Why County Needs New Fees
Revenue shortfall can only be made up with a higher wheel tax, parking fees or bus fares.
First, it was cuts to homeless shelters, then elimination of bus routes, then closure of the Schulz Aquatic Center, and now the prospect of parking fees at Milwaukee County parks.
These actions leave many asking: What’s going on in Milwaukee County? Why are these unpopular moves being proposed, and is the financial situation really so bad that such remedies need to be considered?
The answer, unfortunately, is “yes,” but you wouldn’t know it from the rhetoric flying around these proposals. The passion of opponents is understandable, but there also is a need to acknowledge the underlying financial realities that leave the county few options.
The Wisconsin Policy Forum conducts annual reviews of the county budget and has been warning about the inevitability of this dilemma for years:
- In our analysis of the 2015 county budget, we noted the ability to bridge a substantial budget gap without “slashing services or raising taxes” was a significant feat, but warned “because certain longstanding problems continue to linger, the degree of difficulty is likely to increase in future budgets.”
- Two years later, we stated “the county’s long-term structural imbalance finally has caught up to it” and warned “a sizable injection of new revenue is required if existing service levels are to be maintained and if the needs of the county’s most critical and expensive capital assets are to be addressed.”
- Last October, in our review of the 2018 budget, we reminded policy-makers “the County’s structural imbalance has been widely analyzed and discussed for years and its causes certainly should be well known.” We reiterated that the solutions also are well known: “Either revenues need to be increased, or services need to be reduced.”
This is not rocket science. The county has a set of significant fixed costs related primarily to retirement obligations and aging infrastructure. Those are highlighted by its immense annual pension fund payments, which cannot be meaningfully reduced for quite some time for legal reasons.
Meanwhile, the county’s existing revenue structure provides little annual growth to keep pace with annual increases in fixed costs. The result is a structural gap that requires unpopular action every year on the revenue side, the expenditure side, or both.
To make matters worse, the menu of options on both sides is extremely limited. Under state law, the county lacks local tax options beyond the property tax (the annual growth of which is capped by the state) and the sales tax (which is limited for counties to the half-cent Milwaukee County currently imposes). That leaves fee increases — such as the vehicle registration fee, bus fare increases and parking fees — as its only options on the revenue side.
Despite these fundamental realities, every time spending cuts or revenue increases are proposed at the county level there is the same outrage and the same calls (which are never heeded) for state government to send more money to Milwaukee County.
What is most dismaying about this year’s repeat performance is it’s getting the county nowhere. As each controversial cut or revenue increase is disputed in a vacuum, efforts to forge consensus on big-picture solutions — as difficult as those may be — never take place. Instead, what gets adopted are stop-gap remedies that don’t achieve permanent deficit reduction and only worsen the next year’s budget gap.
It’s been more than a decade since the Journal Sentinel published an investigative series titled “Road to Insolvency” that tried to focus public attention on the unsustainable nature of the county’s fiscal framework. Unfortunately, that picture has not changed.
It’s time for realistic and collaborative strategic planning among both branches of county government — and, ideally, among state leaders as well — to mutually define the depth of Milwaukee County’s fiscal challenges and determine a long-term path forward.
Rob Henken is president of the Wisconsin Policy Forum, a nonpartisan, independent public policy research organization.
This column was originally published by the Milwaukee Journal Sentinel.