The Forum's top five research findings of 2011

With the end of the year upon us, it’s time once again for the Forum to unveil its top five research findings of 2011. We started this annual tradition last year with a list that included findings on Milwaukee's skilled workforce, Milwaukee Area Technical College spending habits, and the imbalanced state of Milwaukee County's adult mental health system. This year's list is equally diverse and provocative (or so we hope). Without further ado, here they are in chronological order:

1. Greater Milwaukeeans need to be better educated about how their individual actions impact regional water quality. Our January report detailing results of a survey of 400 area residents on water-related issues revealed that nearly 85% feel "the actions of individuals do not have an impact on water quality and quantity problems," while only 4% feel they "have a responsibility to future generations to protect the region’s water resources." Those responses may be linked to the survey's additional finding that respondents place a relatively low value on water quality as a factor in the regional economy, and suggest that stepped up public education efforts are in order, particularly if the region's status as a freshwater innovator is to be promoted.


2. MMSD's capital spending needs are daunting and may conflict with the capital needs of other local governments. Our comprehensive fiscal assessment of the Metropolitan Milwaukee Sewerage District (MMSD) - released in June - found a local governmental body that is in sound fiscal condition. Nevertheless, despite the completion of deep tunnel expenditures and expiration of stipulation agreements with federal and state regulators, "the types of enormous capital investments that distinguish MMSD from other local governments...may need to continue because fundamental water pollution problems remain." We caution that in light of their enormity, MMSD’s capital priorities may need to be debated in the context of the investment needs faced by other local governments for schools, parks, roads, libraries, etc.


3. Milwaukee County was housing or paying for an average of 556 fewer adult and juvenile inmates per day at the end of 2010 than it was at the end of 2008. In a June research brief, we documented the remarkable decline in the county's inmate population and speculated on possible causes. We also calculated related financial savings, estimating the county spent $12 million less on adult and juvenile incarceration in 2010 than it did two years earlier. The brief noted that while some county law enforcement officials disagreed on the public safety impacts of reduced inmate populations, the county's fiscal woes demanded consideration of strategies to sustain the downward trends.


4. Analysis of the budgets of 15 comparable cities shows Milwaukee is the only one funded substantially with intergovernmental revenue. While the Forum has consistently reported on Milwaukee's significant reliance on state government, even we were surprised at the extent of that reliance when compared to other cities. A July report by the Forum's 2010-11 Norman N. Gill fellow found that the 15 comparison cities use intergovernmental revenue to fund about 18% of their budgets, as compared to Milwaukee's 46%. Meanwhile, at least half of every other city’s budget is funded by local tax revenue, with most having access to a local sales or income tax to supplement property tax funding.


5. Strategic economic development planning is a national trend that has not yet taken hold in Milwaukee. "Assembling the Parts," our November report on Milwaukee's economic development landscape, noted that while impressive progress has been made by city and private sector leaders to assemble the right pieces of a comprehensive economic development strategy, the city still could benefit from a strategic vision and plan that ties those pieces together into a "cohesive and strategically organized whole." We cited the existence of such plans in other cities and discussed a new "metropolitan business planning" concept engineered by the Brookings Institute that could provide great value to Milwaukee.

With 20 research reports in 2011, it was not easy for us to narrow down our list of top findings to five. Left off the list this year were important findings related to the readiness of area child care providers for the state's new quality ratings system; the impacts of the state budget repair bill on Milwaukee's city and county budgets; the views of area residents on municipal shared services and consolidation; and the potential for greater collaboration in technology transfer among local universities. Those interested in reviewing those and other findings can check out our full list of research publications here.

New survey shows mixed feelings on water issues

A new survey of nearly 400 residents of the Milwaukee, Kinnickinnic, and Menomonee River watersheds shows opinions are mixed on the role of government and the impacts of individual actions on protecting the region’s water resources.

The survey, designed and analyzed by the Public Policy Forum and commissioned by 1000 Friends of Wisconsin, also shows that citizens rank “the quality of water in the inland lakes, rivers, and streams in southeastern Wisconsin” an average of 3.3 on a scale of 1 to 5 (with 1 representing “extremely poor” and 5 representing “excellent”), and that sewer overflows and flooding are considered to be the top two water problems for the region during the next decade.

Respondents also view many government actions to protect water resources as at least somewhat effective, but split on whether the best governing body for water resource management is the state or a regional water district.

