Cultural Needs Report 2015

&Summary of

Findings and RecommendationsRELEASED OCTOBER 2015

www.culturalneedstaskforce.com/

CulturalEntertainment

CAPITAL NEEDS TASK FORCE

Task Force MembersCO-CHAIRS

IAN ABSTONNEWaukee

RANA ALTENBERGMarquette University

JOANNE ANTONMilwaukee Bucks (Alternate)

ROBERT BAUMANCity of Milwaukee

DANIEL BECKEROzaukee County Board

CORRY JOE BIDDLEFUEL Milwaukee

DAVID BOROWSKIMilwaukee County Circuit Court Judge

CHERI BRISCOEMilwaukee County Parks Advisory Commission

BOB COOKMilwaukee Bucks

JAKE CURTISOzaukee County Board

RICARDO DIAZUnited Community Center

MARINA DIMITREJEVICMilwaukee County Board

RODNEY FERGUSONPotawatomi Bingo Casino

JORGE FRANCOHispanic Chamber of Commerce

ALEC FRASERMilwaukee Symphony Orchestra Board

ELLEN GILLIGANGreater Milwaukee Foundation

FRANKLYN GIMBELWisconsin Center District

JENNIFER GONDACity of Milwaukee

REV. CARL GRIFFINCommon Ground (Alternate)

JON GREENBERGMilwaukee Admirals

GARY GRUNAUSpirit of Milwaukee

EVE HALLAfrican American Chamber of Commerce

MAGGIE KUHN JACOBUSCreative Alliance Milwaukee

TRACY JOHNSONCommercial Association of Realtors

DAN KEEGANMilwaukee Art Museum

SUZANNE KELLEYWaukesha County Business Alliance

JOHN KISSINGERGRAEF

KEN KRAEMERBuilding Advantage and the Construction Labor Management Council of SE Wis.

KEISHA KRUMMCommon Ground

MICHAEL LANZDORFRacine County (Alternate)

JON LEHMANRacine County

VINCENT LYLESBoys and Girls Club of Greater Milwaukee

ALDO MADRIGRANOVISIT Milwaukee

ROCKY MARCOUXCity of Milwaukee

VICKI MARTINMATC

PAUL MATHEWSMarcus Center for the Performing Arts

MARY MCCORMICKRotary Club of Milwaukee

MARK MCCUNEWashington County

MARIE O’BRIENSharon Lynn Wilson Center for the Arts

JENNIFER O’HEARCommon Ground (Alternate)

MATTHEW PARLOWBradley Center Board

KHALIF RAINEYMilwaukee County Board (Alternate)

MIKE RUZICKAGreater Milwaukee Association of Realtors®

DEBBIE SEEGERPatina Solutions

TIM SHEEHYMMAC

KELLY SKINDZELEWSKIPotawatomi Bingo Casino (Alternate)

KEITH SWARTZWaukesha County

JULIA TAYLORGreater Milwaukee Committee

RICH TENNESSENZoological Society Board

GREGORY THORNTONMilwaukee Public Schools

DEANNA TILLISCHUnited Performing Arts Fund

HARRIS TURERMilwaukee Admirals

PAUL UPCHURCHVISIT Milwaukee

BETH WEIRICKMilwaukee Downtown BID 21

TEIG WHALEY-SMITHMilwaukee County Executive’s Office

SCOTT WILLIAMSFUEL Milwaukee

LAURIE WINTERSWisconsin Museum of Art

TERRY WITKOWSKICity of Milwaukee (Alternate)

To: Timothy Sheehy, President - Metropolitan Milwaukee Association of CommerceFrom: Keith K. Swartz, Waukesha County County Executive Representative Member of the Cultural & Entertainment Capital Needs Task ForceDate: March 12, 2015Re: Final Report of the Cultural and Entertainment Capital Needs Task Force-Appendix

Tim,Thank you for the opportunity to serve as a member of the Cultural and Entertainment Capital Needs Task Force and provide input and suggestions from Waukesha County’s perspective during committee and work group subcommittee meetings. Waukesha County has worked and will continue to work cooperatively and effectively on several share services projects with both the City of Milwaukee and Milwaukee County, which have been cost effective and save taxpayers’ money. This memo is for inclusion in the final report to reiterate the position of the Waukesha County Executive and Waukesha County Board. As I have indicated throughout the entire time I served on the committee, Waukesha County’s position continues to be opposed to any proposed regional tax to be used to fund capital costs of Cultural and Entertainment Facilities indicated in the Task Force report. Again, thank you for the opportunity to be at the table for these discussions.

