Density and transit in metro Milwaukee

Greater Milwaukee has had a long and contentious debate about public transit, with one common argument against investing in rapid transit being that the region doesn't have the population density to support it. A recent study from the U.S. Census Bureau, however, may be cause for reexamining that contention. It finds Milwaukee among the densest metropolitan areas in the U.S., with greater population density than many of the nation’s most populous metros, including Atlanta, Houston, and Seattle.

In 2010, the Milwaukee metropolitan area – comprised of Milwaukee, Ozaukee, Washington, and Waukesha counties – ranked 15^th in population density among the 102 metro areas in the U.S. with populations over 500,000, with a density of 5,258 persons per square mile. Milwaukee was second only to Chicago among Midwest metros. Notably, the Milwaukee area’s density declined slightly between 2000 and 2010, by 3.6%. This downtick followed a national trend, however, as 33 of the nation’s 50 largest metro areas saw their densities decline during that period. The complete data set can be found here.

Rather than using the traditional method of determining population density, which involves simply dividing total land area by total population, the Census Bureau study used “weighted density,” which averages the densities of each census tract in a metro area while giving each tract a relative weight based on its share of the metro’s total population. Using this methodology, for example, if 75% of a given metro area’s population lives in low-density suburbs, that metro will have a lower weighted density than another metro area of the same size and with the same population where 75% of residents live in medium- or high-density urban neighborhoods.

A frequently-cited example illustrating why researchers are converting to this new method of determining population density is the fact that under the traditional definition, the Los Angeles metro area has a higher density than the New York metro area, which is counterintuitive to anyone who has visited both places. Using weighted density, the New York metro is more than twice as dense as L.A., because the typical New Yorker lives in a denser neighborhood than the typical Angeleno.

While metro Milwaukee is not as dense as New York or Chicago, it is denser than many metro areas considered to have admirable public transit systems, including Seattle and Portland. Milwaukee also is denser than many others that have made recent investments in rapid transit, such as Minneapolis and Phoenix with their relatively new light rail systems, and Cleveland and Kansas City, where bus rapid transit (BRT) systems recently have been developed. 

Rapid transit may come back into Greater Milwaukee’s infrastructure planning at some point in the future. While many factors impact the success of a rapid transit system, we now have a clearer understanding of our population density and how it compares with other metro areas around the country.

The decade of infrastructure?

The Governing Magazine web site recently published a provocative piece declaring the first decade of the 21st century the "decade of infrastructure."

While acknowledging the many infrastructure challenges still facing the United States, the piece argues the past decade was the one in which Americans came to grips with the importance of their roads, bridges and transit systems. It also cites increased use of transit nationally and creative approaches to highway and bridge reconstruction as evidence of an infrastructure epiphany.

Regardless of whether one agrees with this premise from a national perspective, it is interesting to think about it from a regional point of view. Was the past decade the one in which southeast Wisconsin came to grips with its longstanding transportation infrastructure problems?

The answer to that question is in the eye of the beholder, but certainly we can point to the following signs of success:

• After years of controversy, the $810 million Marquette Interchange reconstruction project not only happened, but happened pretty darn well. The project came in on time and on budget, and the disruption associated with it was far less onerous than many had feared.


• Milwaukee gained national attention from its decision to tear down the Park East Freeway and replace it with a ground level boulevard. While the projected economic development benefits have not come close to materializing so far, most would agree the plan has not produced more congestion and otherwise has worked well from a transportation perspective.


• The Sixth Street viaduct project showed that roads and bridges, in addition to connecting commuters between two points, can serve as neighborhood gateways and points of architectural pride. The related Canal Street reconstruction, meanwhile, has been a significant factor in the rebirth of the Menomonee Valley.


• After years of planning for the day when federal funds might be available for high speed rail, Wisconsin was rewarded with a recent $823 million federal pledge to a Milwaukee-Madison rail line. Undoubtedly, there will be plenty of future debate regarding the merits of this project, but it certainly is a sign that our state's political leaders can successfully compete for federal infrastructure dollars.

