July 27, 2015 – A state appeals court has upheld a City of Milwaukee ordinance that requires city employees to be residents of the city, rejecting claims that the city’s ordinance is trumped by a state law, enacted in 2013, that abolished local residency requirements for workers as a matter of “statewide concern.”
Wis. Stat. section 66.0502 says that local governments cannot require, as a condition of employment, “that any employee or prospective employee reside within any jurisdictional unit.” Under the statute, law enforcement, fire, and emergency personnel can still be required to live within 15 miles of the “jurisdictional boundary.”
But Milwaukee’s ordinance, more than 75 years old, says that all city employees must live within the city limits, and the common council directed city officials to keep enforcing the residency rule after the statewide prohibition on employee residency requirements took effect (reportedly, the city later agreed in court not to enforce the rule pending the lawsuit and hundreds of city workers now live outside Milwaukee).
The Milwaukee County Circuit Court pointed to section 66.0502 in striking Milwaukee’s ordinance, a request by Milwaukee police and firefighter unions. The city appealed, arguing that its residency rule should not be trumped by the state law.
In Milwaukee Police Association v. City of Milwaukee, 2014AP400 (July 21, 2015), a three-judge appeals panel for District I upheld Milwaukee’s residency rule, concluding that Milwaukee can use its “home rule” authority on the issue of employee residency.
It’s a Local Matter
Under the Wisconsin Constitution, local governments have “home rule” authority to enact local ordinances, but they must not conflict with state laws “of statewide concern” that apply uniformly to all local governmental units in Wisconsin.
The Wisconsin Legislature, through section 66.0502, specifically declares that “public employee residency requirements are a matter of statewide concern.”
However, the three-judge appeals court panel noted that “such pronouncements are not controlling, and it is the judiciary that has been charged with the ultimate determination of what is a matter of statewide concern.”
“The argument that residency requirements are a matter of statewide concern simply because the legislature said so is not persuasive because it is unsubstantiated,” wrote Judge Patricia Curley for the three-judge panel, noting that Milwaukee can keep enforcing the residency rule.
While noting that courts give great weight to the legislature, the panel said there were no facts to support the conclusion that section 66.0502 relates to a matter of statewide concern.
“The facts in the record, exemplified by the Legislative Fiscal Bureau paper, make clear that the goal of Wis. Stat. § 66.0502 was to target the City of Milwaukee,” Judge Curley wrote.
Wisconsin’s nonpartisan Legislative Fiscal Bureau, which provides fiscal information to the Wisconsin legislature, released a paper prior to passage of the law, outlining the likely impact on Milwaukee’s local economy and budgets if the residency rule were abolished.
The paper suggested that abolishing the residency rule would trigger an exodus of workers with higher salaries, negatively impacting home values and other aspects of the local economy. The paper noted the economic decline of Detroit following a state law that lifted residency requirements there, and population declines after Minneapolis lifted its residency requirement.
The bureau’s analysis targets Milwaukee but does not analyze impacts on other municipalities, the panel noted, which undermines the legislature’s pronouncement that residency requirements for local employees are matters of statewide concern.
The panel also rejected the claim that the legislature can legislate on issues of public safety and welfare, and the residency requirement impacts safety and welfare.
“The problem with the Police Association’s argument, however, is that no evidence in the record allows us to conclude that § 66.0502 was drafted with the public’s health, safety, or welfare in mind,” Judge Curley wrote. “Instead, the sole reason we can delineate for the statute’s existence is the gutting of Milwaukee’s long-standing residency requirement.
“We cannot conclude that such a measure involves the health, safety, or welfare of the people of Wisconsin in any demonstrable way,” Judge Curley continued.
The circuit court determined that the legislature has an interest in “protecting public employees against unfairly restrictive employment conditions,” but the panel rejected that conclusion:
“It is well known that residency restrictions imposed upon municipal employees as a continuing condition of their public employment have been upheld by numerous courts. Such residency restrictions have been held to be rationally related to legitimate governmental purposes.”
The panel was persuaded by the city’s “local concern” argument because a residency rule prohibition would significantly impact Milwaukee’s local economy and tax base, and could impact emergency response times by law enforcement and firefighters.
“The imminent decimation of the tax base and neighborhood make-up of the largest city in our state should concern every Wisconsin citizen, but the issue is most acutely a local one,” Judge Curley wrote. “In this regard, § 66.0502 involves a matter of local concern.”
The panel also ruled that § 66.0502 does not uniformly apply to all local governments across the state, because it will disproportionately impact the City of Milwaukee.
“[T]he notion that a statute purporting to gut the tax bases and compromise neighborhood integrity of all municipalities would pass both houses of the legislature defies logic,” Judge Curley wrote. “Regardless of what the statute’s language says, the facts in the record make clear that only one city – Milwaukee – will be deeply and broadly affected.”
Judge Joan Kessler wrote a concurring opinion, joined by Judge Kitty Brennan. Kessler joined Judge Curley’s majority opinion, but wrote separately to point out the additional fiscal impacts that a residency rule prohibition could have exclusively on Milwaukee.
For instance, Judge Kessler noted a report from an outside consulting firm, SB Friedman, predicting that 60 percent of Milwaukee employees would become nonresidents, and local retail businesses would lose almost $55 million annually.
The report projected that Milwaukee’s tax base would lose $649 million based on lower residential land and retail property values.
“A loss of $649 million from the Milwaukee tax base will obviously directly impact Milwaukee’s ability to pay for necessary infrastructure, services, and wages,” Judge Kessler wrote. “There is no evidence in the record that any other municipality would likely be similarly affected.”