June 5, 2023

What They’re Saying: “State leaders need to take last critical steps to avert fiscal cliff for Milwaukee”
GMC & Milwaukee Business Leaders Extend Support for Enabling Mechanism as Journal Sentinel Report Outlines Grim Future for Milwaukee County Without a Fiscal Fix

MILWAUKEE, WI – As leaders in Madison continue to discuss local revenue reform and helping Milwaukee County avoid a fiscal cliff in just a few short years, the Journal Sentinel this morning outlined the real-world impacts for residents if Milwaukee County meets a fiscal cliff. 

The piece highlights the short timeline ahead before Milwaukee County’s fiscal cliff begins to threaten critical services for residents: 

“By 2025, Milwaukee County transit will be grappling with a nearly $26 million budget deficit annually. By 2028, it’s predicted to be more than $40 million. MCTS has already been facing challenges with deferred maintenance and delayed capital purchases. This transit financial cliff will see an estimated 20% cut in services — nearly one-half of all routes in the system — for Milwaukee residents.

“The fiscal challenges have also meant deferring maintenance to buildings, roads and replacement projects. Today, county officials estimate the cost of addressing the backlog has reached more than $1 billion. Come 2026, the county’s capital plan anticipates the replacement of the Public Safety Building would begin, contingent on funding. That project in total is expected to exceed $400 million, according to county officials.

“County officials project that without permanent solutions — and whatever interim solutions remain — the annual structural gap would continue to grow in the coming years, reaching about $109 million by 2028. […] The $109 million figure would be 35% of the 2023 tax levy, a revenue source that does not grow as quickly as the projected costs. Over the coming years, officials anticipate such a funding gap could require a cut of 1/3 of the county's staff — or about 1,300 people from the nearly 4,000 positions in 2023.”

Over the last decade, Milwaukee County has implemented significant reforms to address the County’s budget crisis, including: 

• Decreasing staffing from about 7,300 full-time positions in 2000 to fewer than 4,000 this year. 
• Implementing pension reforms require employee contributions, saving $17 million annually. 
• Reducing the county's footprint by about 3 million square feet, saving $9 million (not including land sales)
• Finding opportunities to earn revenue as growing budgetary pressures reduce available tax levy dollars and overwhelms the county’s limited borrowing capacity. The Parks Department’s budget includes over $22 million in earned revenue, representing more than half of their operating budget and far exceeding revenue generated from comparable parks systems nationwide
• Due to financial pressures diverting resources to address growing pension obligations, the County has deferred capital investment in buildings, road repairs, and replacement projects to reduce levy impacts. The result is a capital infrastructure backlog that is over $1 billion in total deferred maintenance. 

Despite major cuts and efficiencies to close a $340 million budget gap, Milwaukee County faces an annual structural deficit of $109 million by 2028. Growing pension costs currently consume one-third of the local levy, while costs for local and state services are increasing nearly three times as fast as local revenues.

Further reforms supported by additional revenue are essential to prevent dramatic impacts on critical services including public safety. A partnership with the state would enable Milwaukee County to pursue the next phase of local reforms.

The short timeline to avert potential disaster and the scale of the problem ahead prompted Greater Milwaukee Committee leadership and Milwaukee business leaders to write an opinion editorial imploring state leaders to enact a .5% sales tax in Milwaukee County to protect essential services and allow the tax to be enabled via a County Board vote rather than alternative means: 

“We also believe the final bill should enable the local sales tax to be enacted through approval by the Milwaukee County Board and executive, Milwaukee Common Council and mayor rather than through a binding referendum. Over the last 40 years, nearly 95% of Wisconsin counties have instituted a local sales tax. In each case, that was accomplished through actions by their board and executive or administrator. Milwaukee should be treated no differently as we take on these unprecedented challenges. Local elected officials in the City of Milwaukee and Milwaukee County should undertake a rigorous debate and then vote on these issues in their legislative bodies. As soon as next Spring, voters will be able to judge these leaders’ actions to help bring Milwaukee back from the brink of financial ruin. We will support them, and we are confident their constituents will as well."

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