On other major transportation issues, success is more difficult to define. For example, significant progress was made on planning and building diverse support for the Kenosha-Racine-Milwaukee commuter rail line, but lack of a local funding source has prevented the project from moving forward. Meanwhile, an act of Congress broke a 17-year logjam and divvied up $91 million in federal funds reserved for a Milwaukee transit project, allowing the City of Milwaukee and Milwaukee County to independently pursue downtown streetcars and bus rapid transit, respectively. Still, lack of local funding sources looms as a major obstacle to those projects as well.

Which brings us to perhaps the region's biggest transportation infrastructure failure of the past decade: the inability of elected leaders to agree on a dedicated funding source for the Milwaukee County Transit System. As the Forum has documented in great detail, MCTS' funding problems escalated throughout the decade. Receipt of stimulus dollars to buy new buses has delayed a full-fledged crisis for now, but that crisis is expected to re-emerge within the next three years. While a new regional transit authority proposal from Governor Jim Doyle could solve the problem, its fate remains uncertain.

So, as we begin a new decade, those looking to enhance the region's mass transit infrastructure find themselves asking the same two questions they asked at the beginning of the previous decade and the decade before that: how will we pay for our basic bus service, and how can we even think about new transit options until we solve that fundamental problem first?

The least objectionable of several undesirable options?

The Journal Sentinel's Dan Egan and Larry Sandler did a nice job in Monday's newspaper summarizing the issues surrounding a potential long-term lease of the Milwaukee water utility.

The story aptly captures the overriding concern likely to be associated with the proposal: relinquishing control of a public asset to a profit-driven private entity will result in higher costs for users. That concern is exacerbated by the fact that such control would need to be relinquished for a lengthy period of time - perhaps 75 to 100 years - to make the economics of the deal work.

It is those economics, of course, that have led city policymakers to consider this option, as it is thought that a long-term lease could attract an upfront payment in the range of $500 million. City Comptroller Wally Morics wisely has proposed that, if such a deal were to go forward, those funds would serve as a pseudo-endowment that would produce a significant, ongoing source of revenue to city government, as opposed to a short-term revenue boost.

It is far too early to evaluate whether the water works proposal or the other huge privatization proposal that has been floated for Milwaukee - a long-term lease of General Mitchell International Airport - will be in the best interest of the taxpaying public. But should these proposals reach the point of serious deliberation, then it is critical to keep in mind why they are being contemplated in the first place.

In the case of the city, a key factor is the lack of revenue options available to address its extraordinary expenditure pressures. City officials face a huge increase in the required pension fund contribution resulting from the stock market collapse, annual employee and retiree health care costs that significantly exceed the rate of inflation, and steady or even increased demand for its various services (including, most notably, police and fire). In the meantime, the state revenue streams upon which the city heavily depends are being cut because of state budget woes, and the state has blocked its ability to consider new local revenue options.

In fact, in comparing Milwaukee to 10 other similar-sized cities (as part of a fiscal assessment of city government to be released this summer that will be similar to our recent assessment of county government), the Forum found that Milwaukee essentially is the only one that does not utilize a city-specific sales, income, hotel or food service tax to complement the property tax. Milwaukee officials increasingly have turned to increased fees (e.g. solid waste and snow/ice) as an alternative revenue source, but even that source is limited because of state policy prohibiting service fee revenue from exceeding the direct cost of providing the service and being used to support other aspects of city government.

Few would argue that relinquishing public sector control of critical assets is an optimal approach. But with state funding being cut, property taxes capped, and their hands largely tied on both the fixed cost and new revenue side, it was inevitable that city leaders would have to consider this option.

