New development is a long-term solution to balancing a city budget but unlikely to fix Milwaukee’s money trouble in the next year.
The city is facing an $85 million to $90 million gap between costs and revenue in the 2010 budget because of payments to Milwaukee’s pension system. As city officials contemplate cutting services or creating new fees or taxes to bridge the gap, some people insist new development is the answer.
Michelle Bryant, of Milwaukee, said the city should develop more attractions to draw families downtown, perhaps by building restaurants along the lakefront or something akin to Navy Pier in Chicago.
“There certainly has to be an eye toward growing our current developments and city structures,” she said.
But the chances of Milwaukee getting enough new development to solve next year’s budget problems are slim, said Anneliese Dickman, research director for the Public Policy Forum Inc., a Milwaukee-based think tank.
“If you are a city where the population is declining,” she said, “if you have large tracts of undeveloped or under-developed land, then you do need to turn that around.”
Milwaukee’s population is increasing, and the city is turning vacant lots into taxable properties, said Rocky Marcoux, Milwaukee development commissioner. Without new development, such as the tax-incremental finance district in the Menomonee Valley, the city’s budget picture would be even worse, he said.
“The budget exists because of revenues that are coming in,” Marcoux said. “The idea isn’t to tax the people that are here more. The idea is to get more people here paying taxes.”
Richard Geldon, of Milwaukee, said the city should rely less on TIF districts for projects because TIFs keep new developments from contributing to the city’s general budget for too long. To create TIF districts, cities borrow money to promote development and use increased taxes from those developments to pay off the debt. It can take as long as 27 years before the money from taxes goes into a city’s general operating budget.
Geldon said Milwaukee should roll out the carpet to whatever developments the city can snag that do not need public money.
“Get private development so we can get money to the city treasury for services,” Geldon said.
Marcoux said Milwaukee is growing the tax base by using TIF to clean up contaminated properties and bring in new jobs, people and companies that will generate additional money for city services. As a land-locked city of about 97 square miles, Milwaukee must attract developments by shouldering the cost of cleaning sites.
He used as an example the estimated $32 million cleanup of the Tower Automotive site.
“Government’s job is to do brownfields,” he said, “to go where the private sector won’t and clean it up and get it back into the private sector to maximize return on investment and create jobs.”