Graham Kilmer
MKE County

County Would Hike Property Taxes for Museum

Financially strapped county would spend up to $63 million over 15 years for new museum.

By - Mar 14th, 2022 12:04 pm
Milwaukee Public Museum Reef Rendering. Rendering Luci Creative

Milwaukee Public Museum Reef Rendering. Rendering Luci Creative

The nonprofit that operates the Milwaukee Public Museum (MPM) received the first approval it needs from Milwaukee County to secure $45 million in public funding for its planned new $240 million museum.

The Milwaukee County Board’s Finance Committee and Parks, Energy and Environment Committee held a joint meeting to consider approving a proposal that would commit the county to borrowing $45 million to help pay for the new museum. Current plans would have construction begin in 2023 and the museum opened by 2026.

The new facility is needed to maintain the museum’s accreditation, as the existing building has deteriorated to the point where MPM has had to put out buckets to collect water leaking through the roof.

This plan would require the financially strapped county to both exceed its self imposed bonding limit and, very likely, increase property taxes. It received approval from the committees, though not unanimous approval, and still needs approval by the full board and the county executive’s signature.

During the nearly four-hour meeting Tuesday Dr. Ellen Censky, the President and CEO of MPM Inc., the 501c3 non-profit that operates the museum, along with staff from the museum and county officials, presented the plan for the museum and the funding proposal.

While all the supervisors present Tuesday expressed support for the museum and its mission, there were many concerns voiced related to MPM’s relationship with labor at the museum, the financial impact to the county, public input on the museum’s future and the very name of the museum.

During discussion of the museum’s name, it was clearly stated by museum leadership that MPM should not be viewed as a public institution and that they want to eliminate the word “public” from the name of the museum, in favor of the Wisconsin Museum of Nature and Culture.

It was at this suggestion that supervisors, who rarely find complete agreement on a tough issue, seemed to universally chafe. County officials regularly warn that the government is headed toward financial catastrophe in the coming years, but on this project, officials are working in concert with museum staff to ask the board to approve a deal that will ultimately cost the county anywhere from $55 to $63 million – given varying interest and repayment schedules on the bonds.

County Would Have To Raise Taxes Annually

The museum is asking the county for $45 million. It has said that this funding is critical to advancing the project. Without it, private donors won’t be willing to step forward, MPM staff said.

The project itself is critical to the future of the museum. In 2021, the museum saw its re-accreditation application “tabled” by the American Alliance of Museums (AAM) because the poor state of the existing museum threatened the collections. Censky’s presentation quoted a letter from the AAM saying “the building… is utterly inadequate to meet even the most minimal standards for care of the collections.”

The proposal, as it currently stands, would have the county borrow the $45 million and issue municipal bonds for 15 or 20 years; 15 year bonds would mean annual debt service payments of $3.7 million leading to a cumulative cost of $55.5 million; 20 year bonds would lead to a cumulative cost of $60 million.

But the U.S. Federal Reserve is expected to raise interest rates in the near future, Sup. Shawn Rolland pointed out at the committee meeting. Pamela Bryant, capital finance manager for the Milwaukee County Comptroller, responded that she recently updated interest rate estimates and found that higher interest rates at the time of bond issuance could push annual payments up to $4.2 million annually for a 15 year bond. This would give the county a cumulative price tag of $63 million.

The county has a self imposed $50 million annual limit on how much it can borrow. Bonding for the museum project would mean it exceeds the annual cap. Right now, with the limit in place, county debt increases by about $1 million a year, according to the Milwaukee County Office of the Comptroller.

To pay for the $55 to $63 million in debt over the next two decades, the county will have to raise property taxes annually or make equivalent cuts to the county’s operating budget. In normal years, before the county was showered in federal COVID-19 aid, the county would often meet the state imposed limit on property tax increases just to continue business as usual. How does the county pay for this without making its structural deficit bigger?

The Comptroller’s office noted there is an exemption to state’s statutory limit on the tax levy that allows the county to increase property taxes above the state imposed limit when it’s making payments on debt. It won’t show up as a line item on the tax bill, but it will be a specific annual increase on top of the existing property tax bill for the museum.

As Urban Milwaukee has previously reported, under the proposed financing deal the county’s annual contribution to the museum’s operating budget would be reduced from $3.5 million to $1 million. But the county is expected to see a new $1.5 million cost to maintain the old building once it’s vacant.

Sup. Rolland said a plan should be developed for getting the old building off the county’s books. “I just want to make sure… that Milwaukee County doesn’t own a vacant building that’s just gathering dust in the middle of Downtown.”

Some supervisors expressed concern at the joint committee meeting that the last minute scheduling made it difficult for public input on this large financial deal between the county and MPM. Now, board leadership has once again scheduled a meeting at the last minute, moving up the final vote before the full board to tomorrow, March 15.

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