Sincerely,Keith K. Swartz

CC: Daniel Vrakas, Waukesha County Executive Shawn Lundie, Waukesha County Chief of Staff

www.Cu l t u ra lNeedsTaskForce.com

JOHN DANIELS Quarles & Brady

CHUCK HARVEY Johnson Controls

JAY WILLIAMS Milwaukee Public Museum

Developing a vision, with community input, to leverage cultural and entertainment assets to enhance the region’s attractiveness

Identifying funding approaches to ensure the region retains world-class amenities

Providing impactful options for consideration by policymakers, private sector funders and community leaders

Cultural & Entertainment Capital Needs Task Force• Convened 2013-2015 • 50 civic, elected, business and not-for-profit leaders • The task force is: A

s the co-chairs of the Cultural and Entertainment Capital Needs Task Force, we want to share with you this final report of our group. Following 16 months of discussions, meetings,

benchmarking, and a strong base of research from the Public Policy Forum, we want to thank all our fellow task force members for their engagement.

This, however, is not our “mission accomplished” moment. This is the beginning of what we hope will be continued community engagement and ultimately, concrete actions to secure a sustainable funding source for our regional cultural institutions.

The Task Force members brought a wide range of opinions to the challenging facts of declining public financial support for our key cultural and entertainment assets. Those opinions and recommendations are highlighted in this report. In addition, the timing and focus of the anticipated public financing package for a new downtown entertainment center and NBA arena caused us to delay the release of this report. We believe it is now time to finish what was started with this successful public private partnership.

Our success as a community to grow economic opportunity will be enhanced by our collective ability to sustain a vibrant and globally competitive quality of life. Part of that equation is measured by the character of our cultural institutions, entertainment venues and parks.

Looking forward, we urge our public and private sector leadership to pick up this body of work and move deliberately to the decisions necessary to keep greater Milwaukee competitive as a destination for the talent and capital investment.

Finally, we extend our thanks to MMAC for its leadership in pulling the task force together as well as Anne Curley, our task force project leader. We call on you all to stay the course.

JOHN DANIELS Quarles & Brady

CHUCK HARVEY Johnson Controls

JAY WILLIAMS Milwaukee Public Museum

www.cu l t u ra l needs tas k fo rce.com | 03

Dear Task Force members,

The best way to start this torch-passing letter is with a deep thank you to the entire Cultural and Entertainment Capital Needs Task Force for your time, ideas and passion to improve metropolitan Milwaukee’s quality of life. And a special thank you to John Daniels, Chuck Harvey and Jay Williams for their significant leadership in guiding this work.

The way forward begins with our commitment to engage with other partners to execute the vision and ideas incorporated in the task force work product. MMAC launched this effort because world-class culture, arts and entertainment institutions are key to our economic competitiveness. Quality of place matters to the business community’s ability to grow, attract and retain the talent that it needs to be successful in a global marketplace.

Furthermore, we need a metropolitan approach. We cannot compete for capital investment and jobs county by county. A majority of the region’s citizens work outside the counties in which they live. Those employers that drive our economic prosperity rely on the assets of the entire metro area. To support cultural, arts and entertainment assets that are both unique and metropolitan in their value, we cannot continue to rely on the property taxpayers of one county for the necessary public investment.

The crossroad is here; the impact of our decisions going forward will be metro-wide and generational. The insightful work of this committee will not be left on the shelf.

Next steps for MMAC include identifying organizations and individuals interested in using the task force work product to secure a better funding source. We will need a significant commitment to:

Your participation was invaluable in setting metro Milwaukee on a path forward. But the destination — the long-term viability of these regional assets — is well worth a sustained journey.

Sincerely,

TIM SHEEHY MMAC President

Engage regional leaders;

Solicit public feedback;

Gain legislative support; and1 | 2 | 3 | 4 | Execute a successful campaign to

implement a new funding model.

