Mayor Johnson’s Budget Hikes Fees, Taxes In 2025, Maintains Services
See what's included in budget to be presented Tuesday morning.
The City of Milwaukee enters its second year with its “game-changing” 2% sales tax, as it’s been called. However, some of the same challenges that plagued the city’s finances for the past two decades have returned.
The city must again contend with multi-million dollar budget deficits and service costs growing faster than revenues. A July memo from budget director Nik Kovac indicated the city must work to overcome a structural budget deficit of approximately $87 million.
Drastically changing the 2025 budget process, which formally kicks off Tuesday morning with Mayor Cavalier Johnson‘s budget address, is the end of the pandemic-era American Rescue Plan Act federal grant. Milwaukee received $394.2 million and, since 2021, used two-thirds of the grant to plug budget shortfalls and fund the city’s COVID-19 response.
This is also the second budget where the city must contend with restrictions imposed in Act 12, the state law that authorized the sales tax and an increase in shared revenue. While the city made regular reductions in public safety personnel numbers in prior years to save on ballooning staffing costs, it is now required to increase staffing or face revenue reductions. The mayor’s proposed budget calls for increasing the daily average Milwaukee Fire Department staffing by seven to 206 through the addition of 28 personnel. The proposal also calls for maxing out the capacity of the Milwaukee Police Department academy with three 65-member recruiting classes to maintain the current staff level of 1,645 funded sworn officers, while also providing the department with an additional $10 million to cover growing personnel costs.
On the good news front, sales tax revenues are coming in higher than estimated. Then-Comptroller Aycha Sawa estimated in 2023 that the city would collect $184 million in 2024, but a recent report from her successor and former deputy Bill Christianson indicates the total is likely to be closer to $191 million. The estimate for 2025 is $192.9 million. The sales tax, and a statewide increase in shared revenue, were heavily sought after because it will grow with inflation, unlike many other city revenue sources. Shared revenue, which was stagnant for more than a decade, will grow by $5.5 million in 2025, atop a $21.9 million 2024 increase.
An approximately $10 million cut in prior spending will help close the gap.
Departments were asked in July to produce a budget that indicated what they would do with a 5% cut, as requested by Act 12. “The Mayor looked really closely at a 5% cut,” said the budget director in an interview. But he said the city ultimately pursued a strategy that largely maintained the status quo.
But there are changes planned.
That includes, said Kovac, eliminating dedicated staffing for the Milwaukee Public Library‘s Ready Reference program that allows the public to call or email a librarian for help on virtually any topic. The city would still provide the service by forwarding the requests to whatever librarian is available at the moment.
Johnson is also proposing to save one of the most contentious items from the 2024 budget: Sunday library hours. Kovac said there is no guarantee the offering would survive in 2026, but that the mayor was committed to maintaining the service, which launched in July, for at least one more year. The council added the Sunday hours through the amendment process.
More than half of the budget gap will be eliminated by $44 million in withdrawals from its tax stabilization, public debt amortization and transportation funds. It largely avoided withdrawals in recent years by using federal grant funds, but will now tap the growing balances in the fund. But at the same time, Kovac detailed how the city must also rebuild the transportation fund, primarily funded with parking revenues, after over-relying on it late in Tom Barrett‘s tenure as mayor. The budget document credits innovation director Jim Bohl with overseeing an effort to maximize parking revenue from meters and fines.
The city will increase all of its fees by 2%, with the exception of the sewer and stormwater fees, which will increase by 5% to stabilize an associated maintenance fund. “If you look at it in raw dollars, it’s not a huge amount for each resident,” said Kovac of the fee increases. “But we were able to generate considerable revenue for the whole city.” Unlike the sales tax, which rises with inflation, these fees can only be increased with council approval. And state law prevents the fees from exceeding the cost of providing the service.
The property tax levy, which is effectively capped by state law, would also be increased by 2% to account for new construction and a small, state-allowed inflation increase. The actual impact for a specific property taxpayer would not be known until the assessment process is completed in the spring.
The budget document also notes that the city would boost its borrowing from $96 million in 2024 to $116 million, and likely continue it at that level through 2027. The increase is expected to cover a $40 million public safety radio replacement project, $28 million ERP software system replacement and $17 million cruise ship terminal, as well as provide matching funding to a surge in federal infrastructure funding.
Public safety is likely to remain a hotly-contested topic into 2025. Johnson will maintain a two-pillar focus on prevention and accountability, but recruiting may need to be added. MPD was unable to fill all three of its 65-member recruiting classes in 2024. He will also need to monitor contract negotiations with the Milwaukee Police Association and Milwaukee Professional Firefighters Association. The rank-and-file unions are operating under deals that expired in 2022, and new agreements could impose dramatic salary increases or back pay.
What about pension relief? A key provision of Act 12 was soft closing the city’s pension system and putting new employees in the state system. While there are clear long-term advantages to the switch, in the short term, the city must pay on an accelerated schedule to fully fund its existing system and for new employees in the state system. Kovac said it would be more than a decade until substantial savings are realized.
Urban Milwaukee will have substantially more coverage of the 2025 budget process in the coming month. The council is scheduled to adopt the final budget in early November.
