Milwaukee could run out of money by 2025, mayor warns of cuts

Milwaukee could run out of money to fund city services by 2025. With the city speeding closer to a long-feared fiscal cliff, Mayor Cavalier Johnson warned Wisconsin lawmakers of crushing cuts.

"The fire department would be in a position where there would be cuts, severe cuts, devastating cuts in the fire department," said Mayor Johnson. "By 2025, the city will face insolvency, which will force massive cuts, massive cuts, to general city workers, to firefighters, as well as police officers. That will dramatically increase our emergency response times. It will harm quality of life in the city of Milwaukee, and it will reduce basic city services to unacceptable levels."

The nonpartisan Wisconsin Policy Forum echoed the warnings of the upcoming fiscal crisis. The city expects to be $156 million short next year. A big part of the problem is the city’s ballooning pension.

SKYFOX Milwaukee skyline

The mayor joined Common Council President Jose Perez in testifying to the Senate Committee on Shared Revenue, Elections and Consumer Protection, during a public hearing on a bill to boost shared revenue to every community in Wisconsin.

The bill's Senate sponsor said without extra funding, Milwaukee would have to cut hundreds of police officers and firefighters to covering the growing pension obligation.

"We can talk about allowing Milwaukee to go bankrupt," said State Sen. Mary Felzkowski (R-Irma). "When Detroit went bankrupt, the pensioners got about 48 cents on the dollar."

The city's police union also reflected on the damage insolvency would mean for retired members and their pensions.

"They made a contract to say, if I give you 25 years of service working night shift, holidays, weekends, missing my kids' birthdays and put myself in danger, at the end of that term, or when I turn 51, or whatever the agreement is now, that I will have some sort of protection for myself and my family," said Andrew Wagner, Milwaukee Police Association. "I think about the fallen officers’ families, the fallen firefighters' families who gave their lives. Their pensions are going to be cut. Their health care will be cut. The word of the city didn’t matter, and we allowed the city to go into bankruptcy."

The city has pushed for years to be able to charge a city sales tax. The Wisconsin Legislature is considering one that would add 2%. For example, if you spent $20 in Milwaukee, you’d pay an extra 40 cents in sales tax. The city says it would bring in $190 million.

Milwaukee Police Administration Building

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The question of who needs to approve the new tax is one dividing Wisconsin Republicans. Last week, the Assembly passed its shared revenue bill. It requires Milwaukee voters to approve a sales tax referendum, but the Senate would give the city’s Common Council that power.

"The city strongly requests that the bill be amended to enable the Milwaukee Common Council enact the local sales tax component," said Mayor Johnson. "Common Council members are close to the communities they represent and can make informed and timely decisions on behalf of their constituents to move Milwaukee forward. A referendum, though, adds a significant level of uncertainty, and next year, none of us want to revisit all of the hard work we have been doing to plan that has brought us to this point now."

If both the Wisconsin Senate and the Assembly can’t agree on who should approve the sales tax, the city will have to find a new way out of the hole.

Milwaukee's recent budgets have used federal COVID relief money to fill budget holes. That money runs out in 2024.