1st Quarter 2020 President’s Message

By Rob Henken

In a speech in early February to the Milwaukee Rotary Club, Milwaukee Mayor Tom Barrett highlighted the Forum’s dire warnings about the city’s fiscal condition and jokingly referred to me as a “buzzkill.”

I didn’t consider that to be an insult, nor did the Mayor intend it to be. Rather, he was underscoring the role we proudly play as “adult in the room” when it comes to assessing the financial condition of critical public sector entities.

Now we find our world – and our economy — upended by the COVID-19 crisis. But long before it started, we were warning about the need for state and local governments to plan for unexpected fiscal shocks because the good times would not last forever.

For example, we have cautioned Milwaukee County policymakers several times in recent years about dipping too deeply into their Debt Service Reserve; and advised City of Milwaukee officials that their once robust Tax Stabilization Fund is shrinking.

And, when analyzing the status of state government’s reserves last October, our research director, Jason Stein, wrote:

Clearly, fiscal 2019 was one of the state’s best years in decades. However, some other very strong years, including 2000, were followed by recessions and difficult state budgets. The state’s current financial strength and its past challenges are both worth remembering as officials chart Wisconsin’s fiscal path moving forward.

The Forum obviously had no idea that a global financial crisis of epic proportions was on the near-term horizon. That said, we have been reviewing government finances for many years. We have seen how quickly a government’s fiscal fortunes can head south.

While not saying “I told you so,” we do hope our repeated warnings have contributed to more cautionary fiscal decision-making that will provide at least some cushion for the state and Milwaukee’s largest governments in the difficult weeks ahead. And we’re also hoping that policymakers will pay even more attention in the future to our analyses of their financial strengths and weaknesses and reserve levels.

Of course, playing this role can be a lonely task. For example, we typically describe a wide range of policy options when discussing potential responses to vexing fiscal problems so policymakers and citizens can understand the full range of choices. Yet, that doesn’t stop groups and individuals who don’t like certain options from lashing out at us as if we were advocating for the solution they oppose.

We have also received criticism for acting like callous bean counters when we have warned policymakers to control growing pension and retiree health care liabilities; and as irresponsible big spenders when we have suggested that a balanced mix of spending cuts and revenue increases often is the best tonic for structural budget gaps.

But perhaps the most common fiscal admonishment we have made to government leaders as the economy has improved in recent years is one we think rings true now. It is the need to exercise caution in spending down growing reserves and to otherwise take steps to prepare for the proverbial rainy day.

While we’re in work-from-home mode for the foreseeable future, we will be doing more than ever to produce content that will provide insight and context on the impacts of the COVID-19 crisis on state and local government and school district finances and the state’s economy. On behalf of the entire Forum team, we hope you and your loved ones are staying healthy and safe and we urge you to reach out if we can answer any questions or be of any service to our valued members and supporters.