A quick read-through of the Milwaukee County Executive’s 2023 recommended budget may prompt some to ask why there has been such commotion over the years about a fiscal crisis at the county, or why county leaders have been insisting on the need for a larger sales tax and increased state aid.
That’s because for the third consecutive year, the recommended budget not only avoids major cuts in services and staff, but also makes important new investments in areas like corrections reforms and parks operations, and it even initiates construction of a $127 million state-of-the-art forensic science center to house the county’s medical examiner and emergency management personnel. Moreover, pension and health care costs – which often have been a primary source of financial distress – are reduced by a combined $4.3 million, freeing up resources for other needs.
The budget’s positive vibes also stem from continued strong growth in sales tax revenues – up $8.8 million in the recommended budget – as well as a healthy contribution from the county’s debt service reserve, which heading into this year had a balance of nearly $120 million, more than double the amount it held just five years ago. Perhaps most encouraging is the fact that outside of transit, the recommended budget would again avoid the use of one-time federal aid from the American Rescue Plan Act (ARPA) to prop up operations; instead, those funds are largely being used for one-time needs and investments.
Yet, as is typically the case with Milwaukee County finances, amid the good news there are also signs of ominous future challenges. The main hint that the county’s long-term outlook is far from rosy comes from the Milwaukee County Transit System (MCTS) budget, which is one of the few to see any service reductions and which requires a $21 million infusion from its special ARPA allocation to offset losses in passenger revenue and other budget shortfalls. When those funds are exhausted after 2024, MCTS may face a budget hole of $20 million or more.
In addition, while the capital budget is the largest in recent memory and addresses several important needs, the county’s infrastructure backlog is still immense and growing. Furthermore, as they are forced to engage in a level of borrowing that has been avoided for years, county leaders do so at a time when interest rates are rising, thus driving up the cost of debt payments and the pressure they will exert on other needs.
In the report, we analyze both the promising aspects of a relatively calm recommended budget and the elements that are harbingers of a more precarious future. Our objective is to provide county policymakers and the public with impartial analysis and context as deliberations on the 2023 county budget and its longer-term financial challenges continue in the weeks ahead. Continue reading…