Public Policy Forum Blog

A Familiar Set of Issues Marks Next Year's Budget

If there is one thing you can count on pertaining to the City of Milwaukee’s annual proposed budget, it’s this: all things being equal, you’re going to get a fiscally responsible budget that preserves key services and addresses pressing infrastructure needs. Yet, because of the City's limited financial capacity, you're unlikely to see bold and expensive new initiatives.

That's essentially the case for the Mayor's 2017 proposed budget. In the Forum's annual budget brief – released this morning – we focus on six keys to understanding the budget, two of which point to the pair of overriding challenges discussed in the Forum’s review of the City’s fiscal condition, Making Ends Meet: stagnant intergovernmental revenue, which leads to heavy reliance on City property taxes and fees; and Milwaukee Police Department (MPD) cost-to-continue expenditure pressures, which cause MPD to be the major beneficiary of any increase in annual spending.

Intergovernmental revenue grows slightly (0.9%) in the 2017 proposed budget, but the largest component – State shared revenue – is flat, as it has been for years. To keep up with the City's expenditure pressures, the budget again leans on property taxes and charges for services, the former seeing an increase of 2.75%, and the latter seeing an increase of $1.2 million (when adjusting for an accounting change in the proposed budget).

We point out that while this has been an ongoing trend, it does not mean the City is placing an unusually large tax burden on residents. According to the City Comptroller’s Comparative Revenue and Expenditure Report, the City’s per capita local taxes actually are the lowest among a list of 10 comparable cities. It's also in the middle of the pack in terms of per capita charges for services. The key is that other cities supplement their use of property taxes and fees with local sales or income taxes – options Milwaukee does not possess under State law.

With regard to Police spending, the proposed budget includes an additional $25 million for MPD, including $23 million for salaries. This reflects new labor agreements with Police unions, which contain both retroactive pay increases and increases for 2017.

The amount of new money is a bit misleading, as funds had been appropriated in a Wages Supplemental Fund (WSF) in previous budgets in anticipation of the agreements; for 2017 that fund decreases by $17.6 million in the proposed budget. Also, Police union members now are required to pay into their pensions, which reduces net expenditures for the employee retirement system. Nevertheless, as we document in the budget brief, the need to accommodate MPD salary increases and operational needs continues to chew up most of the City's increased spending capacity in 2017.

Other keys we analyze in this year's City budget brief include what the City is doing in terms of infrastructure, debt management, and neighborhood development. The full brief can be accessed here and our media release here.

Any questions or comments contact Ben Juarez at bjuarez@publicpolicyforum.org or tweet us at @ppfmilwaukee.

Author: 
Ben Juarez