A troubled outlook for Milwaukee's city and county budgets

While the news of a potential $3 billion deficit for the state’s next biennial budget sent shockwaves throughout the State capitol, perhaps no group of people were shuddering more than county and municipal budget officials. Facing their worst budgets in years and highly dependent upon the generosity of the state, this challenged group of individuals must now face the reality that this year’s nightmares are likely to grow worse.

The Public Policy Forum recently released its analyses of the 2009 Milwaukee County and City of Milwaukee budgets, and a common theme is the devastating impact of stagnant state aids on the structural condition of each. Other points of commonality are the growing employee compensation costs faced by both governments, which the city budget document deems “unsustainable”; and growing debt service costs, which are forcing both to limit new debt issuance despite huge backlogs in infrastructure maintenance and repair.

Our analyses also found several differences between the two, both in overall fiscal condition and approach. For example, the city began its 2009 budget season with a $45 million tax stabilization fund and an over-funded pension fund. The county, in contrast, possessed only a $3 million debt service reserve and a $400 million unfunded pension liability.

Also, while the city has quantified and openly discussed its structural imbalance and articulated some strategies for addressing it, county leaders remain locked in ideological disputes over privatization and taxes and seem unable to agree on even the nature and depth of their fiscal problems.

A note of warning: our analyses make for some pretty depressing reading. Even more depressing, however, would be inattention by policymakers to their findings.