The most striking finding is that, in general, most respondents feel that the actions of individuals are not likely to have a big impact on water conservation or water quality. Yet, when asked about specific actions individuals might take in these areas, most are seen as being at least somewhat effective. In addition, when asked about their own actions, most respondents indicate they have taken action, or would be willing to do so, to protect the region's water resources.

A complete analysis of the survey can be found on the Forum's website.

The survey was funded by the Wisconsin Coastal Management Program and The Joyce Foundation of Chicago, with additional support from the Southeastern Wisconsin Watersheds Trust, Inc. and American Rivers. The Research Brief was underwritten by Badger Meter.

Water utility deal moves forward in Indy

Interesting news out of Indianapolis, where Mayor Greg Ballard has announced plans to move forward with a sale of the city's water and sewer utilities. The deal reportedly would net the city an upfront payment of $425 million, which it would use to address significant infrastructure needs. The new owner - a public charitable trust called the Citizens Energy Group - also would assume about $1.5 billion of debt from the two utilities.

Here in Milwaukee, the prospect of leasing the city's water utility was first raised by the city comptroller in 2008 as a potential strategy to help offset dwindling state aids and maintain existing services (see the Forum's August 2009 report for more information on the city's long-term fiscal predicament). A proposal to explore the idea was shot down by the common council, however, after significant opposition arose from environmentalists, city labor unions and others.

Indianapolis' proposed deal differs from the concept discussed in Milwaukee in several key aspects. Perhaps most important, the potential buyer is a non-profit entity that was created by civic leaders to provide gas, steam and chilled water to citizens without a profit motive. Citizens Energy Group's assets are owned by Marion County residents - suggesting important public oversight capability - though it is administered by a board of directors that is not accountable to voters.

The concept floated in Milwaukee, on the other hand, likely would have involved a private, for-profit entity. That entity would have entered into a long-term lease agreement to operate the water utility, as opposed to assuming ownership.

In addition, one of the key benefits cited by proponents of the deal in Indianapolis is the opportunity to consolidate water and sewer operations, which they say will reduce operating costs and save money on large-scale construction projects. Here in Milwaukee, sewer operations are governed by the Metropolitan Milwaukee Sewerage District, which privatized the bulk of its operations in the 1990's.

Whether the proposed deal in Indianapolis encourages Milwaukee officials to take another look at a potential lease of its water utility certainly is dubious given the strong reaction evoked by the comptroller's recent trial balloon.

Providing more food for thought, however, is the most recent The People Speak poll, conducted by the Forum in partnership with UWM's Center for Urban Initiatives and Research and The Business Journal Serving Greater Milwaukee. The poll found that 40% of respondents in the four-county metro area agreed with the notion of leasing the water utility as a means of helping address the city's budget problems, while 51% disagreed. In a much smaller sample size of City of Milwaukee residents, the margins were 39% for and 56% against.

Certainly, there's no groundswell of support for the concept at this time, but it's also not attracting the type of overwhelming opposition that might justify refusal even to explore the idea, particularly when other potential revenue enhancements or service cuts are put on the table for comparison.

The People Speak: Citizens' views on water issues

The winter 2010 People Speak Poll, conducted in conjunction with the Center for Urban Initiatives and Research at UWM and The Business Journal Serving Greater Milwaukee, focuses on water issues including quality, quantity, governance, and economic development.

The People Speak is a tracking poll conducted at regular intervals throughout the year. Its purpose is to gather information from local citizens about their interests in, preferences for, and concerns about public policy. By gathering and reporting these citizens' perspectives, the partners hope to expand the public voice in policy matters affecting greater Milwaukee.

Highlights from the February 2010 poll of 429 residents in Milwaukee, Waukesha, Washington and Ozaukee counties include:

• Solid support for efforts to use the region's fresh water resources as an economic development tool.


• Concern for water quality in Lake Michigan, but confidence in the quality of local drinking water.


• Consensus on the need for and importance of water conservation in general, but not a tendency to conserve water on a household level.


• Moderate to strong support for allowing the City of Waukesha to access water from Lake Michigan, as long as the water is returned to the Great Lakes basin.


• Preference for regional water governance, rather than leaving it up to municipalities or the state.