So, those who are rightly concerned that public-private lease deals could increase costs for users and allow profit motive to outstrip the public good must weigh those concerns against those associated with major cuts in government services and/or major increases in other fees or taxes. Indeed, decisions on privatization may come down to choosing the least objectionable of several undesirable options.

Some call for investment in people, not bricks and bridges

A recent Milwaukee Talkie blog post asked, “Can’t we all get along when it comes to spending stimulus funds?” That post tackled state-vs.-local issues with regard to infrastructure spending, but not everyone is even at the point of agreeing that President-Elect Obama’s forthcoming New Deal-like plan to stimulate the economy by funding infrastructure has the right target.

In articles like “First, Repair the Human Infrastructure,” the head of a community health initiative claims that stimulus funding used to prevent chronic illness would save billions down the line in medical care and disability costs. Similarly, another blog makes a bid for human capital: “Lots of infrastructure is decaying in this country, and that includes the people and systems that comprise our social, educational, health and other kinds of human infrastructure. It isn’t just a matter of bricks and bridges.”

In the article “Don’t Forget the Human Infrastructure,” the Brookings Institute’s Isabel Sawhill presents some pragmatic arguments for making strategic investments in the nonprofit sector, which employs 10 percent of the workforce while providing a safety net for many, but is suffering in the bad economy. She notes that if such "human infrastructure" investments were made, the nonprofit sector would:

· Spend the money quickly and fully
· Employ people with a broad range of skills
· Be able to rely on a network of preexisting institutions
· Have the capacity to spread the dollars widely
· Avoid shrinkage, thus not adding to the ranks of the unemployed.

In Milwaukee, nonprofits are feeling the crunch. A Journal Sentinel article advised the sector: "Now is a time to be wary." The Nonprofit Portal of Milwaukee's most recent online newsletter links to five articles on weathering the economic crisis.

A commenter on a Seattle blog disagrees with Sawhill and others' human infrastructure arguments, cautioning against investing too heavily in recurring costs, “When you finance a building [or a road, bridge or rail line], you’re expecting to be able to use that building for maybe 50 years. You don’t need to build it again next year. . . . When we hire a teacher, however, the cost of their salary will recur each year.”

Others agree that we should be building things, but stress that short-term projects should be emphasized to stimulate the economy more quickly. An L.A. Times article describes how complex infrastructure projects like subways have a long lead time devoted to preparing engineering studies and environmental surveys, which can delay their stimulative effect. Lawrence E. Harris, a USC professor of finance counters, “But lots of tradesmen who know how to build houses can build community buildings, senior citizen centers and early childhood centers, which don’t take a long time.” Despite its emphasis on large infrastructure projects, Obama’s stimulus package is likely to highlight modernizing schools.

At least one women’s group is also concerned about Obama’s plan. Feminist Majority Foundation President Eleanor Smeal expressed alarm that the recovery package will emphasize construction jobs “which notoriously under-represent women workers.” She cautioned, “Although we support a physical infrastructure stimulus package, we believe it must be accompanied with a human infrastructure component that will employ a majority of women workers.”

Evidence abounds that many aspects of physical infrastructure have been neglected for too long in this country, as well as locally in Milwaukee. The number of voices pointing out that other aspects of the country’s “infrastructure” – from education to the nonprofit sector to hurricane protection – also are in disrepair speaks to the myriad challenges facing the new Obama administration. But perhaps no challenge is greater than this: while consensus seems to have emerged that we must stimulate the economy somehow, and while the battle therefore will continue over what sector or project gets the money, in the end we are still spending money we don't really have.

Can't we all get along when it comes to spending stimulus funds?

For years, state and local officials in Wisconsin and across the nation have pleaded with federal officials for more help in addressing their crumbling infrastructure. Now that it appears those pleas may be answered as part of a huge federal stimulus package, disagreement has arisen over who gets to control and spend the money.


State governments received welcome news earlier this month when President-elect Obama told the National Governors Association that the stimulus package he was planning would include substantial allocations to the states for roads, bridges, mass transit and other public works projects. That news, however, was not as well-received by local government officials.


