County Would Raise Tax Levy For Forensic Science Center

Milwaukee County would borrow $62.9 million in 2023 to fill a funding gap for the proposed Forensic Science Center. The county will likely need to pay back the debt through an increase in property taxes.

“The Forensic Science Center, I believe, is the single biggest financial decision that is being asked in this budget,” said Steve Cady, research and policy director in the Office of the Milwaukee County Comptroller, Tuesday at the first meeting of the county board’s budget committee.

The project involves partnering with the state to develop a $226 million, three-story, 200,000-square-foot building that would be called the Center for Forensic Science and Protective Medicine and would house both the county’s Office of the Medical Examiner and Office of Emergency Management as well as the Wisconsin Department of Justice Milwaukee Crime Lab. The county would contribute approximately $127 million and own just over half of the building. It would be built in Wauwatosa on the Milwaukee Regional Medical Center campus.

The proposal asks the supervisors to exceed the county’s annual self-imposed bonding cap of $45.8 million, similar to the $45 million the Milwaukee County Board approved for the new Milwaukee Public Museum.

The debt issued by the county for the Forensic Science Center and the public museum is estimated to increase the property tax levy by approximately $12.5 million per year for 15 years beginning in 2025, according to a recent budget analysis by the Comptroller. The total property tax levy in the recommended budget for next year is approximately $313 million. The total budget would be approximately $1.4 billion.

Without raising taxes, the county cannot bond for projects like the Forensic Science Center or the new public museum and avoid cutting other projects.

State law constrains the county’s ability to raise new revenues, except in one notable way: put it on the credit card. State law allows a county to increase its property tax levy to pay down debt created through the issuance of municipal bonds. The annual tax levy increase otherwise is limited to the increase in net new construction, the Emergency Medical Services levy and any increase in the levy for the regional planning commission. In 2023, the tax levy would be limited to a $3.5 million increase.

“[The county] is not required to increase its tax levy to cover those additional costs,” Cady said. “So that would be something that policymakers would have to find if there was any other alternative funding, or how they would like to manage that, that burden going forward.”

The county currently has an annual structural deficit of approximately $12 million. This structural gap has been created, in large part, by more than a decade of frozen revenue from the state while the cost to continue county government as it is has increased every year with annual inflation. Since 2012, the county has had to close approximately $300 million in budget gaps.

How Much Debt Can the County Handle?

Along with the new debt proposed in the budget, the Forensic Science Center proposal relies on $14.6 million already set aside in previous budgets, $20 million from the state, $20 million from the county’s federal stimulus funds and $10 million from a pool of money rarely mentioned outside of budget season called the Debt Service Reserve.

The reserve is a unique stash of county funds that is used to pay back the county’s debt and also to reduce the county’s reliance on property taxes. “Thanks to unusually large countywide surpluses the past two years, the debt service reserve is at a historically high level,” according to an analysis of the 2023 budget by the comptroller.

County departments have been trying to maintain services with a shrinking pool of money for years. The massive infusion of funds related to the COVID-19 pandemic offered a temporary reprieve, and county agencies have proven adept at managing their annual budgets with overspending. In total, between allocations from the federal and state governments, the county has received approximately $680 million in COVID-19-related funds since 2020, according to the comptroller’s office.

In 2020 and 2021, the county was able to finish the year with budget surpluses that added up to approximately $93 million, which allowed the county to increase the debt service reserve by an unprecedented $82 million. These kind of surpluses, according to Research and Policy Director Cady, “are pretty unlikely to occur again.”

Sup. Shawn Rolland asked, how much money the county would need to maintain in its debt reserves in order to maintain its current bond rating of Aa2 — which is an investment grade rating. “Again, I’m curious to know, like, if $10 million is the right number for us to use from the debt reserve, in regards to the Forensic Science Center, because again, the remainder of the, I believe, $63 million would be a request to go on to bonding which would hit people’s property taxes.”

Justin Rodriguez, budget management coordinator in the comptroller’s office, said it would be difficult for the comptroller to give the board an exact picture of how issuing nearly $63 million more than the county’s debt limit, on top of the $45 million already authorized to exceed the debt limit, would impact the county’s credit rating or the interest rates it receives on future borrowing. “We can give an idea of kind of what actions that really agencies view as positive, or other actions that are viewed as negative,” he said. “Like, for example, having more reserves is better than having less reserves, issuing less debt versus issuing more debt.”

What the rating agencies like is the county’s debt management practices, explained Pamela Bryant, capital finance manager in the comptroller’s office, which include efforts to limit the county’s annual debt increase — like the self-imposed bonding cap.

“Our strength has been our management,” Bryant said, “and the way we pay off our debt very rapidly.”