Council Strikes Deal On How To Spend $179 Million ARPA Allocation

The Common Council’s $179 million American Rescue Plan Act spending plan represents a grand bargain of the highest order.

“Even though the amount of money we received in the first tranche seemed like a lot… it didn’t stretch nearly as far as we would have wanted it to,” said Common Council President Cavalier Johnson at a special meeting Friday morning to decide what to spend the grant money on.

Council members submitted more than seven times the amount of spending ideas as they had funding available.

“It’s a rare opportunity that we received these type of dollars. It’s our obligation to make sure they are spent wisely,” said Alderman Michael Murphy.

What are they proposing to spend it on? The Finance & Personnel Committee is recommending a broad swath of ideas and Johnson is optimistic the full council will back the plan.

The committee-approved plan includes what is the city largest’s allocation to affordable housing in decades as well as a $26 million surge in funding to address lead poisoning, a $4.2 million grant to build a new Martin Luther King library branch, more than $6 million to support and train child care providers, $1 million to advance a modular house factory, $14.6 million to continue addressing pandemic-related health matters, $3 million to expand the Office of Violence Prevention’s 414 Life violence interrupter program to the South Side, a $10 million allocation to fix 13 of the city’s least reliable street light circuits and a number of smaller allocations.

There is also a critical, and expensive, accounting trick designed to delay an impending fiscal cliff.

“We didn’t all get everything we wanted,” said Alderwoman JoCasta Zamarripa. That includes Mayor Tom Barrett, who originally proposed a $93 million Stronger Summer plan that was only partially adopted.

“For everybody that’s willing to vote for this, there is probably a couple things you could do without,” said Ald. Milele A. Coggs of the omnibus proposal that encompasses almost all of the committee’s proposal.

The biggest single item is an accounting trick designed to show the state a good faith effort is being made to address the city’s pension-induced fiscal cliff.

A total of $50.8 million of the Milwaukee Fire Department‘s 2022 budget would be replaced with ARPA funds. That would free up $36 million in tax levy revenue to be spent free of ARPA restrictions.

“This piece allows us to have more flexibility with the tax levy so we can maintain core services for the city,” said Johnson.

Without the ARPA restrictions, the council could use a budget amendment to contribute $30 million newly-free revenue to the pension reserve fund.

The contribution would create a large enough reserve to delay the city’s fiscal cliff by at least one year, from 2023 to 2024, should the city choose to exhaust the full reserve fund (approximately $82 million). If no action is taken at the state level to support the city (new revenue or pension changes), the cliff would trigger the need for the city to lay off 25% of its workforce.

But is that just rearranging the deck chairs on a ship that is about to sink?

“If the captain had an extra moment and could turn out of the way, I think he would try it,” said Johnson in an interview. “And that’s exactly what I am doing here. It is my hope as well that the state will see in our conversations and what we are doing here that we are being fiscally smart and tackling issues.”

A proposal by Barrett to use $6.1 million in ARPA funding to hire and train 195 police officers in 2022 spread across three separate recruiting classes was rejected by the committee, as a number of advocacy groups had called for. But the intent, as explicitly stated in the policy, is to still hire those recruits using the remainder of the newly available tax levy dollars.

“That’s a separate vote that members will have to take,” said Coggs. Johnson has a pending budget amendment to advance the recruiting classes.

“The mayor does support this change, but he wants to make sure everyone is aware of the critical need for those police classes,” said budget director Dennis Yaccarino.

MPD, as proposed in Barrett’s budget, would still see a 25 officer reduction through attrition over the course of the year. The new officers would be retained in 2023 as existing officers retire or change employers.

The remaining $14.8 million in ARPA funds used for MFD, as Barrett previously proposed, would be used to fund six engine companies using the lost revenue provision, but would not generate levy savings.

Affordable Housing

A number of housing programs would be funded with record infusions of capital as part of the proposal.

A total of $15 million would go towards rehabilitating and selling 150 of the city’s 700 homes it has acquired via property tax foreclosure.

“Today these homes are in poor condition and that’s why the cost per home seems relatively high,” said Ald. Robert Bauman, who originally sponsored a proposal to spend more than $100 million addressing all 700. “The goal with respect to these rehab properties would be to make them affordable to owner occupants.” All of the properties would be single-family or duplex houses.

An additional $10 million would go to the city’s Housing Trust Fund. The program is often funded with approximately $1 million, though Barrett’s 2022 budget proposal includes no funding allocation. The trust fund is used to provide relatively small allocations to larger affordable housing projects that have a financing gap. Recent allocations have gone to the 37th Street School, Old Main and Villard Commons developments. The allocation requires the funding to be split between advancing affordable rental housing as well as home ownership efforts.

A $9 million allocation would go to support the Housing Authority of the City of Milwaukee‘s continued redevelopment of the Westlawn Gardens complex. Barrett had originally proposed $15 million.

The Department of City Development‘s existing housing programs would receive $4.5 million to be allocated specifically by the department. DCD officials have previously raised concerns with contractor capacity to expand many of the programs.

The city’s targeted demolition program, administered by the Department of Neighborhood Services, would also receive $3 million. The compliance loan fund, which provides low-income homeowners low-interest funds to address code issues, would receive $1 million.

The Environmental Collaboration Office‘s proposed public-private partnership to build a modular housing factory in Century City would receive $1 million. ECO would also be awarded $2 million to fund energy-efficiency improvements in homes receiving lead abatement work.

“I think our goal should be to offer a menu of housing options,” said Bauman.

Lead Abatement

Two allocations are intended to bolster the Milwaukee Health Department‘s Childhood Lead Poisoning Prevention Program.