Stateline.org reports the National League of Cities and National Association of Counties have sent a report to the Obama transition team arguing that local governments should receive the bulk of the funds, as they're better equipped than states to spend infrastructure dollars quickly and effectively. Local officials also argue they need more help than state governments because states already are hitting them with recession-induced cuts in state aids.


State officials counter that they're the appropriate recipients given the mechanisms already in place to receive and distribute federal infrastructure allocations. They also contend that states have a bigger picture view of infrastructure needs and can properly allocate stimulus dollars in a manner that will best serve the greatest number of residents.


This national dispute is being replicated in Milwaukee. After Governor Jim Doyle sent a $3.7 billion wish list of infrastructure projects to federal officials, Milwaukee Alderman Bob Bauman criticized the governor for failing to consult with local officials and sacrificing local road and bridge needs for state highway expansion projects. More recently, Milwaukee Mayor Tom Barrett sent his own list of $599 million in infrastructure projects to the president-elect.

So how should this dispute be settled? One interesting idea comes from a University of Maryland professor who suggests a national commission modeled after the federal base closing commission. The commission would review potential stimulus-funded infrastructure projects and provide a list for Congress that would receive an up or down vote in its entirety. That approach certainly has potential to eliminate the intrusion of pork-barrel spending, but could a national commission be fair to localized infrastructure projects, which tend to be far less glamorous than larger state projects?

This is a very difficult issue to referee because both sides have a point. Federal transportation dollars typically are distributed to states precisely because the feds have little interest or capacity to get involved in divvying up dollars to local projects. Also, state government does have an appropriate role to play in funding and coordinating a statewide transportation network that serves residents and businesses beyond local boundaries.

It is this very dynamic, however, that often prevents local transportation needs and wants from being addressed. Projects like the Marquette Interchange always receive priority from state officials because of their statewide importance and the number of people they serve. Such prioritization arguably would be fully justified and acceptable if there were some remaining fiscal capacity to also fund high priority local road and transit projects.

Too often, however, there is not. Furthermore, in Wisconsin, the requirement that the non-federal share of transit projects must be funded at least in part with local dollars is an additional huge impediment. Consequently, localized transportation projects either fall to the local property taxpayer or simply don't get done. The City of Milwaukee's huge local street repair backlog and continued inaction on commuter rail and light rail/bus rapid transit exemplify this dynamic.

Alderman Bauman is right about the need for better consultation between state and local officials, albeit without the hyperbole that typically accompanies transportation discussions in southeast Wisconsin. In light of the certain strife that will occur between the state and local governments when it comes time to cut the state budget, it certainly would be refreshing to see consultation and cooperation regarding how to spend that rare influx of federal transportation dollars.

MillerCoors leases headquarters space in Milwaukee region

One way of looking at MillerCoors' announcement of its new headquarters location is that the company decided to stay in the Milwaukee region after all. Their new headquarters in the West Loop area of downtown Chicago would place them exactly 1 hour and 4 minutes by high-speed rail from downtown Milwaukee. This is currently less time than it takes to drive from downtown Milwaukee to the M7 region's border.

It seems that MillerCoors executives were cognizant of the potential for a high-speed link when they considered possible Chicago locations. It was reported that one of the key reasons for MillerCoors' choice of 250 S. Wacker was that it is was close to public transportation. No doubt, the public transportation they speak of is the proximity to Union Station which is exactly one block west of the new MillerCoors headquarters. Amtrak and Metra both stop at Union Station.

MillerCoors executives might have also become aware of the Amtrak re-authorization bill that President Bush signed into law on Oct. 15th, 2008, which raises the specter of more federal funding for high-speed rail in the Midwest. Assuming the authorization is fully funded in upcoming appropriations bills, Milwaukee could have a high-speed rail connection into downtown Chicago within five years, placing the two city centers 1 hour and 4 minutes apart. This improvement would shave 25 minutes off current Amtrak service and is considerably faster than the average drive-time of 1 hour and 30 minutes between the two cities.