In addition, the February findings on a more general set of public policy issues mirrored the September poll results in these ways:

• Evenly split opinions on whether to pursue high speed rail and commuter rail and whether to implement toll roads.


• Weak support for increased user fees or sales taxes to provide property tax relief.


• Weak support for a mayoral takeover of Milwaukee Public Schools.

The February poll also revealed growing sentiment that jobs are the most important issue facing the region, growing pessimism regarding the direction of the United States government, and virtually no support for using sales tax dollars to pay for a new arena for the Milwaukee Bucks.

For full results, go to the poll website.

Conference casts Wisconsin as uniquely engaged with water issues

Last week’s “Water and People” conference presented by the Marquette University Law School underscored the importance of water to Wisconsin in terms of a natural resource, an economic development driver, and a commodity to be regulated and potentially traded. Numerous speakers described Wisconsin residents as being far ahead of other areas in understanding water’s importance and influence on quality of life.

Where water issues intersect with policy issues, Wisconsin’s abundance of water was identified as both a positive and a negative. Having so much water, which is priced relatively cheaply, may discourage some from realizing the need for conservation, taxes, regulatory policies, and relative equity in water distribution. This contrasts with public debates about oil and other energy sources, where scarcity and high prices generate concerned consumers, interest in conservation, and a multitude of regulations. Dr. Jame Schaefer, a professor of theology at Marquette University, did caution against viewing water as a commodity or resource, however, stressing that it has intrinsic worth beyond its usefulness.

As Wisconsin positions itself to emerge as a leader in freshwater technologies, the division between environmental concerns and economic development was identified by some conference panelists as a false dichotomy. Art Harrington, a partner at the Godfrey and Kahn law firm, said that a main challenge is not necessarily having regulations, but uncertainty about what regulations will be. He called for clear guidance from government on what water policy will be 15 years in the future, since certainty contributes to economic opportunity and investment.

Despite the codification of many water use policies in the Great Lakes Compact, some water issues are still up for debate. Maureen Taylor, Executive Director of the Michigan Welfare Rights Organization, cast water as a human rights issue, noting that 42,000 Detroit households had their water shut off in one year. The conference also explored questions such as: Who should have access to water and to whom does water belong? Who should pay for water and how should it be priced? As southeast Wisconsin moves forward in conservation, regulation, and entrepreneurship, we have the potential to break new ground in answering these questions within the context of their environmental, economic and ethical implications.

Stay tuned for the results of the Forum's latest People Speak Poll, conducted in conjunction with the Center for Urban Initiatives and Research at UW-Milwaukee and The Business Journal, which probes public opinion on various water issues in the region. The poll results will be released in The Business Journal on March 12.

The art of selling tap water

In a bid to solve some of the city's budget woes, a proposal was floated last fall to privatize the city water works. Opponents of the idea noted that privatization would likely mean higher costs to water users, which in turn caused the common council to consider keeping the water works and just raising prices themselves. They are currently studying their options. But how will they convince city water users that the higher price is worth it?

According to Governing Magazine's blog, many cities are now marketing their tap water, although not necessarily to justify higher prices. New York and San Francisco market tap water as a means to reduce bottled water consumption and "green" their cities.

But over in Europe, Venice, like Milwaukee, is struggling with budget problems. Without streets, garbage collection in Venice is quite costly, so the city is aiming to reduce bottled water usage, and the amount of garbage collected, by promoting tap water. Venetian water has been branded "Acqua Veritas," complete with fancy logo and promotional appearances by the city's mayor.

Could "L'eau Milwaukee" be the next hip drink? Imagine the advertisements covering every bus shelter: "Tom Barrett drinks Milwaukee tap water, do you?"

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.

Regional identity could help Great Lakes cities leverage their assets

We’ve all heard of the brain drain—that powerful vacuum sucking all of the college-educated young professionals out of cities like Milwaukee. More recent reporting suggests that many who leave later return to the Milwaukee area. What do these returned brain drainers like myself have to say about their beloved but struggling Midwestern cities? Detroit’s Sarah Szurpicki and Abby Wilson of Pittsburgh have the answer. After stints in New York City and South Africa, the duo returned to their hometowns to co-found GLUE (Great Lakes Urban Exchange), an organization seeking to bolster regional identity among older industrial cities.