04 | Cu l t u ra l & En te r ta i nmen t Cap i ta l Needs Tas k Force

The crossroad is here: the impact of our

decisions going forward will be metro-wide and

generational.

The insightful work of this committee will not be left

on the shelf.


$10.1M

2001 2007 2008 2009 2010 2011 2012 2013

$6.9M

$6.9M

$6.8M

$6.8M

$6.7M $6.0M

$6.0M

Declining Public Investment Annual tax levy support for four cultural institutions

(Milwaukee Public Museum, Marcus Center for the Performing Arts, Milwaukee Art Museum and War Memorial.) Levy adjusted for inflation (2013$)


8 | Findings & recommendations

10 | Overview of conclusions

12 | The path that led there

15 | Shared regional vision

16 | Perspectives from other metros

19 | Number crunching

27 | Funding sources and uses

31 | Summary

32 | Task force members

T A B L E O F

Contents


In December 2013, the Public Policy Forum published a report titled, “Pulling Back the Curtain” that sounded an alarm over a quiet crisis in metropolitan Milwaukee.

Funding shortfall threatens long-term viability of cultural assetsFaced with a steep rise in mandated expenditures, Milwaukee County has steadily reduced funding for the region’s signature cultural institutions. Since 2001, the allocation of tax dollars for county-owned cultural facilities – most notably the Marcus Center for the Performing Arts, Milwaukee Art Museum, Milwaukee Public Museum and Milwaukee County Zoo – has been cut by more than 40% in inflation-adjusted dollars, the Forum reported. Today, leaking roofs, obsolete HVAC systems, faulty windows and other signs of deterioration show the effects of a growing funding shortfall that threatens the long-term viability of the Milwaukee region’s cornerstone cultural assets, which depend solely on the region’s least affluent county for taxpayer support.

Findings &Recommendations


At around the same time, what many saw as a not-so-quiet crisis emerged when the National Basketball Association (NBA) announced that the BMO Harris Bradley Center no longer meets the league’s requirements for an NBA team, putting the future of both the Bucks and the arena in jeopardy.

Meanwhile, the Millennial generation is changing the rule on which comes first – the job opportunity or the location decision. Surveys show, and shifting demographics confirm, that young adults with portable talent – including our own children and grandchildren — increasingly are deciding first where they want to live and then where they’re going to work. And where they want to live depends largely on “quality of place”– a term that has come to describe a blend of social and cultural amenities, openness to new ideas and people, and physical aesthetics. As a result, employers looking to recruit young professionals are creating jobs and fueling a virtuous cycle of economic growth in metro areas that rank high on these attributes.

The crossing of these two trend lines – declining viability of our region’s major cultural and entertainment facilities and rising importance of social and cultural amenities in attracting talent – led the Metropolitan Milwaukee Association of Commerce (MMAC) to form the Cultural and Entertainment Capital Needs Task Force. Having watched dynamic metro areas that once were smaller outgrow the Milwaukee region – such as Cleveland, Ohio; Indianapolis, Indiana; Nashville, Tennessee; and San Antonio, Texas – the MMAC recognized that this quiet crisis is more than a cultural issue. It’s a threat to our region’s job base.

The task force was charged with addressing this threat.

The goal was two-fold:• Generate a fact-based, inclusive discussion regarding our

major publicly funded cultural and entertainment assets, specifically focusing on capital needs.

• Identify one or more funding strategies that would enable our region to retain first-rate cultural and entertainment facilities.

Rather than aiming for unanimity, the task force was designed to reflect divergent views in our region with respect to taxpayer support for cultural and entertainment assets. While not a representative population sample, it encompassed an array of perspectives ranging from members who back a “Go big or go home” approach to public investment in quality-of-place amenities to those who oppose any additional taxpayer support. Likewise, many members see these signature facilities as important assets to the entire region that should receive region-wide public support while others believe they primarily benefit Milwaukee County and should be that county’s responsibility.

These contrasting views mirror divides in our metropolitan area. This report does not resolve them. Rather, we hope it lays helpful groundwork for a sustained, widespread dialog on the role of public cultural and entertainment assets in our region’s growth strategy and how we can best ensure that both flourish if the citizens of this region deem this a priority.