The reduction in Miller's corporate presence will leave a void in Milwaukee. Though not entirely gone, their philanthropic support and the tertiary economic activity that Miller brought to the community will be missed. We should not, however, write off all secondary economic activity from the MillerCoors relocation. Milwaukee, with its cheap housing, amenity-rich downtown and a pending high-speed rail link, would be positioned to gain more than its fair share of investment over the next few years. The Wisconsin Department of Transportation estimates the development potential that occurs as a result of high-speed rail at between $152-$227 million in increased downtown development. In tough budget times, such an increase in tax base would be welcomed by Milwaukee governments.

A high-speed rail link could also foster housing and employment market equilibrium in the Chicago-Milwaukee mega-region. That's a fancy way of saying that Chicagoans would find it easier to migrate north to take advantage of Milwaukee's cheaper housing and Milwaukeeans would find it easier to migrate south to find more lucrative and more plentiful job opportunities. Recent Public Policy Forum research finds that this migration is already taking place with nearly $400 million in net personal income being claimed by new M7 residents who had lived in the Chicago region the previous year. Conceivably, rail improvements linking the two regions would only serve to encourage more Chicago households to make the move north.

In the end, high-speed rail is far from a panacea. The start-up costs are steep and the operation of such service will likely require ongoing public investments. In fact, an M7 economic renaissance may not even require a high-speed train, but it surely will require the recognition that Chicago is our partner in growing a livable mega-region with a diversity of housing, transportation and employment options.

Rail or no rail, Chicago and Milwaukee are cities that are increasingly seen as two parts of one whole. MillerCoors executives understand this. Do we?

Postscript: If the topic of regional transportation improvements piques your interest, sign up to attend the Public Policy Forum's Luncheon on December 4th as we explore the prospect for regional transit. Click here for more details.

When to hold and when to fold public assets

Last week's annual Governmental Research Association (GRA) conference in Boston brought together dozens of government researchers from across the country to toss around ideas and hear about national public policy trends and innovations. Perhaps the most relevant panel discussion to southeast Wisconsin was one entitled "For Sale: Government Assets".

That relevance, of course, is most related to Milwaukee County's ongoing fiscal challenges. County Executive Walker has pledged that privatization proposals will be a key part of his 2009 recommended budget. Furthermore, he has already proposed selling the property that houses the county's mental health complex and leasing a new complex from a private developer, and he has talked openly of wanting to sell or lease Mitchell International Airport.

As these and other proposals are subjected to emotional rhetoric from both sides during the next several weeks, it may be helpful to keep in mind an unemotional litmus test for considering public asset sales developed by John Foote, senior fellow at the Kennedy School of Government, and presented at the GRA conference. Foote's litmus test consists of four key questions:

1. Are there real efficiency gains? In other words, by transferring an asset to the private sector, will the services associated with the asset be delivered better and more cost effectively?


2. Is there a balance between who pays and who benefits? The test here is whether those who may be asked to pay new or higher user fees associated with a privatized asset (e.g. those parking at the airport) benefit from those fees (e.g. airport improvements), or whether instead the proceeds are siphoned off for profit or unrelated functions.


3. Is there a match between the length of the deal and the use of the proceeds? This speaks to the essential and often ignored budgeting tenet that one-time proceeds should not be used to fill short-term budget holes, but should instead be stretched out over the length of a lease deal.


4. Is the public compromised in any way? This question asks whether the sale or lease of a major public asset will impact consideration of other worthwhile public policies. The specific reference made by Foote is to the privatization of the Chicago tollway, which has disrupted efforts to consider system-wide congestion pricing for all of Chicago's major highways.

