City of Milwaukee finances: between a rock and a hard place

Milwaukee's mayor has labeled the city's 2010 budget "by far the most difficult" he has faced in 25 years of public service, while the majority of its common council already has supported a proposal for sharply higher user fees. Meanwhile, the independently elected comptroller has proposed exploring a politically volatile lease of the city's water utility as a strategy for addressing the city's worsening fiscal challenges.

So how bad is the city's fiscal condition? Are its challenges solely the byproduct of economic recession, or do they reflect a more fundamental structural imbalance that has been building over time? Can they be met with short-term solutions designed to “ride out the storm” until the economy recovers, or do they require radical fiscal and programmatic change?

Those are the questions the Public Policy Forum seeks to answer in its latest report: "City of Milwaukee's Fiscal Condition: Between a Rock and a Hard Place", which can be accessed by clicking here.

Using the same respected fiscal monitoring system employed for a similar report on Milwaukee County government earlier this year, we examine fiscal trends, compare Milwaukee with similar-sized cities, analyze the root cause of problems and discuss potential solutions.

What we find is a city government on the precipice of serious fiscal and programmatic disorder. While still maintaining outstanding bond ratings, a comparatively well-funded pension system and healthy reserves, the city's revenue streams have exhausted their capacity to support its expenditure needs. We also find that this reality is not solely the consequence of economic recession, but one that has been building for more than a decade despite the efforts of city leaders to manage it.

The city is now where Milwaukee County was six or seven years ago – on the threshold of major fiscal imbalance and in need of far-reaching solutions. Whatever actions are decided upon must involve both city and state officials and must be of the size and scope needed to truly address the city’s fiscal challenges. Otherwise, as we argue in the report, the city will be unable to avoid several successive years of deciding between police or potholes.