Overview of Conclusions

We LIVE as a metro.

We WORK as a metro.

We PLAY as a metro.

Milwaukee Art Museum Milwaukee County Zoo Marcus Center-Broadway Series

Attendance percentages for selected cultural venues by county of residence.

Milwaukee Waukesha Ozaukee Washington Other


Regional vs. County The Marcus Center, Milwaukee Art Museum, Milwaukee County Zoo, Milwaukee Public Museum, and Wisconsin Center are regional, vs. county-specific assets.

Capital Projects vs. Operating BudgetsAny new public funding mechanism to support these assets should be limited to capital projects vs. supplementing operating budgets, so voters see tangible results.

Sunset ProvisionAny new public funding mechanism should feature a sunset provision so that it expires after a given period of time. To ensure that there is no possibility of a new tax being extended beyond the expected end date, the tax should be used to fund capital projects on a pay-as-you-go basis rather than to fund borrowing.

Sales Tax OptionA sales tax surcharge is the most viable option for a new public funding mechanism. A consumption tax merits further consideration as an alternative.

Milwaukee County ParksIncluding parks in a package that would go to Milwaukee County voters should be considered if polling shows that this significantly broadens citizen support.

Other taxes not an option A ticket tax, TIF district, local income tax or property tax increase should be dropped from consideration as potential funding sources.

www.cu l t u ra l needs tas k fo rce.com | 1 1

A large majority of task force members reached the following conclusions: County Population

Milwaukee 955,205Ozaukee 86,395Washington 132,661Waukesha 392,292

County

Milwaukee 188,000 28%Ozaukee 22,000 65%Washington 25,000 63%Waukesha 129,000 51%

Employed in but live outside county

Employed outside county

Between December 2013 and December 2014, the task force held eight full meetings, four public listening sessions, four meetings of a “Data Curating Team” subcommittee and two optional small-group meetings. Minutes of the full meetings and public listening sessions are posted on the task force web site, www.culturalneedstaskforce.com.

The group grew included community leaders drawn from the business, civic, cultural, entertainment and local government sectors in Milwaukee, Ozaukee, Washington and Waukesha counties. Leading the group were co-chairs John Daniels, chairman emeritus of the Quarles & Brady law firm; Charles Harvey, then

vice president for diversity and public affairs at Johnson Controls; and Jay Williams, chairman of the Milwaukee Public Museum.

To ensure that discussion and decisions would be grounded in facts, the group spent its first three meetings absorbing Public Policy Forum research on historical and projected capital needs, expenditures and shortfalls of the region’s cultural and entertainment facilities that receive public funding.

The Path that Led There


As mandated costs for corrections, human services and employee benefits have ballooned, the share of Milwaukee County tax dollars directed toward cultural assets has steadily declined, now accounting for less than 4% of the county budget.

While the large majority of funding for the region’s signature cultural assets comes from earned revenue and private donations, public funding plays a crucial role in maintaining and periodically updating these facilities’ infrastructures.

County-owned cultural facilities have offset reduced county support by boosting earned revenues and private support and through cost-cutting. But as the Public Policy Forum’s report “Pulling Back the Curtain” observed, “It is difficult to ‘innovate one’s way out’ of the needs associated with aging buildings and facilities.” Equally difficult, the report added, is raising private funds for basic repair and upkeep of county-owned buildings.

Key findings included:

The five-year capital needs of the Milwaukee County-owned arts and cultural facilities and parks are immense, with conservatively projected capital requirements totaling $250 million over the next five years.

DEFERRED MAINTENANCE MKE county parks & cultural amenities

CAPITAL IMPROVEMENTSMKE county parks & cultural amenities

TOTAL

$110M

$140M

$250M

1 |

2 |

3 |

4 |


Deferred Maintenance & Five-year Capital Improvement Budget (MKE County)

$325M could be raised through a five-year, one half cent sales tax in Milwaukee County

Turning outward, the task force looked at how five other U.S. metro areas are using new public funding mechanisms to support cultural assets and other quality-of-place enhancements. The Cleveland, Denver, Oklahoma City, Pittsburgh and St. Louis areas all have won voter support for various types of tax increases aimed at improving their ability to compete for talent and business development.