While this set of criteria may be most applicable to the potential sale or lease of Mitchell International, another panelist, Joseph Aiello of Meridiam Infrastructure, made comments that could be relevant to Milwaukee County's decision on how and whether to build a new mental health complex. He cited three advantages to government's use of private development/ownership for public buildings:

1. When things go wrong with the building - as they inevitably will - the private sector owner is responsible for fixing them.


2. Public construction contracts are awarded based on the lowest construction bid without regard to life-cycle costs (which are heavily impacted by the quality of construction materials and techniques), while private developers/owners must take both initial construction and long-term life cycle costs into account.


3. Private building owners don't skimp on ongoing maintenance, while public sector owners are notorious for doing so in light of pressing programmatic needs.

Finally, the third panelist, Hudson institute vice chairman Joseph Giglio, raised a provocative point about a potential third partner in public-private partnerships for transportation projects: the local business community. Giglio argued that local businesses who benefit from highway, transit or airport construction projects should also be viewed as logical investors in such projects who can help make the financing work and create another level of oversight to ensure proper return on investment.

In all, food for thought as Milwaukee County struggles with some major decisions on its financial future.

Milwaukee has 46th worst traffic congestion in US

According to the National Traffic Scorecard, the Milwaukee region's traffic congestion ranks us 46th among the nation's cities. The national average travel time index is 1.13, meaning a trip takes 13% longer than if there were no congestion. Milwaukee's travel time index is better than the national average at 1.08, which means a trip around here takes 8% longer than if there were no congestion. This is up 1.4% from last year for our region.

The neat thing about the scorecard is that the travel time index is computed for each hour in the day. Can you guess when Milwaukee is most congested? Between 5 and 6 pm on Fridays, of course, like about everywhere else in the nation.

The scorecard also ranks the nation's worst bottlenecks. Our worst, US45 southbound at Highway 100, ranks 1,530th nationally and is congested 16 hours per week with an average travel speed of 19 miles per hour when congested.

The good news? We have only 4% of the total congestion of the worst city, Los Angeles. (LA's travel time index is 1.45.)

Free WiFi fini in Philly

The company that created Philadelphia's citywide WiFi network announced last week that it will begin to dismantle it starting June 12. This comes after the company, Earthlink, declared last fall that they would no longer be in the municipal wireless network business, as it wasn't fiscally feasible. (Last month Earthlink pulled out from a partnership with the City of New Orleans after failing to find a buyer for the network.)

The City of Philadelphia and Earthlink attempted to turn over the network to a non-profit, but those efforts haven't panned out. On the assumption they won't, Earthlink has asked a federal court to rule that next month it can retake possession of its network equipment, which currently provides WiFi coverage over 75% of Philadelphia.

All in all, providing free municipal WiFi coverage seems to be a bad business model, as Milwaukee Talkie noted previously. There haven't been many rumblings about citywide WiFi in Milwaukee lately, since our own partnership with Midwest Fiber Networks fell apart last summer, . . . is this idea finished here, as well?

Hat tip: Governing's 13th Floor

How green is my alley?

This summer the City of Milwaukee Comptroller's office found that the replacement cycle for the city's streets and alleys was several years longer than their predicted useful life. For alleys, the replacement cycle was found to be 272 years, or 4.5 times the useful life of an alley. The response from the Mayor was to hasten the replacement cycle, which garnered general agreement and support.

Interestingly, the New York Times reported this week that the City of Chicago is also focused on replacing alleys:

Chicago has decided to retrofit its alleys with environmentally sustainable road-building materials under its Green Alley initiative, something experts say is among the most ambitious public street makeover plans in the country. In a larger sense, the city is rethinking the way it paves things.

This initiative was prompted by the fact that its hundreds of miles of aging alleys needed replacement. Says Janet Attarian, the project's director, “The question is, if you have to resurface an alley anyway, can you make it do more for you?”

