New Third-Party Study Suggests How Milwaukee Could Save Millions

809 N. Broadway. Photo by Mariiana Tzotcheva

The City of Milwaukee could save $140 million by changing how it provides services and raise $156 million in new revenue by adjusting or increasing fees over the next decade according to a new report from the Greater Milwaukee Committee and consulting firm Ernst & Young.

The ideas range from selling advertising space on garbage cans and selling certain properties in the Menomonee Valley to raising costs for special events and outsourcing functions like leaf cleanup.

Other options listed include privatizing the Milwaukee Water Works, leasing parking meters and garages and dropping city-owned-and-operated health clinics with nonprofit clinics partially funded by the city.

The third-party study was first announced in January, before the city had secured a 2% sales tax from the Wisconsin State Legislature. Endorsed by Mayor Cavalier Johnson, the study was seen as part of a strategy to analyze city finances and advance a revenue solution for the cash-strapped city.

The GMC, in a letter transmitting the study to Johnson, is open with the fact that the city has already been cutting for some time.

“After 20 years of austerity and budget reductions, limited ‘easy’ options remain,” wrote GMC President Joel Brennan on Nov. 9. But he said there were still “highly actionable” items.

Brennan’s letter confirms what those familiar with the city’s pre-sales tax fortunes have said for years. “The City could not achieve fiscal sustainability through internal measures alone,” wrote the nonprofit president. But there are opportunities for savings, including ones that don’t require coordination with the state.

The GMC, in releasing the 207-page report, said it is not endorsing all of the reforms included within. “We expect this review to deepen the conversation as you seek reimagine operations and enhance service delivery to every community resident,” wrote Brennan to Johnson.

Other cities, in a rush to raise cash have encountered issues with certain options the plan lists. Chicago received $1.1 billion in 2008 for a 75-year lease of all of its parking meters, but now has significantly less control of its streets and is widely believed to have missed out on substantial revenue it could have earned itself by raising meter rates internally. The Common Council has shown a political willingness to raise parking rates in line with market factors, and the city derives millions in revenue from its various parking operations.

Other options, like remote control of every movable bridge ($4 million over 10 years), might encounter resistance given high-profile incidents associated with their limited implementation. In 2022, an elderly man died after standing on a remote-controlled bridge as it rose.

Some options are subject to collective bargaining and intertwined with state control. The report says the city could save $24 million in 10 years by modifying the Milwaukee Police Department overtime policy to only go into effect when an individual has worked at least 80 hours in a two-week pay period, but such a change would require approval from the Milwaukee Police Association.

A few of the options might not be politically palatable.

The report suggests the city could yield an additional $41.7 million per year by changing how it calculates certain fees. State law prohibits municipalities from charging fees beyond the cost to provide the service, but the study says the city is undercharging by not including unfunded pension costs and other administrative costs. “Best practice to review service costs regularly for all fees and adjust annually for inflation,” concludes the report. The city increased several fees in the 2024 budget.

There are plenty of what Brennan deemed “highly actionable” items.

One includes buying three log-loader trucks for the Department of Public Works. It would make tree removal more efficient, as confirmed by a pilot study, by removing trunks and stumps and could save $20 million in a decade. The report also suggests an urban forestry fee and combining some forestry services with Milwaukee County. Such ideas are already under consideration due to a $12 million federal grant.

While part of the agreement with the state on the sales tax included moving new hires to the state’s pension system, the report makes suggestions about the soft close of the city’s pension system. The key idea calls for offering lump sum payments instead of a guaranteed, long-term liability. The report estimates $90 million could be saved, but such an estimate would be highly dependent on market performance.

Selling City Buildings

The report examines the potential sale of four city properties, including one Downtown.

One, the Materials Recovery Facility, the city is already flirting with following a May fire. The recycling facility, 1401 W. Mt. Vernon Ave., sits on a riverfront site in the increasingly desirable Menomonee Valley.

The report suggests it could be packaged with the Municipal Service Building and the Central Repair Garage, which occupy riverfront sites to the southwest to offer 26 acres of developable land. The service building, 1540 W. Canal St., and the repair garage, 2140 W. Canal St., are facilities used by the Department of Public Works, but without an explicit need to be in the Menomonee Valley.

The fourth building suggested for sale is part of the Milwaukee City Hall complex. The report suggests the city could yield $17 million in revenue plus savings by selling the 809 N. Broadway building that houses the Department of City Development and the permit center. Employees would be relocated to the neighboring Zeidler Municipal Building under a hybrid office policy. The study says the four-story 809 building, a former auto dealership the city remodeled long ago, is currently only 20-t0-25% occupied following a shift to a hybrid work model.

What’s Next?

“The GMC is a committed partner to solving our community’s most pressing challenges,” said Peggy Kelsey, the GMC board chair, in a statement announcing the report. “Our members have agreed Milwaukee’s long-term fiscal health is a strategic area of focus for our organization. We look forward to collaborating with the city to implement the recommendations in this report.”

Former Milwaukee Journal Sentinel publisher Betsy Brenner and Ernst & Young Milwaukee office managing partner David Gay will lead a task force that works with the city on implementation.

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Related Legislation: November 2023 Service Delivery Report