RACINE — The City of Racine is to see much more monetary benefit than its neighbors from the $1.9 trillion spending bill signed by President Joe Biden on March 11.
Nearly one-fifth of the bill’s expenditures — the third such massive spending bill passed by Congress during the pandemic — is aid to states, cities, counties, tribes and smaller municipalities as the country’s economic revs its collective engine in the wake of the pandemic.
Collectively through the bill, titled the American Rescue Plan Act of 2021, $5.711 billion will be coming to Wisconsin in various forms, with some going to the state, some for capital projects and much of it for municipalities.
The local governments in Racine County are to receive $96.87 million in total, with the money partially (but not totally) being divvied by population. Nearly half of that money is going to the City of Racine.
Why the difference?
Cities with higher poverty rates and more crowded housing are getting larger allocations than simply based on population, based on how the spending bill was designed. Also, locations that are federally designated as “metro cities” — of which there are 18 in Wisconsin, including the City of Racine — are slated to get considerably more than their neighbors, even if those neighbors aren’t that much smaller, population-wise.
According to initial estimates, the City of Racine is getting $46.98 million from the American Rescue Plan. That’s nine times more than the combined $5.18 million Mount Pleasant and Caledonia are due to receive, despite Racine’s population (77,000) being less than 50% greater than the combined populations of Mount Pleasant (26,900) and Caledonia (25,100).
However, 21% of City of Racine residents live in poverty. Caledonia’s poverty rate is only 5% and Mount Pleasant’s is 7.3%, according to Census Bureau data. The U.S. poverty rate was just above 10% in 2019, preceding the pandemic.
Madison, with a population of 259,680 but a poverty rate of 16.9%, is expected to get $49.19 million, less than 5% more than Racine. However, per-capita yearly income in Madison is considerably higher than in Racine: $38,285 vs. $22,808, according to the Census.
For similar reasons, Milwaukee (population 594,548) is getting a whopping $405.72 million. That’s almost double what slightly more populous cities usch as Seattle (724,305) and Portland (645,291) are due to receive, $239.02 million and $217.79 million respectively.
“It’s a significant amount of money, but the fact of the matter is for 17 years I’ve been in this job and I’ve been fighting cuts from Madison,” Milwaukee Mayor Tom Barrett said during a briefing last week. “Now for the first time I’ve got the federal government that’s got our back and recognizes the issues we face as a community as diverse as we are.”
State aid has consistently fallen as a percentage of average general revenue for Wisconsin’s municipalities since the mid-1980s, from more than 40% down to about 20%, a 2019 Wisconsin Policy Forum analysis found. As a result, local governments in Wisconsin rely on property taxes more than any other state in the Midwest, with more than 40% of local government revenues coming from property taxes, compared to a U.S. average of 23.3%. Still, sales taxes makes up very little of local government revenue, equaling about 1.3% of totals compared to a U.S. average of 12.8%.
Racine leaders have not stated publicly what they’re aiming to do with the $46.98 million. A spokesman said it will likely be at least another week before any kind of preliminary planning or announcement can be made, since it was only last week that communities found out how much they would be receiving.
The federal dollars can be used to fund water, sewer and broadband infrastructure, but cannot be used to directly or indirectly offset tax reductions, delay a tax increase or be deposited into pension funds.