Chicago has found that the answer is yes. They will now pave all alleys in such a way as to filter rainwater, reduce run-off, and recharge groundwater, while reducing heat retention in the summer and reflecting heat in the winter. The cost? About the same as traditional paving, divided between materials (porous concrete) and labor (creating a stone filtration layer).

Milwaukee would be smart to consider making a similar investment in its alley infrastructure. Things to investigate: Would the cost of porous paving be more than traditional paving? Would the maintenance costs differ significantly? Would the useful life spans differ significantly? If the answers to all these questions are "no," green alleys could be a feasible option for our city, as well.

The Infrastructure-Police Tug of War

Sunday’s expose in the Milwaukee Journal Sentinel on city police overtime raised questions about management choices over the past couple of years. But a bigger picture of shifting priorities emerges when the analysis spans the longer term. Over the past several decades, the police department has gobbled an ever-increasing piece of the city’s financial pie.

Mayor Barrett’s proposed 2008 budget calls for $575 million in spending on general city purposes. Most of the money will go to the police ($217 million) and fire ($97 million) departments. Compare that to 60 years ago, when police accounted for less than 20% of city spending and nearly half went to public works, largely to develop and maintain the city’s infrastructure. Put another way, public works spending was well over double police spending in 1947; today we spend twice as much on police as on public works.

Obviously many factors help explain this dramatic change. What’s constant over the years is that about three-quarters of city tax money supports just three functions of municipal government: police, fire and public works. In the long run, the police department has dominated, infrastructure gets a smaller piece of the pie, and the relentless trend raises a red flag about the city’s long-term capacity to provide for the infrastructure that underlies economic growth.

PPF Viewpoint luncheon: Infrastructure

Cracked

Infrastructure makes the world go round.
Are our roads, bridges, sewers, dams, transit systems, utilities, etc. being ignored, endangering our ability to compete? What needs to happen to make sure southeastern Wisconsin is ready for the 21st century?

Panel:
John Goetter, chairman, American Society of Civil Engineers-Wisconsin Section
committee on Wisconsin infrastructure report card
Marc Levine, director, UWM Center for Economic Development
W. Martin "Wally" Morics, comptroller, City of Milwaukee

Wednesday, September 26, 2007
11:45 – 1:30
Italian Community Center
Festa Hall
631 East Chicago Street
Milwaukee’s Historic Third Ward

Reserve your place now by clicking here

Changes or cancellations will be accepted until Monday, September 24.
No refunds will be given after that date.

The road replacement blues

Today's story in the Milwaukee Journal-Sentinel on Milwaukee's inability to properly budget for city street resurfacing brings up one major issue: In the Mayor's quest to rectify the situation (i.e. reduce the replacement cycle for side-streets from 163 years to 60 years), where is the money going to come from?

You can bet that it won't come from the city's general fund. Crime is the issue of the day and I can guess where any spare property tax dollars will flow.

A more likely scenario is for the city to try to persuade the state to grant more aid for street repair. Currently, over half of the city's budget for street, alley and sidewalk reconstruction and maintenance comes from state and federal aid (see page 129 of the city budget, here). The problem with the city trying to hit up the state for more street repair dollars is that the state may have problems of its own in raising revenue in the near future. There are a few trends that need to be highlighted.

First, we are driving less. The theory is that since gas costs more these days, folks have cut back on driving (see below chart).

While that's good for the environment, that's bad for the state budget since the state gets revenue from a tax on gasoline. Also, we are not buying as many SUVs. Again, this is good for the environment, but bad for gas tax revenue. There is nothing like a gas-guzzling vehicle to produce a revenue windfall for government. That windfall will likely abate as we enter the hybrid car era. See the below chart to note the recent tapering in fuel tax collections.


Lastly, the legislature recently repealed the automatic indexing of the gas tax - a policy that increased the gas tax on an annual basis without any vote or debate. Some would call this taxation without representation, others would call this an effective revenue enhancer. The non-partisan Legislative Audit Bureau has said the following about the repeal of the gas tax:

"In the fiscal estimates for the bill, the Department of Revenue and the Department of Transportation estimated a loss to the Transportation Fund of $5.1 million for the portion of Fiscal Year 2007 affected by the bill, with reductions of $26.0 million for FY 2008 and $41.9 million for FY 2009."