While funding sources and uses vary among the five, several recurring themes emerged:

• Sustained public awareness and education campaigns that make a compelling case for increased public funding are essential.

• Proposed uses for the funding must have broad, “something in it for everyone” appeal.

• Tangible results – i.e., a physical improvement versus a new program or expanded payroll – build credibility.

• Time-limited tax increases are easier to pass and, when coupled with an on-time delivery of promised results, can pave the way for future successful referenda.

• Transparent, representative governing bodies that monitor allocation of the funds raised is another crucial ingredient.

1 4 | Cu l t u ra l & En te r ta i nmen t Cap i ta l Needs Tas k Force

Shared Regional Vis ion

With some members feeling the need to step back from the data and envision the end in mind, the task force convened a large-scale visioning event at the Milwaukee Art Museum. There, 120 community leaders from Milwaukee, Ozaukee, Washington and Waukesha counties spent a half-day identifying key elements of a broad vision for the future of culture and entertainment in metropolitan Milwaukee.

Perhaps the biggest idea that emerged was to use a shared regional vision for a world-class cultural and entertainment scene as a way to get citizens of a divided region to start identifying as one, interdependent community. What might this shared vision look like? From hundreds of ideas, there were three recurring themes:

• Globally competitive cultural and entertainment offerings ranging from the visual and performing arts to professional sports to museum and zoo exhibits.

• Easy access for all to these offerings – in terms of travel time, affordability and robust public transit.

• A wealth of diversity – racial, generational, ethnic and economic – that adds vibrancy and interest to the area’s cultural and entertainment scene.

With these and other ideas offered as “starter thoughts” for a more broad-based, inclusive visioning process, many participants said the region must move beyond the we/they mentality that often divides city dwellers from residents of outlying suburbs. Think big, many urged – “not just outside the box but as if there were no box,” in the words of one young entrepreneur.


Picking up on the “think big” theme, the task force next heard from representatives of three metro areas – Cleveland, Denver and Oklahoma City – that have significantly improved their ability to compete for economic growth by increasing public funding of quality-of-life amenities.

The Denver area has focused on branding itself as “the smartest and healthiest community in America — the best place for 25-34-year-olds with a college degree,” said Kelly Brough, president and CEO of the Denver Metro Chamber of Commerce. “We are competing with regions around the world for talent. There’s a different expectation of what your city has to look like to attract the next generation,” she said.

Suffering from a prolonged downturn in the area’s dominant industry, the energy sector, Denver’s leaders persuaded citizens to pass a tenth-of-a-cent regional sales tax to fund a “Scientific

and Cultural District.” Voters approved and twice renewed the time-limited tax increase, with a fourth referendum scheduled for 2016. These and other investments have catapulted Denver to the sixth fastest growing city in the country in 2014, according to Forbes Magazine.

Perspectives from other metros

MMAC President Tim Sheehy moderated a discussion with Roy Williams, president & CEO,

Greater Oklahoma City Chamber of Commerce; Kelly Brough, president & CEO, Denver Metro Chamber of Commerce; and Joe Roman, president & CEO,

Greater Cleveland Partnership.


Voters in the Cleveland area approved a 10-year, 30-cent-a-pack cigarette tax to fund a variety of cultural and entertainments assets through a newly created “Cuyahoga Arts and Culture District,” said Joseph Roman, president and CEO of the Greater Cleveland Partnership. “A previous generation built our museums and cultural attractions and they were neglected for years. We know now, in hindsight, how valuable these amenities are to our community.”

The tax, which raises $15 million to $20 million a year, has helped spark a revitalization that has attracted more than $3.5 billion in private funds to the Cleveland area, according to Forbes.

Oklahoma City citizens approved a temporary one-cent increase in the local sales tax to fund eight designated civic projects over eight years. The vote came after the area lost out on an opportunity to add thousands of jobs from a corporate relocation because the company feared it would not be able to persuade professionals to move there.

Citizens may also have been reacting to another wake-up call: The area’s largest employer, Devon Energy, was being forced to promise new recruits that it would pay for them to move away from the area in two

years if Oklahoma City did not meet their expectations. “World-class companies can go anywhere,” said Roy H. Williams, president & CEO of the Greater Oklahoma City Chamber. “Companies are driven to locate where there is talent.”

