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.
Milwaukee’s 2026 budget proposal shows how far the city has come since 2022, when the Forum warned that soaring pension costs and a daunting array of fiscal challenges threatened to force “untenable budget cuts” unless prompt action was taken.
Four years later, an infusion of new revenue from a landmark state law has allowed Milwaukee Mayor Cavalier Johnson to propose a budget that would increase fees and property taxes, but limit most impacts to city services outside of the library. Yet despite the near-term reprieve, concerns remain for the years to come, according to the Wisconsin Policy Forum’s annual review of the city budget.
Inflation has pushed wages for city employees upward, and growth in the national economy has slowed in recent months, which could affect the city’s new sales tax. State caps will also limit the growth in city property tax revenues for operations to less than the rate of inflation.
Benefit, pension, and in particular infrastructure costs also are likely to keep rising. City employee pension costs are projected to continue their climb in 2026, with contributions to retirement plans rising to an estimated $209.9 million. That’s an increase of $19.9 million, or 10.5%, over the 2025 budget, and an astonishing $131.9 million increase over 2022. These costs do not reflect enhanced benefits going to employees, but rather efforts to better fund their pensions.
After replenishing its reserves, the city can now draw on them to balance this budget. The 2026 proposal calls for tapping $38.3 million from reserve funds. The proposal also would increase the city’s fiscal reliance on fees, rather than its property tax levy or state aid. It would add $10 to the city’s vehicle registration fee, raising it from $30 to $40, while raising fees for solid waste collection, ice and snow removal, and street lighting.
While the city’s current financial position has strengthened, there are still reasons for concern on the horizon. Chief among these are that the cost of pensions and other employee benefits will likely put continued pressure on city finances, and the state of city infrastructure is such that it will require sizable ongoing investments to maintain.
The review also notes that in the near term, the city is very unlikely to gain any new tools comparable to those in 2023 Wisconsin Act 12, which enabled adoption of a new city sales tax and boosted the city’s main form of state aid, shared revenue. Act 12 has yielded an estimated increase in sales tax and state aid revenues of more than $240 million in 2026 compared to 2023, a lifeline that has helped preserve key city staff and services.
These and other ongoing pressures should add to the urgency for city leaders to find whatever efficiencies they can to control costs without sacrificing service levels. City leaders would be well-served to identify efficiencies, structural changes, or partnerships with other local governments to reduce future spending.
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.