In other words, Wisconsinites can count on less and less money from the gas tax in the coming years. Sure, the city may still try to hit up the state for funds to repair it's crumbling infrastructure, but the data suggest that this strategy won't pay unless the state raises taxes or everyone buys an SUV as their next car. Pick your poison.

Warning: Wi-Fi woes wane not

According to today's Wall Street Journal, Milwaukee isn't the only city that's Wi-Fi experiences aren't living up to their expectations.

Minor issues range from cost overruns due to coverage problems to concerns about Wi-Fi equipment emitting too much radiation.

The main problem, says the WSJ story, is that the original business model no longer works:

"The Wi-Fi companies envisioned being able to offer subscription service to consumers at rates that were significantly cheaper than phone and cable broadband. But the unexpectedly high costs of building Wi-Fi networks -- the price tag can easily run into the tens of millions for a big city -- coupled with lower prices for broadband from some phone companies, has made it tougher for consumer Wi-Fi to be competitive."

An article in Business Week yesterday cites a different, but related factor: weak demand, which was noted as a problem here in Milwaukee.

"...[I]nitial forecasts for Wi-Fi subscriptions used to justify the investment in these networks have proven to be overly optimistic by a wide margin. In many cases, 15% to 30% of an area's population was expected to sign up for muni Wi-Fi. But only 1% to 2% have signed up so far figures Glenn Fleishman, editor of an industry blog called Wifinetnews.com."

In many cases, Wi-Fi companies are now seeking to renegotiate their contracts, wanting the municipal government to sign on as a customer in order to guarantee a revenue stream. The Business Week story quotes a Wi-Fi executive as saying, "There's no one that I am aware of right now who'd build a network without the city as a paying customer. The days of a service provider coming in without a city commitment are over."

That makes Milwaukee's failed contract with Midwest Fiber Networks look less like an opportunity for a better deal down the road and more like a sure bet that the city will be hit up for big bucks by whichever "white knight" provider rides into town. Knowing that it's coming, Milwaukee would be smart to conduct its own market study of the potential for paid subscribers outside city government, in order to be on a level playing field during contract negotiations.

UPDATE: The Journal Sentinel covers the issue in a Sept. 2, 2007 article.

Milwaukee, the bedroom community

Governor Doyle's proposed biennial budget calls for additional spending to grow Milwaukee's economy. Undoubtedly, this spending package will face intense pressure from out-state legislators looking to secure goodies of their own. Can't blame them for that, really.

But according to a recent blog post by Neal Peirce, one of our nation’s foremost writers on metro issues, our second-tier cities (for those of you still living in 1950's Milwaukee, I hate to break the bad news, but our fair city is now decidedly "second-tier" in the pantheon of large US cities) are entirely justified in seeking "more generous state aid for hard-pressed city governments" based on new research by The Brookings Institution.

According to Mr. Peirce, more state investment in a city like Milwaukee is warranted by Milwaukee's proximity to Chicago. Basically, Chicago has stifling traffic congestion, high housing costs, and a seemingly unsustainable and sprawling land-use pattern. Milwaukee, by extension, would be the next logical place to accommodate Chicago's growth. Milwaukee has the existing infrastructure, a large and growing immigrant labor force, a solid existing housing stock, and attractive quality of life amenities.

In other words, invest in Milwaukee to help it become Chicago's newest, largest, and most economically diverse bedroom community.

The Brookings report and Mr. Peirce's commentary should please supporters of both the proposed KRM train line and Gov. Doyle's spending plan for Milwaukee.

Then again, do we really want Milwaukee to become Chicago's newest bedroom community? Let's save that topic for another post.