Here & Now

Jason Stein on Budget Headwinds Facing Milwaukee

Frederica Freyberg:
The economic engine of the state is looking at a whopping county government budget shortfall. Milwaukee County leaders project a $50 million deficit next year, and a nearly $170 million shortfall in five years. That’s if measures to cut costs aren’t taken. What is happening? We turn to Jason Stein, president of the Wisconsin Policy Forum, and thanks for being here.

Jason Stein:
My pleasure. Thank you.

Frederica Freyberg:
So what is happening? I thought that the shared rev deal and new county sales tax was supposed to make things okay.

Jason Stein:
Right. So you’re referring to a 2023 law that provided both new sales tax authority to the county, as well as additional state aid. And those were helpful. I mean, the sales tax revenue is going to be nearly $90 million projected for 2027. So without that money, that $50 million shortfall is even larger. But at the same time, that deal also imposed new costs on the county to, you know, shift to the state pension system, which is a good long-term fix but is challenging in the short term. And then additional law enforcement costs and other costs. So it was very helpful, but it didn’t change the fact that the county has a structural imbalance between how fast its revenues are growing and how fast its expenses are growing. And you see that showing up in this budget shortfall.

Frederica Freyberg:
So I understand that 75% of the county’s budget is mandated state services, some of which you just spoke to, including court operation and highway patrols. So what goes? The quality-of-life things like parks and pools.

Jason Stein:
Absolutely. And, you know, there are a number of also discretionary challenges that the county has. The county also has its transit program, which is facing a big challenge in 2027 because it’s finally exhausted the federal pandemic aid, which stuck around a little bit longer for transit operations than other parts of government. So that’s a challenge. It has a county courthouse that it needs to replace. That’s nearly a half a $1 billion project. And then you talk about its parks, something like that amount in deferred maintenance to its parks system. So it has a lot of generational challenges that are still pressing it pretty strongly.

Frederica Freyberg:
So how does the county stave off these deficits?

Jason Stein:
I mean, I think when you have a challenge of this size, you’re going to have to look on the cost side and the revenue side. So, I mean, the challenge on the cost side is that the county has really had 20 years now of making, you know, cuts and trims and other things. But, you know, they’re going to have to look in transit. They’re going to have to look across their system to try and find some savings. And then at the same time, they’re probably going to have to find revenues, whether that’s from the state, whether it’s from increasing their vehicle registration fee, whatever it happens to be that they can do because there aren’t a lot of levers they can pull.

Frederica Freyberg:
Should or could the state do more?

Jason Stein:
I mean, the state in the current budget, it should be said, did a lot for the county in that the state put forward funds for patrolling the highways in Milwaukee County. So that was a big financial help. Governor Evers, with one of his partial vetoes, also lowered the cost to counties of housing juvenile offenders in a state prison for youth, which — that helped Milwaukee County more than any other county. So there was assistance there. But you’ll certainly hear elected officials from the county going to the state again over the next year.

Frederica Freyberg:
How vexing is this perennial problem, especially for the county executive now running for governor?

Jason Stein:
I mean, it’s every county executive faces this. I mean, another county executive who became governor, Scott Walker, you know, faced the same shortfalls and some of these capital challenges have built up over a period of time that goes back to the 2000s, when Walker was Milwaukee County executive. So it’s certainly a challenge. I think one of the things that I’m sure the county executive will ask for, you know, elected officials would ask for is freedom from the state limits on county property taxes. So more flexibility to raise local revenues to deal with these problems. But of course, the state has been reluctant to give that flexibility.

Frederica Freyberg:
So I trust that Milwaukee County is not the only county that is facing these kinds of budget crunches.

Jason Stein:
No, that’s certainly the case. I think it is worth noting, though, that Milwaukee County, particularly in the city of Milwaukee, has some of the poorest residents. So any county or any city that has a transit system, for example, is facing that same problem with the loss of federal revenue, ridership and ridership revenue being down and the cost being up. But in Milwaukee County, it has a particular pinch and resonance because you really have people that are relying on that transit system, low-income people to get to a job, to get to a doctor’s appointment, to get to the grocery store. And so the impact is magnified, I think, over many places in Wisconsin.

Frederica Freyberg:
All right. Jason Stein, thank you very much.

Jason Stein:
My pleasure. Thank you.