Milwaukee is Turning its Water Utility Into a Cash Cow

Is reversing a relied-upon transfer of city funds the way to fix the city’s lead pipe problem?

This year, about $13 million is expected to flow from the coffers of the Milwaukee Water Works and into the city’s general fund, where it can be spent on anything from fixing fire engines to filling potholes. Depending on who you ask, this payment is either a backdoor means for propping up city finances – at a time when the money could be used to replace dangerous lead water pipes – or a routine, irreplaceable part of city finances. The amount is about 10 percent of all funds received by the water works, which gets most of its revenue from residential water bills.

Milwaukee isn’t the only city to turn its water utility into a cash cow. Nearly all municipalities in Wisconsin that operate a water utility make a similar “payment in lieu of taxes,” as defined under state law, according to Mark Nicolini, the city’s budget director. (A city analysis ranks our payment as slightly below average for the state.) He says it would take an act of the Common Council for the Water Works to hang onto the money and spend it on replacing some of the 70,000 remaining lead lateral lines in the city, pipes that are believed to play a role in poisoning an unknown number of children and adults.

Robert Miranda, an activist and leader of the group Freshwater for Life Action Coalition, has argued for a similar course of action and believes the city should be spending $20-25 million a year on replacing lines. “At least then we’re reducing the number and reducing the harm,” he says. Mayor Tom Barrett’s 2017 city budget includes about $3.6 million to make some 600 high-risk replacements, and Nicolini says the city will look into applying for a water rate increase later in the year, through the state Public Service Commission, in part to generate more money for lead laterals. He estimates the new rate bump, which has yet to be determined, would allow the city to replace many more lines each year without subtracting from other programs, as would happen with reversing the $13 million. “You’d be talking emergency services and libraries,” he says. “Thirteen million would not be a trifling amount.” ◆

Source: City of Milwaukee

‘Drops in the Bucket’ appears in the May 2017 issue of Milwaukee Magazine.

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Matt has written for Milwaukee Magazine since 2006, when he was a lowly intern. Since then, he’s held the posts of assistant news editor and, most recently, senior editor. He’s lived in South Carolina, Tennessee, Connecticut, Iowa, and Indiana but mostly in Wisconsin. He wants to do more fishing but has a hard time finding worms. For the magazine, Matt has written about city government, schools, religion, coffee roasters and Congress.