Williams credits the increased public investment, which leveraged additional private funds, with dramatically boosting the area’s retention of college graduates from less than 50% to 90%. The area is now adding an average of 2,500 new residents a month.

Denver’s Brough said she sees Milwaukee at a tipping point and asked, “Are you willing to make the investment that will tip you to become a city of the world?”

“There’s a different expectation of what your city has to look

like to attract the next generation.”

- KELLY BROUGH

Denver Metro Chamber



Having reviewed the facts surrounding the funding shortfall at home and the strategies used to meet similar challenges elsewhere, the task force delved into scenario-building over the summer of 2014. A subcommittee dubbed the Data Curating Team was formed. Its assignment: Project the impact of various potential funding mechanisms and present this analysis to the full task force in September.

The team immediately eliminated a property tax increase from consideration. Task Force members earlier had pointed to what many consider an existing overreliance on this revenue source, which already places a substantially higher tax burden on area property owners than the national average.

Funding mechanisms deemed worthy of analysis included a regional consumption tax on beer, cigarettes and/or liquor; a surtax on admission tickets for designated attractions; a tax increment financing district; a four-county sales tax surcharge; and a Milwaukee County-only sales tax surcharge.

Under the leadership of Task Force Co-chair Jay Williams, the Data Curating Team reviewed a variety of “sources and uses” scenarios, crafting a set of options for the full Task Force to consider.

Data Curating Team

Number crunching

JAKE CURTISOzaukee County Board

ELLEN GILLIGANGreater Milwaukee Foundation

ROB HENKENPublic Policy Forum

DAN KEEGANMilwaukee Art Museum

PAUL MATHEWSMarcus Center for the Performing Arts

MATT PARLOWBradley Center Board/Marquette University

KEITH SWARTZWaukesha County

DEANNA TILLISCHUnited Performing Arts Fund

JAY WILLIAMSMilwaukee Public Museum


1 2 3 4

$8 million per year to cover 20-year debt financing of $105 million to eliminate the current deferred maintenance backlog at Milwaukee County-funded parks and four regional cultural institutions: the Milwaukee Art Museum, Milwaukee Public Museum, Milwaukee County Zoo and Marcus Center for the Performing Arts. (Note: The assumption made throughout this analysis is that public assets that predominantly benefit a single county should be funded by the taxpayers of that county and that the public funding of assets that significantly benefit residents of a multi-county region would most fairly be spread proportionally.)

$11 million per year to cover 20-year debt financing of $140 million for modest, currently planned capital improvements to Milwaukee County parks and the same four regional cultural institutions.

$11 million per year to augment the operating budgets of the Milwaukee Art Museum, Milwaukee Public Museum, Milwaukee County Zoo and Marcus Center for the Performing Arts. This item contemplates moving these line items off the Milwaukee County budget, which would free up funds for other purposes such as public transit, mental health services, or property tax reduction. While outside the slated scope of the task force, the team included this option in response to interest expressed by task force members.

$5 million per year in discretionary funding to Waukesha, Ozaukee and Washington (WOW) counties to support projects or organizations of their choosing. This option was included in recognition that each county in the metro area has needs and aspirations that could be funded through additional public support or by shifting from the property tax to a new funding mechanism. This type of flexible funding is similar to the Denver model, where grants are awarded by a representative governing body to applicants for specific projects.

Deferred Maintenance

Capital Improvements

Operating Budgets of Major Assets

W.O.W. Counties Discretionary Funding

5 6 7

$25 million per year of funds raised in Milwaukee County only to pay for the operation of that county’s parks. This item contemplates moving parks off the Milwaukee County budget, which would allow the county to shift funds to other purposes and/or reduce property taxes. While outside the stated scope of the task force, the team included this option in response to interest expressed by task force members.

$18.2 million per year of funds raised in Milwaukee County only to pay the county’s portion of the current public transit system. This would allow this cost to be removed from the county budget, which would enable the county to shift funds to other purposes and/or reduce property taxes.

