the 2023 assessment year.5Wisconsin Department of Revenue. 2023 Wisconsin Act 12 – Personal Property Exemption
To protect local budgets, the state created aid payments to every affected taxing jurisdiction beginning in 2025, calculated from the personal property taxes levied under the final January 1, 2023 assessment.1Wisconsin State Legislature. 2023 Wisconsin Act 12 Act Memo The state absorbs the lost revenue so municipalities and counties stay whole.
Milwaukee’s New Sales Taxes and Pension Rules
Act 12 carved out a special arrangement for the only Wisconsin jurisdictions carrying pension liabilities large enough to threaten their solvency. The City of Milwaukee may impose a 2.0 percent local sales tax, and Milwaukee County may impose an additional 0.4 percent on top of its existing county tax.1Wisconsin State Legislature. 2023 Wisconsin Act 12 Act Memo Both took effect January 1, 2024.
The revenue has a single primary purpose: eliminating the unfunded actuarial accrued liabilities in the city and county retirement systems.6Wisconsin State Legislature. Milwaukee City and County Sales Taxes and Pension Reforms The authority to collect the tax expires once the system’s actuary determines the pension is fully funded, or after 30 years, whichever comes first.7Wisconsin Department of Revenue. 2023 Wisconsin Act 12 Information That sunset keeps the tax from becoming permanent.
When sales tax revenue in any year exceeds the pension payment, the City must use the excess to hire more police officers and firefighters until it reaches mandated staffing floors: at least 1,725 law enforcement officers, including 175 detectives, and a daily staffing level of at least 218 members of the paid fire department.1Wisconsin State Legislature. 2023 Wisconsin Act 12 Act Memo The deadline to hit those levels is December 31, 2033. Missing it triggers a 15 percent reduction in the City’s supplemental aid.
Milwaukee also agreed to spending bans in exchange for the taxing authority. The City cannot use property tax or sales tax revenue on a streetcar system, and it cannot fund any position whose principal duties consist of promoting individuals or groups on the basis of race, color, ancestry, national origin, or sexual orientation.1Wisconsin State Legislature. 2023 Wisconsin Act 12 Act Memo Those restrictions apply only to the City of Milwaukee, not to other municipalities.
Conditions Attached to the Money
The expanded aid is not without strings. Local governments must satisfy several ongoing conditions to keep full payments.
Maintenance of Effort for Public Safety
Every municipality and county must certify annually to the Department of Revenue that it has maintained fire protection and emergency medical services at a level at least equivalent to the prior year. The law enforcement maintenance requirement applies only to cities, villages, and towns with a population greater than 20,000. Smaller municipalities and counties still have to meet the fire and EMS piece.8Wisconsin Department of Revenue. Maintenance of Effort Certification and Report
A municipality that fails to certify, or that actually cuts services, loses 15 percent of its total shared revenue, covering both the base aid and the supplemental aid.6Wisconsin State Legislature. Milwaukee City and County Sales Taxes and Pension Reforms For most communities that penalty is large enough to make the certification a real compliance exercise rather than a formality.
Limits on Advisory Referendums
Act 12 narrowed what county boards can put on the ballot as advisory referendums. A county may now hold an advisory referendum only on capital expenditures proposed to be funded by the county property tax levy.9Wisconsin State Legislature. 2023 Wisconsin Act 12 Broader policy questions, previously allowed, are no longer permitted at the county level.
Tighter Levy Limits for New TIDs
The law also adjusts property tax levy limit calculations for Tax Incremental Districts created after December 31, 2024. For those newer TIDs, only 90 percent of the annual value of net new construction counts toward the levy limit valuation factor, down from 100 percent, and the value of any removed improvements is excluded each year.10Wisconsin State Legislature. County and Municipal Levy Limits For fast-growing communities that lean on TIF districts to finance infrastructure, this slightly tightens the cap on how much property tax revenue the municipality can raise from new TID development.
The Innovation Fund for Consolidated Services
Act 12 created a $300 million Innovation Fund to encourage local governments to merge overlapping services with neighboring communities.11Wisconsin Towns Association. Act 12 – Shared Revenue Wisconsin has more than 1,800 municipalities, and the fund offers one-time grants to those willing to consolidate specific operations.
Eligible services cover public safety, fire, emergency medical services, courts, jails, communications, IT, administration, public works, economic development, tourism, public health, housing, planning, zoning, and parks and recreation. To qualify, a consolidation plan must show at least a 10 percent reduction in spending on the consolidated service. Half the projected savings must be realized within two years, the full savings within three.11Wisconsin Towns Association. Act 12 – Shared Revenue
Grant amounts generally equal 25 percent of the prior year’s cost of providing the service, excluding costs paid by the highest-spending jurisdiction in the group. Public safety, fire, and EMS consolidations get top priority. Municipalities with 5,000 or fewer residents can also apply for smaller planning grants to study whether consolidation would work before committing.11Wisconsin Towns Association. Act 12 – Shared Revenue Only consolidations taking effect after November 13, 2024 qualify; earlier arrangements are not eligible retroactively.