Pension Costs Decimated County Services
New generation of leaders has inherited government unable to pay for parks, buses, buildings and basic services.
In April of 2018 newly elected Supervisor Sylvia Ortiz-Velez was stunned by what she encountered in the Milwaukee County government. “I had no idea that we were in such financial trouble,” she says. “A lot of trouble.”
A major contributor to the problem, she soon learned, was the cost of the county’s pension system. “We have no control over the pension we have inherited and it just keeps getting higher and higher. It’s frustrating.”
The nationally unique design of the pension plan has cost taxpayers nearly $600 million through 2020, and may cost another $740 million over the next two decades, as Urban Milwaukee estimated in Part I of this series. That has left much less to spend on county services like the parks and bus system, and on maintaining and replacing county buildings, buses and highways.
The county parks system was declining even prior to the 2000-2001 pension plan, as the total staff dropped from 1,195 full-time equivalent (FTE) positions in 1985 to 802 in 2002, as a recent Wisconsin Policy Forum (WPF) report noted. But the decline has been more drastic since then. By 2020, the parks were down to just 450 FTE positions as detailed in a column by Jeremy Lucas, Director of Administration & Planning at Milwaukee County Parks. If Milwaukee were staffed at the national median level for park systems, it would have an additional 300 employees, he noted.
The reason for this is inadequate funding. In 2002, the county provided $30.6 million in tax levy support, as the WPF report noted. That dropped to $23 million in 2012, the group noted, and to $20 million in 2021, as Urban Milwaukee reported. In real, uninflated dollars, that’s a drop of $27 million in annual tax support. The tax provided 12% of the parks budget in 1999, which had declined to 5% by 2019, the WPF found.
The county has also been underspending on other capital projects and has 12 buildings that are in poor condition and have passed their dates “when replacement should be considered,” another WPF report found. The total replacement value for these buildings is more than $225 million.
Another county service that has suffered is the Milwaukee County Transit System (MCTS). In 1987 and again in 1999, it was selected as the best transit system in the nation by the American Public Transportation Association. MCTS reached its highest point in 1990 with more than 56 million revenue passengers and in 1999, peaked again at 54 million. But after the county pension plan was passed, the decline began. Elected officials annually “made decisions to slice service, raise fares or both every year since 2001, transit officials said,” as the Journal Sentinel reported in 2011. From 2001 to 2010, bus service hours were reduced by 22 percent and the cash fare increased by 50 percent, an MCTS report noted.
In 2016 Milwaukee County implemented a $30 vehicle registration fee or “wheel tax,” dedicating a major portion of the proceeds to MCTS. This helped increase local tax funding, which had declined in real dollars in many of the years after 2000, but not by nearly enough. In 2019, nearly 3 percent of MCTS’s routes were reduced. And the system also faces a huge problem from years of inadequate spending on the replacement of buses. As Urban Milwaukee reported in July, MCTS estimates it will need to replace 233 buses by 2024. At a cost of about half a million dollars per bus, “the county is looking at approximately $117 million in bus purchases that need to be made in the next three years,” Graham Kilmer reported.
Over the past decade, the county has eliminated more than 1,000 jobs, and cut back its office spaces and facilities by three million square feet, Urban Milwaukee has reported. The county may also have problems keeping up with the maintenance of county highways it is responsible for, the WPF noted.
The county’s financial problems could eventually force it to liquidate assets, the WPF warned, including the possible “closure and/or downsizing of entire parks or cultural facilities.” It could be forced to sell entire parks. The costs of the pension are a major contributor to this situation, the group noted.
In 2018, Abele and then-County Board chair Theo Lipscomb announced an effort to push for a Fair Deal from the state, hoping to lobby the Legislature to increase its funding. The effort not only didn’t budge state officials, but county funding from the state in 2022 will hit a new low of just over $100 million, down some $90 million in real dollars from what it was a decade ago, and increasing the total loss in state funding since 2010 to $545 million.
Abele and Lipscomb warned that county government was not sustainable long-term given this squeeze in state funding. The county faces an ever growing structural deficit that by 2027 would require it to spend 100% of its revenue on state mandated services, as Urban Milwaukee has reported. This would leave not a single dollar to spend on local services like transit, parks, senior services and public safety, as County Executive David Crowley told the county board’s finance committee in May.
In a statement for this story, Crowley outlined the situation county leaders face: “Irresponsible decisions made by county leaders decades ago, with the addition of state-imposed funding limits and the growing weight of state-mandated services, have created a perfect fiscal storm that we’ve inherited at Milwaukee County. The result is each year we start our budget process with figuring out how to close a structural budget gap instead of focusing on making investments that will best help residents.”
“There is a critical need to increase funding for Milwaukee County,” Crowley says. He hopes the state Legislature will consider allowing the county to increase the local sales tax. A 1% increase, he notes, “would mean we can close the gap for good and reverse the trend of planning for cuts and instead plan for investments. We can utilize our local dollars for local priorities such as mental health, transit, senior services, and maintain valuable assets such as the zoo, and parks.”
Which is something the county really hasn’t been able to do since it passed that infamous pension plan.
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