Wednesday, January 27, 2010
Thursday, January 14, 2010
The Forum has done a considerable amount of work over the past two years analyzing the fiscal health of the city and county of Milwaukee. Our research has caused us to be concerned about the ability of local governments to continue to provide the same breadth and quality of core services, given the magnitude of their structural deficits. The bottom line is that these governments may soon be at the point where the only way to get into balance is to stop providing certain services.
As drastic as that sounds, in reality this scenario already may be occurring. In Madison, for example, the lack of an updated downtown economic development plan has caused the business community to step in and conduct the planning itself. The city's failure to plan is not the result of a lack of willingness to do it. In fact, the city has budgeted $70,000 for the planning process. According to the Capitol Times, the city simply has been unable to create the plan because the Department of Planning & Development is stretched too thin and has had to prioritize other activities.
Citizens of Madison must now decide whether they are troubled by this or not. Is city planning an essential city service or could it be done in the private sector? Budget constraints have forced the issue, but a re-evaluation of the most realistic level of services that citizens and taxpayers should expect is probably a good idea. In fact, the Forum is urging policymakers, citizens, taxpayers and others in Milwaukee to conduct that very debate. If our county or city government's balance sheets cannot be righted without giving up some services, what are we willing to give up? How large or small of a government can we sustain?
A very detailed analysis of this issue with regard to county government will be released at a members only event on Jan. 27. Stay tuned.
Tuesday, January 12, 2010
Governor Doyle has not been shy about his desire to see the mayor of Milwaukee governing the Milwaukee Public School (MPS) district as part of an effort to make Wisconsin more competitive for new federal K-12 education dollars. The dollars at stake, called the "Race to the Top Fund," will not automatically go to every state, but will be disbursed to selected states based on their promise to fulfill certain criteria.
While the desirability of chasing after these funds has been controversial in Wisconsin, we're not the only ones debating major education reform policies as a result of the Race to the Top challenge. This week's Education Week highlights some of the policies being considered in other states:
- Several states are responding with policies that would tie teacher pay to student performance. Maine's governor has proposed allowing student achievement data to be considered in teacher evaluations, as have Michigan's and Tennessee's governors.
- Many states are focusing on increasing the number of charter schools, or in the case of Alabama, enabling charter school operations for the first time.
- The strategy that seems to be garnering the most attention from the states is "turning around" low-performing schools via state intervention. In Michigan, a newly signed law allows the state to take over low-performing schools or districts and place them under the direction of a "reform officer." In New York, proposed legislation also empowers the state to intervene in the lowest-performing schools, by authorizing new management under private educational management organizations. Tennessee's governor has proposed allowing the state to take over "chronically" underperforming schools.
Tuesday, January 5, 2010
While many state and local budget officials undoubtedly were thrilled to see 2009 come to a close, two recent national news articles indicate the outlook for 2010 and beyond isn't much rosier.
The first, from the Wall Street Journal, cites a 7% decline in local and state tax collections in the third quarter of last year and warns that despite indications of economic recovery, the worst may be yet to come for state and local government budgets.
The article notes that rebounds in state and local tax revenues tend to lag upturns in the general economy by several months because tax collections trail increases in store sales and incomes. In addition, while the economic downturn already has produced significant hits to state and local income and sales tax collections, the impact of falling property values has not been fully felt on property tax collections. The bottom line, according to an expert with the Brookings Institution, is that local governments "will be working through the catastrophic drops in revenue for the next 18 months to two years."
Meanwhile, the second article, from the Washington Post, puts a damper on the notion that federal assistance might continue to be a significant source of relief. The Post article cites increasing support from the Obama administration and members of Congress for a new commission to tackle the skyrocketing federal budget deficit. The bipartisan commission would have broad power to recommend both spending cuts and tax increases. Its recommendations would be presented to Congress as an unamendable "take it or leave it" package, thus increasing the odds of passage.
Prospects both for the formation of a new commission and for its ability to agree on a major deficit-reduction strategy are uncertain. What is more certain, however, is that the escalating federal debt no longer can be ignored by the administration and Congress, which spells bad news for state and local policymakers who have relied heavily on stimulus funds and other federal dollars to help alleviate budget pain during the past year.
So what does this mean for state, county and municipal officials in Wisconsin? It means that the fundamental problems that have created persistent and growing structural deficits at the state, Milwaukee County and City of Milwaukee will not magically disappear and must be the subject of equally persistent focus in 2010.
Simply put, the programs, services and spending commitments currently in place at those levels of government cannot be supported by their existing revenue streams. As the Pew Center on the States recently reported, efforts to paper over this reality at the state level with questionable short-term budget tactics have run their course. And, as the Forum has found, the same holds true for Milwaukee County, while the City of Milwaukee is on the verge of needing to revert to similar tactics or face major cuts in core services.
Hopefully, policymakers at all levels will resolve this year to honestly discuss what it costs to provide the government services that are desired by citizens and required by law, and whether the government structures and revenue sources currently in place are the best way to administer and pay for those services. Such a resolution also should include a pledge to provide specifics regarding which programs and services should be cut if increased revenues aren't part of the answer, and just how much new revenue is needed from taxpayers if expenditure cuts are not a big part of the equation.
Whether 2010 will be the year that elected officials openly confront their unpleasant budget realities is questionable given the November elections for governor and many legislative seats. Then again, could there ever be a better time to put these issues on the table and demand that candidates responsibly address them?