Milwaukee County Parks Operations

Milwaukee County Public Transit

Wisconsin Center Expansion

$10 million per year to cover 20-year debt financing of a $200 million expansion of the Wisconsin Center convention center. While also outside the task force scope, this item was included in the analysis in response to interest expressed by task force members. The Wisconsin Center District owns and operates the convention center, the UW-Milwaukee Panther Arena and the Milwaukee Theatre. The district collects revenue from four taxes: a 2.5% Milwaukee County room tax; a 7% room tax in the City of Milwaukee; a 0.5% food and beverage tax in Milwaukee County; and a 3% countywide car rental tax. All of that revenue is pledged for debt service.

Hypothetical uses of funds that were included for discussion purposes were:

+ + + +

20 | Cu l t u ra l & En te r ta i nmen t Cap i ta l Needs Tas k Force www.cu l t u ra l needs tas k fo rce.com | 2 1

+ + =$8M $11M $11M $5M $25M $18.2M $10M $88.2MAnnually

Milwaukee County Schools

Health & Human Services

MATC County Transportation

County Public Safety

Miller ParkCultural & Entertainment/Milwaukee County Parks

$1.98 billion

$570 million

$395 million

$261 million

$230 million

$56 million

$27 million

Annual Public Spending Comparison

Funded through $.10, five-county sales tax


1. A consumption tax applied throughout the four-county region on beer, cigarettes and/or liquor. For illustration purposes, the team calculated the impact of a $2 per barrel surtax on beer, a $2 per gallon surtax on liquor and an additional 20-cent-per-pack surtax on cigarettes. Without accounting for any fall-off due to the higher cost, projected revenue from each levy was $2.5 million on beer, $7.4 million on liquor and $12.7 million on cigarettes. Looking at consumption taxes across the U.S., the team noted that beer and liquor sold in this area are taxed less than the national average, while cigarettes already are taxed substantially more than average.

2. Tax increment financing (TIF), in which future gains in property tax revenue from new development in a defined district are used to fund current improvements within the district. The task force later dropped this vehicle from consideration since it assumes that the development in question is subject to property taxes, which is not true of publicly owned assets.

3. A ticket tax, which would apply to all paid admissions at designated venues. A $1 surcharge applied to the current number of tickets sold at the Milwaukee Art Museum, Milwaukee Public Museum, Milwaukee County Zoo, BMO Harris Bradley Center and the Marcus Center would raise about $2.4 million annually, assuming the higher price had no effect on sales.

Continued on page 24

The annual cost of the first three items – which were the focus of the task force – totals $34 million. This figure is appropriately modest, relative to amounts spent on core pubic services. For example, Milwaukee County taxpayers spend 58 times more, $1.98 billion, on public K-12 schools; 17 times as much, $570 million, on human services; and seven times as much, $261 million, on public transportation.

The team noted that using annual revenue to support debt payments for some of the above purposes had the advantage of accelerating the positive impact of investments by using borrowed money. On the other hand, using a pay-as-you-go approach would ultimately make substantially more dollars available for investment by eliminating interest payments.

Potential sources of funds and their projected impact included:


7.62%Denver


7.78%Minneapolis

7.85%Kansas City

9.5%Chicago

7.0%Indianapolis

6.875%Nashville

7.25%Charlotte

7.78%Raleigh

7.0%Pittsburgh

6.0%Baltimore

8.37%Oklahoma City

8.125%San Antonio

5.6%Milwaukee

Sales Tax Rates of Comparable CitiesSource: Tax Foundation


While property taxes are relatively high in Wisconsin with only 11 states ranking higher, the Milwaukee region’s 5.6% sales tax is 99th lowest of the country’s 108 metropolitan areas.

For every $ in taxable purchases

Milwaukee County Sales Tax with one-half cent increase*

Continued from page 23

For every $ in Current One-half Total taxable purchases sales tax cent increase increase

$10 .56¢ .61¢ .05¢ $100 $5.60 $6.10 .50¢ $1,000 $56.00 $61.00 $5.00

*Calculated pre Miller Park tax expiration in 2018Note: For Milwaukee County to levy additional sales tax, legislative approval would be required.


