Jeramey Jannene

Council Reverses Cuts, Raises Fees In Adopting 2023 Milwaukee Budget

But police will still see service reduction and drastic cuts will come in future years without changes at state level.

By - Nov 4th, 2022 03:14 pm
Milwaukee City Hall. Photo by Jeramey Jannene.

Milwaukee City Hall. Photo by Jeramey Jannene.

The Common Council is poised to keep the city of Milwaukee in the “calm before the storm” in 2023, but Mayor Cavalier Johnson‘s administration is warning that might only make the 2025 fiscal cliff even larger.

The council approved a $1.7 billion budget Friday that reverses fire and library cuts proposed by Johnson as a result of costs growing at a rate far in excess of state-imposed revenue restrictions. Council members acknowledged that their decisions, still subject to a possible mayoral veto, were not easy and come with the knowledge that things will only get harder going forward.

“We have some more work to do, but we’re going to do it together,” said Finance & Personnel Committee chair Alderwoman Marina Dimitrijevic. “As we move forward, I think what the largest and most important message of this budget is that we need to do it together and we need to do it soon.”

“We have a tough road ahead of us,” said Common Council President Jose G. Perez.

The city faces a looming need in 2025 to begin laying off one in four workers, including police and firefighters, due to state prohibitions on enacting new taxes, state restrictions on raising property tax revenue, long-frozen state aid levels, the expiration of a COVID-era federal grant and an anticipated increase in costs to fully fund the pension system. The city’s annual structural deficit is expected to reach $150 million in 2025, approximately a quarter of the city’s general fund. Adjusted for inflation, the city now receives $155 million less annually than it did in 2000 in state-shared revenue. Johnson, on the campaign trail, pledged to get a cot in the state capitol if that’s what it took to resolve the city’s state-imposed fiscal issues.

The mayor had asked city departments to prepare a cost-to-continue budget for 2023 and was going to exhaust the city’s American Rescue Plan Act grant over the next two years to temporarily fill the growing structural deficit, but even with that budget director Nik Kovac told the council that rising costs made it impossible to hold things as is. Johnson proposed $4 million in savings by eliminating Saturday hours at four of the 12 branch libraries and shuttering the Martin Luther King Library while a replacement is built. The fire department was to see two engines mothballed and the associated positions eliminated by the end of the next year.

But the council reversed those cuts Friday through an omnibus amendment that also included funds for a handful of other programs. It left in place an approximately 17-member cut to the sworn strength of the Milwaukee Police Department, triggered largely by rising salaries.

Much of the amendment’s funding would come from the city’s $394 million American Rescue Plan Act grant. Approximately $20 million has not been earmarked to plug budget holes or advance capital projects like street lighting upgrades.

The $4.75 million omnibus amendment would use $2.5 million of the unallocated funds. But there is an intent on behalf of the council to replace those funds with $2.5 million in expected new funding from an under-development state program that would reimburse ambulance costs using Medicaid funds. Comptroller Aycha Sawa declined to certify that revenue for use directly in the 2023 budget given the uncertainty on how much it would be and when it would arrive.

Two blocks of already-allocated funds would be reprogrammed. Approximately $1 million allocated to the Milwaukee Health Department for lead abatement and $500,000 for street lighting upgrades from the Department of Public Works would instead fund the restoration of the service cuts. In both cases, a multi-million dollar allocation is being reduced and funds weren’t expected to be spent in 2023.

The proposal also relies on $634,000 in savings by delaying a 65-member police recruiting class by eight weeks and $114,412 in savings by reducing the city’s annual payment to Milwaukee Area Domestic Animal Control Commission (MADACC).

Kovac, last week, said Johnson supported reversing the temporary closure of the King branch and eliminating the cut to one of the four other branches by using approximately $600,000 in savings from the previously unanticipated need to delay the police recruiting class and needing to make a smaller payment than anticipated to MADACC. “Beyond that, we feel is irresponsible,” the budget director told the finance committee on Oct. 27.

The mayor’s communications director said Johnson would review the budget later today and did not immediately have information to share about whether he would sign the entire budget or veto specific items.

The omnibus amendment also includes $500,000 for the Department of City Development‘s Commercial Corridor Program, $100,000 for the Healthy Food Establishment Fund, $100,000 for an emergency medical services matrix study, $50,000 for a Community Excellence Fund to provide matching funding for events focused on peace and violence prevention, $42,576 to reverse proposed cut to seasonal tax collection workers in the City Treasurer’s Office and a reconfiguration of Department of Public Works (DPW) funds intended to increase the number of times that vacant, city-owned properties are mowed. Only Ald. Michael Murphy voted against the amendment. Ald. Scott Spiker offered a compromise proposal more in line with the mayor’s proposal, but voted for the original omnibus proposal after his amendment was rejected.

The final budget was adopted on a 9-2 vote, with Khalif Rainey and Russell W. Stamper, II in objection.

Other amendments that passed included several non-fiscal footnotes to push departments to enact policies or programs, a $125,000 tax levy increase to fund two inspectors in the Department of Neighborhood Services with a goal of speeding up service, a new labor negotiation researcher position in the Department of Employee Relations funded by an expected vacancy in the City Attorney’s Office, a reallocation of DPW funding to fully-staff MKE Plays and a reallocation of ARPA funding from speed limit reductions to speed humps.

The speed hump funding, $500,000, comes after Murphy said the city saw great success by lowering the property owner cost in 2022 via a $1 million ARPA infusion. “We saw a 270% increase in residents taking advantage of the program,” he said, noting the record year of new hump installations. Until the initial $1 million was exhausted, the city cut the property owner cost from approximately $250 per new hump to $80. The new humps were also installed the same year, a plus even in the eyes of the amendment’s opponents.

