County Faces $47 Million 2026 Budget Deficit

Milwaukee County Courthouse. Photo by Graham Kilmer.

Milwaukee County is running out of options and into a $47 million budget deficit next year.

The county’s Office of the Comptroller released its annual five-year fiscal projection showing the county is on track for a $46.7 million deficit in 2026 and a $171.6 million structural deficit by 2030.

“The seemingly prosperous times the County has enjoyed in recent years may be winding down while significant fiscal pressures mount,” Comptroller Liz Sumner reports.

Federal stimulus funding released during the COVID-19 pandemic is exhausted. The revenue freed up by the additional 0.4% sales tax is being used to pay off the county’s pension obligations. Salaries have grown at a rate in recent years that is proving unsustainable. One-time injections of revenue from the county’s rainy-day account will only forestall and expand the county’s structural budget deficit. All that’s left is trying to find some source of new revenue, budget cuts or a combination of the two, according to the report.

“This goes back to the issues that we’ve been speaking to the entire time, since my administration,” County Executive David Crowley told Urban Milwaukee. “We did get some reprieve from the [sales tax legislation] but it lets you know that we need to continue to strengthen our relationship with both the state and federal government.”

Crowley secured authorization for dedicated funding in 2023 to address the county’s unfunded pension obligations. In 2024, the county passed a historic budget, lowering property taxes and making significant investments in county services. But the fundamental problem for the county’s finances remained: it does not collect enough revenue to pay for all of its services.

“​​The 2024 and 2025 budgets consumed the entire $50.0 million in one-time savings realized from the landmark 0.4% sales tax to fund growing expenditures in those years,” according to the comptroller’s report. “So, for 2026 and beyond, there are no remaining savings available to reduce the estimated structural deficit.”

State aids have not kept pace with inflation for more than a decade and state law also restricts the county’s ability to raise property taxes beyond the rate of new construction. Meanwhile, the cost simply to maintain services increases with annual inflation.

“For the past decade, the average cost-to-continue has fluctuated from year to year, with a low of $12.8 million to a high of $21.9 million,” the comptroller reports. “The forecasted average for the current five-year period marks a substantial break from previous averages with the current forecast predicting an average cost-to-continue of $34.3 million.”

State legislation authorizing the additional sales tax also adjusted state shared-revenue for the county, which is used to fund government operations. The new formula ties shared revenue payments to sales tax growth. In 2026, that’s estimated at 1.9%. But under state law, the county’s payment is reduced $400,000 because it receives funding from a settlement with Volkswagen for pollution and $20 million for a child welfare payment. It’s also reduced by $4 million for the annual contribution to the Fiserv Forum and $2.5 million for the Milwaukee Brewers stadium. The end result is only a $1.1 million increase in state shared revenue in 2026.

“The Comptroller’s report does confirm one thing: The costs of state-mandated services are accelerating faster than we can pay for them,” Crowley said. “Unfortunately, the increase in expenses for these functions has been solely funded by Milwaukee County taxpayers, and it is a priority of my administration to address this with State of Wisconsin officials in the next state biennial budget.”

Property tax reductions in 2024 are on their way to being wiped out by the growing cost of the county’s debt caused by borrowing for the Milwaukee Public Museum project and the new Forensic Science Center. It’s expected the county will increase the property tax levy by $17.6 million in 2026, primarily to pay for the debt associated with the museum project, according to the report. The county hasn’t begun issuing debt for the $495 million courthouse project, yet, which will “have a substantial financial impact on the property tax levy,” according to the comptroller.

When the COVID-19 pandemic hit, a hiring freeze was instituted and the county workforce declined. To maintain, and improve its workforce, during the recovery the county has provided significant wage increases for many county employees. Employee salaries are on track to be 37% higher this year than they were in 2021.

“While some of this growth can be attributed to sizable increases for deputy sheriffs and correctional officers and to wage increases provided through the compensation study, it is also a result of higher compensation for newly hired employees,” according to the comptroller report. 

Milwaukee County Sheriff‘s Office Deputies and correctional officers have received pay raises in recent years, as policymakers have attempted to retain staff and slow down the rate of turnover, both of which are held up as causes of understaffing and subsequent heavy reliance on overtime. In its latest report, the office of the comptroller is breaking from previous assessments and reporting that, based on a review of historic MCSO and correctional officer overtime, the deficits in overtime spending are likely caused by underfunding, not an increasing reliance on overtime.

The Milwaukee County Transit System (MCTS) is running out of federal stimulus funding and approaching a fiscal cliff. By 2028, the transit system will need an infusion of approximately $17.8 million to maintain service at existing levels. Without additional revenue, this cost will either fall to the property tax or result in service cuts.

“This revenue problem, coupled with the mounting fiscal pressures of maintaining a productive and engaged workforce, funding previous capital commitments, and preserving transit operations jeopardize all the programs and services that our community relies on,” the comptroller reported.

The report suggest county policymakers should begin deliberating how to maintain the county’s “policies and priorities” as the financial ground shifts beneath their feet.

The county executive noted that policymakers have responded to dire fiscal outlooks before, both securing additional revenue and reducing costs.

“And at the end of each year, we have addressed the concerns raised in all prior year forecast reports produced by the Office of the Comptroller,” Crowley said. “I have no doubt that we will continue to find creative solutions to balance the budget and maintain services for Milwaukee County residents and families.”

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