GLUE just completed its second annual conference in Milwaukee, featuring an inspirational mix of post-boomer urbanites from rust-belt cities like Buffalo and Cleveland sharing ideas about urban renewal, the green economy, sustainability, transit, community journalism and more. Following tours of the Growing Power urban farm, Menomonee Valley’s sustainable redevelopment, and the Great Lakes Water Institute, I’m still on a high from hearing so many people call Milwaukee a beautiful and impressive city. One participant from St. Louis commented, only partially joking, that he was now deciding between Paris and Milwaukee for his honeymoon.

If that didn’t warm my Milwaukee-loving heart enough, there was also serious information about how the Midwest can leverage its assets to compete in the post-industrial economy (covered locally here and here). Conference speaker Richard Longworth, senior fellow at the Chicago Council on Global Affairs, first laid out some bad news: the Midwest has in some ways lost its embrace of change and its former knack for innovation and creativity. Moreover, independent-minded Midwesterners are not accustomed to working across borders to create regional, shared solutions. No Midwestern university teaches even one course on the Midwest. Fragmented efforts, such as the fact that each state has its own separate bioscience organization, lead to duplication and competition. Longworth didn’t mince words. “The good news is this era is so new. The bad news,” he said, “is that so much of the Midwest is already behind.”

The advantages that Great Lakes cities share include having existing infrastructure and appealing street grids, a density that can support development, an intense work ethic, access to bioscience raw materials, and, of course, plentiful fresh water. Opportunities exist if the region plays its cards right, in industries of the future such as clean water technology, bioscience, nanotechnology, green industry, and transit.

But how can the Midwest and its Great Lakes cities maximize assets? Multiple speakers at the GLUE conference stressed the need for regional planning and geographic unity (as did this recent local editorial), what Longworth characterized as a need for a Midwestern Marshall Plan. Tom Wolfe of the Northeast Midwest Institute described how sustainability should be a principle criterion for the distribution of federal dollars. Kate Rube of Smart Growth America showed how current zoning and land growth laws need to be revised because they often make “smart growth” sustainable development illegal. John Austin of the New Economy Institute highlighted affirmative, targeted immigration policies as a promising strategy for bringing innovation back to the Midwest, an especially important approach for Midwestern cities that are losing population.

The winds of change blowing off the lake appear to suggest that Great Lakes cities would do well to adopt an open attitude toward regionalism, the new green economy, and the feedback of young professionals who are reversing the brain drain in their post-industrial Midwestern cities and beginning to speak with a unified voice through organizations like Great Lakes Urban Exchange.

Water solution in Brown County. Really?

Recently, the Business Journal ran an article highlighting a just-completed 65-mile, $80 million pipeline that delivers fresh Lake Michigan water to the suburbs of Brown County from Manitowoc, WI. In the article, the Business Journal states that "what happened in Brown County could serve as a prototype for southeast Wisconsin," implying that the Milwaukee region could learn something from Brown County in addressing the water demand in its suburban communities.

Based on previous reporting in the Milwaukee Journal Sentinel (JS), this implication is puzzling. The JS article reports that instead of utilizing the existing City of Green Bay pipeline, an entirely separate pipeline had to be constructed because negotiations broke down between the city and its suburbs.

How can the construction of redundant infrastructure - two parallel pipelines stretching from Lake Michigan to Brown County) - be good public policy?

In addition to the apparent fiscal inefficiencies of the Manitowoc/Brown County pipeline, this project may have also cost the Green Bay region a chance at building regional trust, goodwill and cooperation. So state the major players in the pipeline negotiations...

From the suburbs: "Think of the old days, when people fought over water out West. Those days are still here. It just boggles the mind that you can't get people to cooperate on something as basic as water."

From the city: "This was a failure of business, a failure of government, a failure of the media. A failure by everybody. We're taking $20 million to $100 million out of the Brown County economy . . . for no other reason than we can't get along."

From the suburbs: "We all went into this with the idea that we had a regional problem and we were going to come out of this with a regional solution. Unfortunately, it didn't work out that way."

From the city: "It (the pipeline) puts a dollar figure on urban-suburban hate."

These statements from those close to the negotiations question whether this $80 expenditure should be hailed as a prototype for regional cooperation.

It looks as though the Milwaukee Common Council may have been following this debate closely, as they have decided, instead, to negotiate with their thirsty suburban neighbors. Here's hoping these negotiations don't also end up placing a dollar figure on urban-suburban hate. I'll drink to that.