Public Policy Forum Blog

A Few Words of Caution Related to the City of Milwaukee’s 2016 Adopted Budget

The City of Milwaukee Common Council recently approved the City’s 2016 Budget with a number of amendments to the Mayor’s originally proposed budget. The Mayor has approved all amendments proposed by the Council with the exception of the proposal to transfer the Small Business Development Program to the City Clerk’s Office. The Council will vote on that veto next week.

Most of the adopted amendments that require additional spending are offset through prudent fiscal measures such as reducing funding in other areas of the budget, responsibly adjusting revenue assumptions, and/or enhancing assumptions of savings from vacant positions. For instance, one of the amendments funds 20 additional police officers by eliminating funding for a police captain, securing additional grant funding, and modestly increasing assumed savings recognized from turnover and vacancies. This type of maneuvering responsibly offsets additions made to the budget.

A few amendments, however, rely on questionable financial practices to offset added expenditures. These include amendments that increase transfers from the parking fund, rely on grants that have not been secured, or fail to specify offsets at all. For instance, a new heroin and opiate victim advocate will be funded through a potential grant and vacancy savings, and the cost of a new safety coordinator will be offset through an increased transfer from the parking fund. Seven community service officers also will be offset through an increase in the parking fund transfer. Another amendment includes $150,000 to create a $1 lot program open to all City residents to purchase city-owned lots and $10,000 to provide forgivable loans to build single-family residences. This amendment does not include an offsetting funding source.

In our 2016 City of Milwaukee Budget Brief, we noted that the use of parking fund transfers will have to be scaled back in future years to ensure the fund’s viability. If the fund transfer is reduced in future years, then the City will have to find other offsets to ensure the sustainability of these amendments. Also, relying on a grant that has not yet been secured and adding sizeable operating expenditures without corresponding offsets are debatable practices that could exacerbate future budget challenges.

These concerns - while mild in the overall scope of the budget - are compounded by the constrained nature of the City’s revenue sources and the likely increase in health care expenditures the City will face in future years. We have stated that City leaders have responsibly managed their budget challenges despite limited resources, and the amendments in question do not necessarily alter that assessment. However, given those challenges, extra attention and care should be given to new expenditure proposals that rely on uncertain revenue sources.

Author: 
Mike Gavin