Newsletter

10/1/21

3rd Quarter 2021 Presidents Message

By Rob Henken

This fall will mark the 10th consecutive year that the Forum has produced annual reviews of both the Milwaukee County and City of Milwaukee proposed budgets. In each of those years, there has been one certainty: given the fierce financial challenges facing both governments, a primary focus would be which programs and positions the mayor and county executive were proposing to cut.

As the Forum dives into the 2022 budgets for the county and city, it is shockingly refreshing to now prepare to analyze the opposite paradigm: on which new or expanded programs do they propose to spend?

Before going any further, it is important to emphasize that the structural difficulties facing these governments have not disappeared. Indeed, for the city in particular — which faces a huge spike in its employer pension payment in 2023 — they are likely to resurface with a vengeance within the next two to three years.

However, the opportunity to allocate hundreds of millions of dollars of federal funds from the American Rescue Plan Act (ARPA) this fall provides a welcome and temporary reprieve. That, in turn, will shift the Forum’s focus to analyzing the extent to which city and county leaders propose to spend these monies prudently and effectively.

For example, will leaders from both governments maximize this unique opportunity to address longstanding needs and ameliorate fiscal challenges in future budgets? Or will they instead use them to initiate permanent new programs and services that will be impossible to sustain after the federal dollars have been exhausted?

Of course, the correct answer may lie somewhere in the middle. There is a real imperative for city and county officials to use substantial chunks of the federal relief funds to address the needs of residents who have been hammered by the pandemic and to plug revenue holes that have been created by it. But ideally, any such expenditures would be accompanied by a plan for reducing or eliminating them once the pandemic subsides and certain key revenue streams recover.

The two governments must also abide by the federal rules for such expenditures. For example, neither the city nor county can use the federal relief funds for paying down their unfunded pension liabilities despite the fiscal benefits that might bring.

Nevertheless, there are several viable options for using these funds that hold potential to benefit citizens and improve the long-term fiscal fortunes of both governments. Examples include:

  • Cash-financed investments in backlogged critical infrastructure projects, such as those pertaining to roadways, parks, and buildings, which will both address important community needs and avert future debt payments.
  • One-time or limited-term investments in projects to address social determinants of health – like new affordable housing, mass transit improvements, and workforce development programs – that will improve the well-being of vulnerable citizens, alleviate the need for future health and human services spending, and potentially boost the local economy.
  • Investments in technology and infrastructure to enhance violence prevention activities, substance use disorder programming, and mental health crisis response, which could generate better public health outcomes and reduce law enforcement costs over the long term.

Given the many competing demands that already have surfaced for use of the federal relief dollars, debates on how to spend them may turn out to be just as contentious as the more familiar recent budget fights on issues like transit route cuts, local wheel taxes, and fire station closures.

And that’s where the Forum will seek to add value. In the past, our budget briefs have centered not only on the impacts of proposed cuts or new taxes or fees, but also on the deep structural challenges that made such proposals necessary. In much the same way, we will analyze the proposed use of ARPA dollars with an eye toward explaining both the immediate impact on the 2022 budget as well as the longer-term implications for taxpayers and future budgets.

We’ll be publishing our 2022 Milwaukee County and City of Milwaukee budget briefs – as well as a similar report on the City of Madison budget – by mid-October. Those products will be followed by others in the months ahead as local governments and school districts across Wisconsin make far-reaching decisions that will merit our impartial analysis and scrutiny.

So stay tuned and, as always, don’t hesitate to contact us with any questions or feedback!