Milwaukee's Finances Have Improved, But Red Flags on the Horizon

Sep 19, 2016

Last week, Governor Walker floated his proposal for the future of the state’s transportation budget. The plan includes a two-year delay on the Zoo Interchange work and no additional taxes. It’s just the beginning to the biennial budget cycle.

As is always the case, local governments will be looking closely at the Governor’s overall proposed budget as they plan for the future. As the process gets underway, the Milwaukee-based Public Policy Forum released an analysis of the City of Milwaukee’s financial condition, and puts it into context with a similar analysis done in 2009. 

"Improvement doesn't mean great outlook. It essentially means, back to the point where they can get by."

"Without question... we find a city government that is in much better condition than it was seven years ago," says Rob Henken, president of the forum. "They have effectively managed their way through the depths of the recession, dealing with issues like a huge spike in the pension obligation, a foreclosure crisis. The fact that city leaders have been able to do that without depleting their reserves, without unnecessarily putting off infrastructure repairs, and other things that you'd look for that you'd hope not to see, is certainly a 'good news' story." 

But he warns that this news has to put into the right context. "Improvement doesn't mean great outlook. It essentially means, back to the point where they can get by," says Henken. "I think one of the questions we're posing in this report is: is that good enough?" 

The analysis comes at a time when city officials are considering new expenditures on the police department, which Henken says has already been "chewing up" any extra money the city has had in the budget. This could put a strain on other city departments, which have already been working on a "status quo" budget, without any major increases. 

"[The city's] revenue growth does not equate to meeting new needs or new investments. It's essentially just enough to try to get by from year to year," he says. 

Henken says that right now the city's revenue structure is broken, in part because it relies on state funding, which has been frozen for years. While the Public Policy Forum doesn't offer specific solutions, it does warn that the current situation is putting too much pressure on property taxes, and suggests the city find other sources of revenue. 

"What city government doesn't have is any ability to generate revenue from the visitors and the commuters, and the consumers of city services who are coming and spending their money," says Henken.