Milwaukee County to close projected $19M budget deficit this year

Last year, Milwaukee County saw its first budget surplus in over two decades, largely due to a new bipartisan law that overhauled local government funding.

But as the year went on, the outlook was more grim, as the county was projecting a deficit of between $17 million and $19 million for its 2024 budget. 

On Thursday, county leaders announced they were able to close that gap. That’s due to a series of over 30 budget adjustments, including using surpluses from some county departments and using funding from the American Rescue Plan. 

Joe Lamers, director of the county’s office of strategy, budget and performance, said there are no “major cuts to services” in the new plan. 

“We were able to maintain all of our core operations within this adjustment,” Lamers said.

Milwaukee County implemented a new sales tax at the start of this year as a result of the new shared revenue law. But revenues from that sales tax were lower than the county was anticipating. 

Lamers said that, combined with overtime costs at the Milwaukee County Sheriff’s Office and an increase in health care costs for new employees, led to the deficit. 

“We had this influx of issues that were impacting our budget and resulting in, ultimately, a projected deficit,” Lamers said.

Rob Henken, the president of the Wisconsin Policy Forum, said lower-than-anticipated sales tax revenue is an issue that’s being seen across the state. Henken said sales tax revenues that were increasing at the end of the COVID-19 pandemic have gone back down.

“Sales tax revenues (were) very robust for the past three to five to six years, in part because inflation was so high,” Henken said. “Inflation has now come down.”

The Milwaukee County committee on finance passed the proposal during its Thursday meeting. The full Milwaukee County Board will discuss the plan during a meeting next week.

In a statement, Milwaukee County Supervisor Shawn Rolland said he supports the plan, which he said would “maintain programs, retain staff and continue to invest in priorities like affordable housing without asking taxpayers for a dime.”

Milwaukee County Executive David Crowley was also supportive of the move. 

“I am proud my administration and the Milwaukee County Board of Supervisors are working together to close the projected budget gap without any additional costs for taxpayers,” Crowley said in a statement.

But even if the proposal is approved, Milwaukee County is still facing a projected $11.5 million budget deficit next year, according to the latest five-year budget forecast.

Henken said the shared revenue deal, which allowed the county to increase its sales tax, was a “lifesaver” for the county and other Wisconsin muncipalities. But he said it’s not enough to avert future financial issues.

“And so now the question is, where does Milwaukee County and where do other local governments that enjoyed a one time boost but are now faced with some of the same structural issues — where do they go next?” Henken said. 

Lamers said the county gets state aid for things like human services programs and transportation. But he said that funding has been flat for years. 

“And if we don’t at least get some level of increase in those areas, we’re going to continue to face budget gaps year over year,” Lamers said. 

Lamers also said property tax is the largest source of revenue for the county. The property tax rate is tied to the rate of net new construction — Lamers said that’s about 1.2 percent for Milwaukee County. 

“So either something needs to give on the levy limit, or we also receive state aids as a good portion of our budget,” Lamers said.

The 2025 county budget will be presented to the Milwaukee County Board later in the month.