2nd Quarter 2023 President’s Message

By Rob Henken

One of the most disturbing elements of our nation’s increasingly polarized politics is the labeling of compromise as a characteristic of weakness, as opposed to one of effective government in reconciling views of a divided electorate. That’s why it was such a pleasant and reassuring surprise when state and local Republicans and Democrats worked out a deal in Madison that averted a fiscal meltdown for Milwaukee’s two largest local governments and showed that the art of compromise hasn’t been abandoned.

The Forum has been a significant player in this issue. As far back as 2009, we issued a report warning that city government in Milwaukee was “on the precipice of serious fiscal and programmatic disorder.” Since that time, our annual city budget briefs have tracked the short-term fixes that have staved off severe service cuts while noting that those fixes were not sustainable.

Similarly, in a 2010 report, we alerted the community that Milwaukee County’s “finances are crumbling and that valued services like parks, transit, mental health, and public safety face severe degradation without prompt and concerted action.” Our annual county budget briefs have analyzed and largely praised several important actions taken to improve the county’s fiscal condition in the years following, but we also have warned of a “seemingly insurmountable” capital repair and replacement backlog and impending fiscal cliffs for parks and transit.

While explaining the severity, causes, and potential consequences of the two governments’ fiscal challenges over the years, we have stayed true to our mission of not advocating for specific legislative solutions. However, we have not shied away from analyzing the policy options available to improve the finances of both governments, with our most detailed work covering their revenue structures and pension liabilities.

So how do we view the ultimate package that emerged from negotiations in Madison? Again, while I must adhere to our policy of not opining on specific legislation, it is important to note that willingness to accept “compromise” applies to the Forum in this case, just as it does to most local and state policymakers.

Indeed, there are certainly aspects of the package that we find troubling – such as the intrusion into local control, which is a principle we have generally supported based on the differing policy needs and challenges of diverse communities in Wisconsin. That principle arguably has been superseded by provisions in the package that would prohibit the city and county from pursuing diversity, equity, and inclusion initiatives, as well as future investments in The Hop streetcar and locally-desired police and fire staffing levels.

A key objective we have noted repeatedly in discussing the pros and cons of a local sales tax is the opportunity to recalibrate the city’s revenue mix by adding a tax that would be paid in part by commuters and visitors while lessening the city’s reliability on sources derived solely from residents.  Given that the package failed to include any property tax relief, the latter element was not as strong as it might have been.

On the positive side, however, the legislation delivers true pension reform along the lines of our previous suggestions by beginning the closeout of the city and county pension plans (converting new employees to the state retirement system) and requiring an aggressive pay-down of pension liabilities. And, most important, it fixes the broken revenue structures of both governments by adding a local option sales taxes to the mix and providing for increases and ongoing growth in shared revenue payments from the state.

Yes, the sausage-making in this case was not pretty and there are elements of the Milwaukee package that many will abhor. Some aspects of local finance will also remain daunting, including ensuring that Milwaukee County’s transit system and capital projects backlog are properly dealt with in the coming years. And in order for shared revenue increases to be funded and distributed to local governments, it remains incumbent on lawmakers and Gov. Tony Evers to reach accord on the full state budget.

But legislative gridlock was averted and, if all provisions of the package are implemented, then the financial outlooks for Milwaukee’s city and county governments will be more optimistic than they have been in decades. That’s monumental and a rare encouraging sign that big public policy problems can be resolved if our leaders are willing to agree on facts and give up something for the greater good.