City of Racine’s Fiscal Condition

Living Within its Means

April 2018


Video Summary

Our latest research finds that as the Greater Racine region prepares for the arrival of Foxconn, its largest city faces a set of difficult financial obstacles. While the City of Racine’s finances are well-managed and its short-term financial outlook is stable, our analysis shows that several successive years of mounting fiscal challenges are taking their toll.

Key findings:

  • Cash solvency is an area of strength, as the City maintains a healthy and growing General Fund balance and enjoys strong liquidity. Those strengths provide some flexibility to address longer-term pressures and show Racine currently is at little risk of short-term crisis.
  • Budget solvency has been a longstanding challenge for the City and remains difficult. Growth in the City’s General Fund revenues has been anemic, which has contributed to position reductions and placed significant pressure on departmental operations.
  • Long-term solvency is an area of great concern. Racine faces growing retiree health costs and its $18 million in annual debt service costs will be difficult to reduce in light of its capital needs. Those factors — combined with stagnant revenue growth — provide City leaders with little future capacity to address other inflationary cost pressures or respond to increased service demands from Foxconn and related development.
  • Service solvency, particularly in the areas of public works and parks/recreation, has declined over the past decade. While the impacts have not been severe nor fully visible to residents, City officials warn of invisible costs, such as the need for expensive street repairs caused by reduction of routine maintenance.