Tuesday, March 24, 2009

Milwaukee County's fiscal condition: crisis on the horizon?

It has been almost three years since Milwaukee County Executive Scott Walker launched a “reality tour” to warn citizens about county government’s deteriorating financial situation, and the Milwaukee Journal Sentinel followed up with a multi-part investigative series detailing the fiscal crisis. So what has happened since that time, and is the prognosis today any better?

Those are the questions the Forum seeks to answer in its comprehensive assessment of the fiscal condition of Milwaukee County government, commissioned by the Greater Milwaukee Committee and released today. The basis of our analysis is the Financial Trend Monitoring System of the International City/County Management Association (ICMA). First developed in the 1980’s, this analytical methodology is routinely used by municipalities and counties to assess fiscal health.

What we find is a government that, on the surface, appears to be in reasonable fiscal shape: revenues and expenditures have grown steadily; budgets have balanced, at least since 2004; cash position and fund balance have improved.

Yet, a closer look reveals a more complex and alarming picture – even before the current economic downturn – that has grown worse with each successive year, and that may now be so severe that radical solutions are required.

The full report, which can be accessed here, not only assesses the county's existing condition, but also details the strategies it has utilized to balance budgets during the past five years. We conclude that while those strategies have staved off crisis so far, they leave the county with few options to address the challenges of the next five years, which will be at least equally arduous.

We also conclude that year-to-year budget balancing is no longer a tenable strategy. Instead, what is needed is a comprehensive approach that considers all alternatives, from implementing new or enhanced local revenue sources; to eliminating, transferring or outsourcing programs and services that are not essential to the county's core mission and that could be performed just as well by others; to selling or leasing assets to generate capital as a means of paying down liabilities or re-investing in other assets that must be retained.

The report is intended not to set off another round of finger-pointing, but to provide county policymakers and civic leaders with baseline information that can serve as the factual underpinning for discussion of strategies to address the fiscal challenges facing Milwaukee County government. Despite inevitable disagreement about the nature of those strategies, there should be no disagreement over the need for comprehensive action now.

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