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More about the 2025 City of Milwaukee budget
- Council Rejects Mayor’s Vetoes, Finalizes 2025 Budget - Jeramey Jannene - Nov 26th, 2024
- City Hall: Mayor Johnson Issues Several Budget Vetoes - Jeramey Jannene - Nov 20th, 2024
- Milwaukee Fire Department Announces New Organizational Changes and Personnel Enhancements in Response to 2025 Budget - Ald. Peter Burgelis - Nov 18th, 2024
- Council Boosts Road Repair In Adopting 2025 Milwaukee Budget - Jeramey Jannene - Nov 8th, 2024
- Council adopts Ald. Burgelis Amendment to Address Decades-Long Underfunding of Local Roads - Ald. Peter Burgelis - Nov 8th, 2024
- Budget amendment adopted to bolster sworn personnel recruitment efforts - Ald. Peter Burgelis - Nov 8th, 2024
- Common Council adopts amended 2025 City budget - Ald. Marina Dimitrijevic - Nov 8th, 2024
- Alderwoman Coggs sponsors budget amendments aimed at improving services, supporting residents - Ald. Milele Coggs - Nov 8th, 2024
- Committee Marks Up Milwaukee Budget With Amendments, Footnotes - Jeramey Jannene - Oct 31st, 2024
- Milwaukee To Issue More Parking Tickets at Higher Prices in 2025 - Jeramey Jannene - Oct 30th, 2024
Read more about 2025 City of Milwaukee budget here
More about the Local Government Fiscal Crisis
- Mayor Johnson’s Budget Hikes Fees, Taxes In 2025, Maintains Services - Jeramey Jannene - Sep 24th, 2024
- New Milwaukee Sales Tax Collections Slow, But Comptroller Isn’t Panicking - Jeramey Jannene - Jun 28th, 2024
- Milwaukee’s Credit Rating Upgraded To A+ - Jeramey Jannene - May 13th, 2024
- City Hall: Sales Tax Helps Fire Department Add Paramedics, Fire Engine - Jeramey Jannene - Jan 8th, 2024
- New Study Analyzes Ways City, County Could Share Services, Save Money - Jeramey Jannene - Nov 17th, 2023
- New Third-Party Study Suggests How Milwaukee Could Save Millions - Jeramey Jannene - Nov 17th, 2023
- Murphy’s Law: How David Crowley Led on Sales Tax - Bruce Murphy - Aug 23rd, 2023
- MKE County: Supervisors Engage in the Great Sales Tax Debate - Graham Kilmer - Jul 28th, 2023
- MKE County: County Board Approves Sales Tax - Graham Kilmer - Jul 27th, 2023
- County Executive David Crowley Celebrates County Board Vote to Secure Fiscal Future and Preserve Critical Services for Most Vulnerable Residents - County Executive David Crowley - Jul 27th, 2023
Read more about Local Government Fiscal Crisis here
Political Contributions Tracker
Displaying political contributions between people mentioned in this story. Learn more.
- July 29, 2020 - Cavalier Johnson received $100 from Aycha Sawa
- May 7, 2015 - Nik Kovac received $10 from Cavalier Johnson
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What does ” soft closing the pension system ” mean please?
@SiddyMonty – New members are not being added, but the actual system is not being formally closed. As a result, the actuarial consultants are asking the city to increase the funding level of the system.
City of Milwaukee residents have one of the highest total tax burdens in the country, especially after recent sales and property tax increases coupled with an already high middle class state income tax. We don’t get anything extra for it (besides a world class entertainment and food scene, but this is unrelated to the city government), we actually get less services than other similarly sized midwestern cities. The mayor and budget director aren’t asking why this is and proposing real solutions, they are simply raising taxes the maximum amount allowed by state law and hoping it works out.
We excitedly bought our empty-nester condo in the heart of the city five years ago to partake in all the great things happening here. Sadly, I am now among the growing number of downtown area homeowners who no longer feel the increasing cost of living here is worth it; we are thinking of moving.
Unless and until MKE gets a handle on its ridiculous spending, fixes our crumbling streets and infrastructure, & starts controlling juvenile crime, holding minors AND their parents accountable & increasing neighborhood patrolling, any planned “enhancements” will not be enough to save us at the current rate of decline amid astronomical cost increases!
Must-have visitors are starting to rethink spending their dollars here or not staying as long. Residents & tourists alike are avoiding driving & parking here because the roads suck, every intersection is a potential reckless driving crash, and our out of control youth are allowed to run rampant without consequences. We can do better than Moving City Art Cars & focusing on driver’s ed as the only solutions.
How about some novel ideas like floating neighborhood mini police presincts setting up like food trucks and in vacant storefronts (similar to other cities and NYC’s Times Square):
<Increase neighborhood patrols to stop crime before or while it's happening versus investigating it after.
<Team up with the Sheriff's Department & State Patrol to provide assistance to MPD along county & state highways within city limits.
<Hire cost-effective "ambassadors" with direct communication to police and fire to answer questions and provide much-needed eyes on the streets.
<Nix any further discussion & action on raises for greedy elected officials.
<Break up failing MPS into manageable subsets and trim its administrative fat.
Unfortunately, it appears Mayor Johnson has been smitten by the 15 minutes of national fame bug propagated by the disappointing RNC gig–I no longer trust him to look out for the city's best interests. And too bad Austin, TX didn't hire our feckless police chief.
I do believe David Crowley is a smart & competent County Exec. Can we pronounce him King of MKE for awhile? I trust him and would like to see what he can do if given the key.
We travel frequently and visit many other cities. Milwaukee does not want to become another Minneapolis, San Francisco, or Denver. Their once thriving downtowns are now scary ghost towns at night and on weekends. Chicago is on the verge of the same fate. And once that happens, it is very difficult to swing the momentum back.
But we still have a chance to capitalize on our prized and atypical comeback since the pandemic. Can't we double down efforts to fix our beloved Milwaukee's problems with innovative ideas? Let's break out of our image as the Windy City's little brother and prove we're well worth the two hour shift north to visit AND move here for all the great things & natural beauty we still offer at lower cost.
We've always been willing to pay extra for excellent city services, but feel we're not getting what we're paying for anymore. We want to stay here. We are still proud of the many positives. But unless there is a turnaround very soon, we will have to cut our losses and find another place to live.