A $26 million allocation would fund a one-year expansion of the program and lower the threshold for intervention from 20 micrograms per deciliter to 10. The allocation is expected to address 490 additional poisoning cases and 850 units of housing.

That allocation is only a portion of the $98 million proposal from the Coalition on Lead Emergency (COLE) that called for lowering the blood-borne lead threshold to five micrograms per deciliter.

A $3 million allocation would be passed to the Department of Administration to train more contractors to perform the abatement. The funding would ultimately go to Employ MKE for a new job training program targeted at people of color and young adults that are unemployed or underemployed.

“Obviously we have been in the news for a lot of the wrong reasons,” said Ald. Nik Kovac of the repeated failures of the lead program. Other committee members expressed frustrations with the program’s repeated failings across multiple commissioners.

The funding allocations spurred Coggs to successfully introduce an amendment that requires quarterly reporting on progress and to require the council’s inspector general to be involved in the reporting.

Child Care

As proposed, the city would make a series of funding allocations targeted at improving the city’s childcare ecosystem.

A total of $5.1 million would go towards a stipend program designed to reduce employee turnover at childcare providers, which is believed to result in lower quality care.

“Every childcare center in the city of Milwaukee is eligible for this, specifically the employees,” said Ald. Marina Dimitrijevic, who originally sponsored a larger proposal. The enabling legislation says the average childcare worker salary is $22,172.80, and the stipend, provided in three payments, would total $1,500 per worker.

An additional program at Milwaukee Area Technical College, which would receive $309,000, would be expanded. The dual enrollment program enables students to attend high school and college simultaneously while study early childhood education. MATC will offer an 18-credit preschool technical diploma and create a pathway to the following two fellows programs.

The MKE Rising program would receive $529,500. The program prepares young men, through 10-month residency programs, for careers as childcare providers. It would support successive classes of five individuals through 2024. According to a representative from the Wisconsin Early Childhood Association, 98% of workers today are female.

An additional $1.06 million would support 20 fellows in the Literacy Lab’s Leading Men Fellowship program designed to train men of color for careers in education.

The City’s Office of Early Childhood Initiatives would receive $315,687, via the ARPA funding’s lost revenue provision, replacing its city levy allocation.

“If you want to help our public schools, the best thing you can do is get our children off to a strong start,” said Dimitrijevic. “It’s not exactly what we asked for, but we can build on it.”

Ald. Ashanti Hamilton also endorsed the programs.

Murphy characterized it as a multi-pronged effort targeted at employment, social justice and improving early childhood education. But he expressed concern that Milwaukee Public Schools was not using its ARPA funds on the effort.

Other Efforts

Coggs sought unsuccessfully to defeat a $1.86 million payment to Milwaukee Area Domestic Animal Control Commission (MADACC). Barrett, as carried forth by Johnson, proposed to make the city’s 2022 animal control contract payment using the lost revenue provision of the ARPA funding.

“I just have a problem with us voting for animals, not for people,” said Coggs of using the ARPA funding. “I know we have obligations. I know it has to be paid for.”

She also unsuccessfully sought to strike the Westlawn funding.

The remainder of the omnibus proposal, as well as the separate MLK library branch allocation, was passed unanimously. But multiple members told Urban Milwaukee that the debate behind the scenes on what to spend the money on was contested.

“There were a lot of meetings, a lot of phone calls, a lot of late nights,” said Johnson. He specifically thanked his chief of staff Kailyn Kenney and assistant Arlisia McHenry. “There was a lot of time, energy and effort put into it over several weeks.”

After spending nearly four hours debating and ultimately passing the library and omnibus proposals, the committee was left with $1,075,654 of unallocated funding. What to spend it on? The committee adjourned for a lunch break to fortify itself.

Once the meeting resumed, the committee quickly adopted two proposals.

It unanimously allocated $15,654 to Ald. Khalif Rainey‘s proposal to mail postcards to all 53206 ZIP code residents to survey their preferences for ARPA funding. The postcards could arrive after the council has allocated the first tranche, but before it has been expended.

The other proposal allocated $1.06 million to retroactively grant hazard pay award to 1,456 still-active city employees that worked from mid-June 2020 through Dec. 2020. The administration used the prior CARES Act program to give hazard pay raises to all employees, but quickly learned that not everyone was eligible. The amount will be less than half of the $3.13 per hour originally envisioned in the amendment because the full $2.6 million was not available to fund the proposal.

The council has already allocated approximately $18 million from what was a $197 million allocation, with funding going towards addressing an ambulance shortage ($4.7 million), hiring attorneys for those being evicted ($1.8 million), combating reckless driving ($7.15 million) and the city’s Earn and Learn high school employment and training program ($3.8 million).

What’s Next?

The full spending proposal must be adopted by the Common Council. A special meeting is expected to be called for Thursday, Oct. 21. Based on the appearances Friday of a number of council members not on the finance committee, the minimum eight votes required to pass the proposal are secured.

And the debate is not over. The city will receive the second half of its $394.2 million allocation in the coming years. The full amount must be encumbered by 2024 and spent by 2026.

“Everything you adopt today will be placed into that dashboard we had previously talked about,” said Yaccarino of how the many reporting metrics embedded in the proposals would be shared with the public.

“I would hope that as we look at that second tranche that we learn from the way that this process was done,” said Coggs.

The council must also adopt the city’s 2022 budget. The budget amendment adoption is scheduled for Nov. 5.

Full copies of the omnibus, library, hazard pay and 53206 survey proposals are available on Urban Milwaukee. The original spending package is also available.

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Related Legislation: File 210894