County Expects First Budget Surplus in Two Decades

Milwaukee County Courthouse. Photo by Graham Kilmer.

County Executive David Crowley announced Tuesday that Milwaukee County is expecting a budget surplus for the 2024 budget and that it would be the first such budget for the county in more than two decades.

Mistakes of past county officials and more than a decade of frozen state aid left the county with an annual structural deficit, which was the gap between how much money the county had to operate and how much it would cost.

But Crowley and other local leaders successfully lobbied the state for the authority to levy an additional 0.4% sales. In July, the Milwaukee County Board provided the final approval for the sales tax and now county officials have begun building a budget for 2024 under the assumption that the county will have approximately $82 million in additional sales tax revenue to work with.

“After securing additional revenue and forecasting the first budget surplus in over twenty years, it is an exciting time for Milwaukee County and the residents we serve,” the county executive said in a statement Tuesday. “While the additional revenue provides the flexibility needed to avoid draconian cuts across the board, we are still tasked with being good stewards of public funds and avoiding financial peril for future leaders.”

Rather than starting the 2024 budget with a deficit, as the county has for decades, officials will will have a projected $31.6 million on top of the cost to operate the government as it exists today.

Crowley is welcoming input from county residents on how these funds can be budgeted with a series of town halls and the annual public-facing budget tool called Balancing Act.

After more than a decade of budget cuts, county department heads have become adept at closely managing their respective agencies within the money allocated. Departments regularly finish the year without overspending their budgets, and this collection of unspent funds is recorded as an end-of-the-year surplus. These budget leftovers are rolled into an account used to pay down the county’s debt.

But this will be the first time for many county officials that the word surplus is associated not with prudent management of departmental budgets, but with extra revenue in the budget.

More than two decades ago, the Milwaukee County Board approved a series of pension enhancements, including massive lump sum payments, that led to out-of-control pension costs for the county. Despite pension reforms in the years since, the county’s pension system has remained an albatross around the government’s neck.

The state legislation that granted the sales tax authority, Wisconsin Act 12, limited the use of the new sales tax revenue to paying off unfunded pension liabilities or spending on public safety. But the county dedicated a considerable amount of its property tax revenue every year to paying down these pension costs. The replacement of these funds with sales tax revenue is estimated to free up $39 to $49 million in property tax money in 2025.

In recent years, the county has been able to overcome budget deficits with a mix of good luck in the form of increased sales tax collections (driven in part by inflation) and healthcare savings, as well as federal COVID-19 stimulus funding and other one-time funds that can’t be reliably budgeted with in the future. There have also been cuts.

The county has been making cuts for more than a decade. The government has moved out of millions of square feet of office space and buildings. The transit system has been reduced over the years by a slow succession of cuts. County staffing has been slashed. But without the sales tax, the county was on track to face unprecedented budget deficits

Crowley has regularly stated, even before the board approved the sales tax, that county policymakers will need to carefully budget in the coming years, even with a surplus. The county’s budget deficits will return in 2026, albeit, at a much more manageable level. Without the sales tax, the projected budget deficit that year would more more than $65 million, it’s now estimated at approximately $13 million.