The “Sources and Uses” scenarios were presented to the full task force in September, 2014 for preliminary discussion. In October, task force members were asked to prioritize the potential funding uses. Consistent with the group’s original focus, members placed most emphasis on meeting the capital needs of the Milwaukee Public Museum, Milwaukee County Zoo, Milwaukee Art Museum and Marcus Center for the Performing Arts and on raising funds for a new arena. While outside the group’s stated scope, shifting the operating cost of Milwaukee County parks to a new funding mechanism and financing an expansion of the Wisconsin Center also drew substantial interest.

The group used an online survey to narrow and focus the balance of its work. Through this tool, a clear consensus was reached on four issues:

1. The Marcus Center, Milwaukee Art Museum, Milwaukee County Museum, Milwaukee Public Museum, BMO Harris Bradley Center and Wisconsin Center are regional, vs. county-specific assets.

2. Any new public funding mechanism should be limited to capital projects vs. used to supplement operating budgets.

3. Any new public funding mechanism should feature a sunset provision so that it expires after a given period of time.

4. A local sales tax increase is the most viable, though not the only, option for a new public funding mechanism.

Funding sources and uses


While not reaching a unanimous consensus, task force members arrived at the following general conclusions:

Funding for parks is a separate issue from a public policy standpoint. However, assuming that a referendum ultimately is held to determine whether citizens support additional public funding for cultural and entertainment assets, parks should also be included if polling shows voters view this as a desirable combination.

Allowing for funds generated by a new tax to be used to support borrowing – i.e., the approach used in the case of the Miller Park District surtax – means there cannot be a fixed-date sunset since the tax must continue until enough money has been raised to pay off the debt. To win voter confidence, any new public funding mechanism should have a fixed end date. Other metro areas have shown that temporary tax increases that produce concrete, positive results pave the way for voter approval of future temporary increase designated for other improvement projects. Therefore, the preferable option is a pay-as-you-go approach that collects a higher amount for a shorter period of time, with money for improvements raised before shovels go in the ground.

A consumption tax drew a mixed reaction but merits further consideration. Taxes on beer and liquor are on the low side here relative to other metro areas. An increase that applies throughout the four-county region could generate significant revenue.

A ticket tax should be ruled out. The area’s cultural and entertainment venues establish ticket prices based on ample evidence of how high a price they can charge without triggering a significant attendance reduction. Because it is part of their mission to remain affordable to citizens of modest means, none of our publicly funded cultural facilities charges a ticket price that covers its actual cost of operation. Therefore, a ticket tax would be counterproductive.

While maintaining a competitive convention center should be a regional priority, the Wisconsin Center falls into a different category than cultural and entertainment assets. Consideration should be given to expanding regional support for the convention center through existing funding mechanisms rather than tapping a new funding source for this.

The Task force focused on five remaining questions at its final meeting on November 25, 2014.

Should we suggest that a Milwaukee County referendum include capital projects at designated Milwaukee County parks?

Should we encourage consideration of a pay-as-you-go approach or an approach that allows for borrowing?

Given that a local sales tax increase has been identified as the most viable option, should we also encourage consideration of a consumption tax on beer, wine and/or cigarettes?

Should we encourage consideration of a ticket tax?

Should we encourage consideration of a convention center expansion as part of a package put to referendum votes in Milwaukee, Ozaukee, Washington and Waukesha Counties?

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By the time the Task Force was nearing its end, it had become clear that the 2017 deadline set by the NBA for moving the Milwaukee Bucks to a new venue had put the arena funding discussion on a separate, faster track. While not as headline-grabbing, the threat to the region’s other signature cultural and entertainment facilities deserves just as much consideration.

The task force has completed its assignment of identifying actionable options to address this threat. The MMAC has committed to use our work to advance a metro-wide outreach initiative aimed at raising awareness of the risk that the area may ultimately lose these regional assets without a broader base of public support.

We understand that some citizens may conclude – just as several of our own members have – that cultural and entertainment facilities do not warrant taxpayer support. But while the ultimate outcome remains to be seen, we know two things with certainty: Just as actions have consequences, so too does inaction. And if our region is to lose one or more of these community assets, it should not happen by accident. Therefore, we are pleased to have had this opportunity to assemble the facts, perspectives and options required for a robust, well founded regional dialog on this quiet but consequential crisis.

Summary


Documents

Cultural Needs Report 2015