Thursday, October 11, 2012

County's finances on the upswing, but big hurdles remain

The Public Policy Forum released its annual review of the Milwaukee County Executive's recommended budget today, and the tone is decidedly more upbeat than in previous years. Because of a smaller (but still substantial) budget gap heading into the year, and thanks to an unexpected $13 million 2011 surplus, this year's county budget is the least difficult in years.  As we point out in our report, multi-year efforts to manage the county's health care benefits and limit long-term borrowing are paying off, though pressing long-term problems remain.

A focus of this year's budget brief is whether the county executive and his budget team seized the opportunity provided by the convergence of these positive circumstances to make continued progress on long-term structural problems, or simply viewed the 2013 budget as a one-year blueprint. We find that, on the whole, the budget responsibly addresses both short-term and long-term issues, though it also leaves the county short on reserves and long on infrastructure repair needs.

Commendable efforts to address immediate fiscal needs include a clean-up of outdated revenue projections in the Behavioral Health Division and Parks budgets; the use of some of the 2011 surplus to cash finance infrastructure repairs; and investments in long-neglected areas of administrative infrastructure, including human resources and information technology.  We also cite the budget's clear priorities when it comes to budget-cutting - which contrasts positively from the across-the-board approach used in many previous years - and the absence of rosy revenue projections and short-term fixes.

The report also cites concerns, however, about the methodologies used to justify big changes to the sheriff's budget, and raises questions about the long-term feasibility of continued cuts in health care benefits and a decision to spend the balance in the county's Debt Service Reserve.

We conclude that, overall, the recommended budget "should be seen as one that proposes several foundational steps that allow the county to continue its path toward financial stability.  Nevertheless, the county's stagnant revenue streams, continued fringe benefits burden, immense infrastructure needs and lack of reserves - combined with the still tenuous legal standing of its recent pension and health care changes - suggest that years of heavy lifting yet will be required before its journey is complete."

The 2013 Milwaukee County Executive Budget Brief can be accessed here.  Our review of the mayor's proposed 2013 budget for the City of Milwaukee will be released early next week.


2 comments:

capper said...

Who funded this study? And where is the disclaimer about PPF receiving funding from the Greater Milwaukee Committee, which Abele is a member of, and Abele's personal philanthropy agency, Argosy.

Rob Henken said...

The Forum's annual analyses of the Milwaukee County and City of Milwaukee budgets are funded out of our general operating revenues and do not have a sponsor. We have been preparing similar analyses for decades. In preparing this year's Milwaukee County analysis, we focused on the same questions as in previous years, as we explained in a 2011 newsletter:

•Does the budget define and adhere to structural balance between revenues and expenditures?
•Does the budget include an appropriate rainy day fund or similar mechanism?
•Does the budget contain strategies to address long-term liabilities?
•Does the budget adhere to recognized debt management policies and practices?
•Does the budget convey appropriate financial information to policymakers and the public?
•Does the budget lay out strategic goals and/or objectives for the coming year, and are those goals accompanied by performance measurements?

Finally, I would add that a disclaimer regarding the Greater Milwaukee Committee or the Argosy Foundation is unnecessary because neither entity has anything to do with the funding of these analyses, nor do they provide any general funding to support our operations other than their membership dues (we have more than 250 dues-paying members). The Forum always cites the funders of our research when our research reports have a specific funding source.