Weekly Fiscal Facts are provided to Wisconsin Newspaper Association members by the Wisconsin Policy Forum, the state’s leading resource for nonpartisan state and local government research and civic education. The Wisconsin Policy Forum logo can be downloaded here.
Amid ridership declines, local fiscal restraints, and the loss of federal pandemic aid, the Milwaukee County Transit System (MCTS) faces a fiscal “cliff” that could translate into a deficit in its operating budget of nearly $26 million annually in 2025. And that deficit, which excludes an additional funding gap for capital needs, could balloon to more than $40 million by 2028.
MCTS provides mobility for the most vulnerable county residents and is a vital cog in the regional economy. Whether harmful impacts to those services can be averted depends on what is done by state and local policymakers, according to a new Wisconsin Policy Forum report commissioned by the Milwaukee County Department of Transportation.
It employs a forecasting model that projects MCTS operating expenditures and revenues from 2024 through 2028 – and examines scenarios for how policymakers might respond to the system’s fiscal challenges. It finds a potential long-term fix for the crisis is within reach and currently under discussion from state legislators from both parties: a referendum on a 1% countywide sales tax increase.
If a state-enabled solution is not enacted, however, avoidance of major service cuts would likely necessitate recurring vehicle registration fee (VRF) increases, sizable property tax levy increases, or both – while still failing to assure lasting stability.
In 2008, the Forum warned that MCTS faced a fiscal crisis that, if unaddressed, would soon require substantial service cuts. That day of reckoning was delayed, due largely to several unexpected infusions of federal funds as well as the imposition of a $30 VRF in 2017. But deep structural problems that most recently were masked by federal pandemic relief funds now are re-emerging.
MCTS’s $160.4 million fixed route operating budget and its paratransit services are funded by four main revenue sources: federal aids; state operating assistance; revenue from riders (“farebox revenue”); and county revenue (via its property tax levy and VRF revenues). The system’s looming fiscal challenges stem mostly from the loss of federal pandemic relief aid after 2024, and declining farebox revenues due to falling bus ridership, which preceded the pandemic but accelerated during it. Transit system officials expect ridership to continue to recover modestly but to remain well below pre-pandemic levels for at least the next few years.
Milwaukee County’s other fierce financial challenges likely preclude a sizable increase in its levy allocation to transit, and societal factors that already are depressing transit ridership could make fare increases counterproductive. As such, the transit funding gap likely would have to be filled by increasing the VRF, reducing services, or a combination of the two. Even if the county’s current VRF was doubled to $60, however, it only would “triage” the problem for a few years and would soon need to be increased substantially again.
A potential 1% countywide sales tax increase – which is being considered as part of state budget deliberations – could produce longer-lasting benefits. Under a scenario in which county leaders allot 10% of their share of the new tax, plus increase the VRF and MCTS’s property tax levy allocation, MCTS’s fiscal challenges could be largely addressed without severe service reductions.
This information is a service of the Wisconsin Policy Forum, the state’s leading resource for nonpartisan state and local government research and civic education. Learn more at wispolicyforum.org.
This information is provided to Wisconsin Newspaper Association members as a service of the Wisconsin Policy Forum, the state’s leading resource for nonpartisan state and local government research and civic education. Learn more at wispolicyforum.org.