Murphy proposed to take $500,000 from a $1.2 million 2021 ARPA allocation to lower the citywide default speed limit from 25 to 20 mph. Ald. Robert Bauman cautioned that could cause the whole effort to fail and Murphy said he was proposing it as a result of a “Hobson’s choice.” The council adopted the amendment on a 6-5 vote. After the vote, DPW told Urban Milwaukee that it was in active negotiations with a vendor on implementing the reduction, which includes a communications component, but that the impact of losing approximately half the funding was not immediately clear.

Murphy wasn’t successful in convincing his colleagues to add additional police recruits in 2023 using a variety of different funding methods. The adopted budget provides funding for 115 recruits, but Murphy and Spiker sought to make it 130 via different funding methods. Dimitrijevic warned that 15 in 2023 would cost $1.4 million in 2024 once they were full-time officers. The reduction in sworn strength in MPD is to come via resignations and retirements, not layoffs. The targeted average sworn strength level from the budget is 1,640.

The budget includes a 2% raise for all general city employees (non-police and fire workers) and an additional, one-time 1% raise for employees who have been with the city for at least five years. Sworn police and fire employees are protected by collective bargaining and subject to labor agreements that have raised their wages faster than city workers since Act 10 was adopted.

The council would review any vetoes at its Nov. 22 meeting. Dimitrijevic asked that whatever happens the 2023 budget, the council be given more time to review the 2024 budget.

Tax and Fee Impact

Taxes and fees for the median single-family homeowner are expected to increase by approximately $48.58 under the council-adopted budget. That includes a 4% increase in fees for water and other city services ($20.76). The median residential property, now assessed for $144,900, would see the city share of its property tax bill rise by $27.82.

The actual city property tax rate (mill rate) is expected to fall by almost 10% from $10.16 per $1,000 in assessed value to $9.16. The figure is calculated from the cumulative assessed value of all properties in the city, which increased 13% in the past year. The median home value increased from $127,900 to $144,900 as a result. Individual assessment increases or decreases do not directly impact how much the city can collect in revenue, but instead change the percentage of the whole a specific property pays.

As a result of new construction and a small state-allowed increase in property tax revenue, the city expects to collect 2% more in property tax revenue in 2023. But adjusted for inflation, the actual property tax levy will have fallen by $6.3 million annually since 2013.

The average city homeowner would pay $542.64 in fees in 2023.

“You keep sneaking fees on constituents. You sneak a few here, you sneak a few there,” said Stamper, who represents the city’s most impoverished district. When informed that they are limited to recovering the cost of services and that those costs are rising, Stamper still objected. “Nickel and diming.” He voted against a number of the increases.

Other council members sounded off on specific fees.

“I am going to vote consistently against this. This is outrageous. This whole thing is a joke,” said Ald. Mark Borkowski of the street-lighting fee. He lamented that the city has had no success attracting electricians to maintain the system, even after using the fee to boost the pay. He said his constituents now see a new fee and the same street lights are out. Dimitrijevic and others noted that the council previously allocated more than $10 million in ARPA money to fix the worst lighting circuits. DPW has said design work is underway on those changes.

“I like fees because that means 17% of the city of Milwaukee that is tax exempt is paying their fair share,” said Bauman, calling out universities and hospitals. He noted they call for police and fire services, but don’t pay for it.

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More about the 2023 Milwaukee Budget

Read more about 2023 Milwaukee Budget here

More about the Local Government Fiscal Crisis

Read more about Local Government Fiscal Crisis here

Categories: City Hall, Politics, Weekly

2 thoughts on “Council Reverses Cuts, Raises Fees In Adopting 2023 Milwaukee Budget”

  1. Wardt01 says:

    less than 1 year ago the City’s Task Force on the
    City of Milwaukee’s Pension System analyzed 12 legitimate ideas to address the Pension, why is the Common Council now solely focused & acting on the single idea of the 12 analyzed that the Task Force universally rejected.

    Jeremy, ask the Mayor, Or The chair of the finance committee, or any member of the council why they have have completely thrown away the other 11 ideas?

    and…. Please stop repeating that the fiscal cliff is “due to state prohibitions on enacting new taxes, state restrictions on raising property tax revenue, long-frozen state aid levels, the expiration of a COVID-era federal grant”….. because those are components of the proposed solutions to what is the root cause of the Pension problem.

    The Pension problem is a result of the Golden parachute pension benefits for a very small number of city employees that will not give up 1 cent on their side….. they believe the other 99.9% of Milwaukeeans should suffer 100% of the burden.

    please also include a link to the task force’e report in future articles, so that readers are better informed & can participate & contact their elected alderman/woman.

    thank you 🙂

  2. Jeramey Jannene says:

    @Wardt01 – I believe it’s not fair to call it a “Golden parachute” level of benefits. There is no lump sum payout like the county has. The pension system problem in Milwaukee is particularly notable because of a requirement, now enshrined in the city charter and court rulings, that it be 100% funded AND that the City of Milwaukee (and Milwaukee County) are not part of the state system (and is actually barred by state law from joining).

    There are issues with the state’s relationship with cities, as evidenced by Brookfield and a host of other cities having issues. Milwaukee’s are most pronounced and immediate because of the pension complications.

    I wouldn’t assume the mayor and other city officials working with state officials have forgotten options other than more revenue (via shared revenue or a sales tax). But more revenue is going to have to be part of any solution, if only because 20 years of inflation has substantially eroded what revenue options the city does have.

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