Newsletter

4/1/21

1st Quarter 2021 Presidents Message

By Rob Henken

When I first learned of the dollar amounts that will flow to Wisconsin’s local governments and school districts from the new American Rescue Plan, I felt like I was in the “Bizarro” episode from the Seinfeld show. That’s the one where Jerry and his friends feel like they’re in an alternate universe in which everything is the opposite of what it once was.

My Bizarro feeling stems from 22 years of largely depressing experience analyzing or formulating local government budgets in metro Milwaukee. During that time, the opening question for any discussions on Milwaukee County, city of Milwaukee, or Milwaukee Public Schools budgets has been: “Where are they going to have to cut?” But now, with hundreds of millions of unanticipated federal dollars flowing into the coffers of all three governments, the question has shockingly become: “Where are they going to spend?”

Of course, before local officials and citizens get too giddy, some perspective is in order. First, substantial portions of the new federal aid will be needed to plug holes from plummeting tax, fee, and license revenues that are unlikely to fully rebound for quite some time; and to pay for the millions of dollars of unbudgeted pandemic-related costs that will continue to linger into the future.

Nevertheless, the dollar amounts – including more than $400 million for the city of Milwaukee and $180 million for Milwaukee County – are staggering and will provide considerable capacity for those and many other local governments and school districts to re-invest in long-neglected needs and shore up longstanding financial trouble spots.

Over the next several months, the Wisconsin Policy Forum will take on this new role of analyzing how local governments and school districts plan to spend instead of where they need to cut. In doing so, we’ll be keeping a handful of important principles in mind, including the following:

  • Local governments should seek to identify where their constituents are suffering or have great need as a consequence of the pandemic and its economic shock waves and invest in emergency services and one-time programs that can effectively address those needs. They generally should not use the dollars to initiate ongoing programs and services that are not “emergency” in nature and that will be difficult to sustain once the dollars are exhausted.
  • Local governments should seek to identify critical capital needs, maintenance backlogs, or potentially unsustainable debt levels and use the federal funds to wipe those off their books, thus improving their fiscal outlook for the future. They generally should not be using the new dollars to plug pre-existing holes in operating budgets given the temporary nature of the dollars, or to initiate new capital projects that will need to be supported by unaffordable operating budget obligations going forward.
  • Local governments should seek to re-invest in technology, vehicles, equipment, or service-sharing efforts that will enhance the efficiency of capital-intensive functions and possibly save money down the road (e.g. purchases of electric buses or modernized public safety dispatch technology). They should not see the one-time funds as a silver bullet that will allow them to permanently retain fragmented and inefficient service models and set aside service sharing and functional consolidation opportunities with neighboring communities.

We’re just starting to formulate ideas for local government and school district fiscal analysis for the coming months and we would love to receive input from our members. Please feel free to send an email or give us a call if you have thoughts on how the Forum can inform citizens and provide objective guidance to policymakers as they seek to maximize the golden opportunity provided by the American Rescue Plan.