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Comptroller projects $3.7 million deficit for 2025; sales tax and health care costs cited as key uncertainties
Summary
The Office of the Comptroller reported a February projection showing a narrowed 2025 deficit of about $3.7 million, citing sales tax shortfalls and rising health care costs as main drivers and noting a possible $5 million upside from investment earnings.
Milwaukee County's Office of the Comptroller told the Finance Committee that the county's preliminary February projection for 2025 shows a reduced deficit of roughly $3.7 million, with major drivers including sales tax collections and healthcare spending.
Financial Services Director CJ Paul presented the February fiscal report and said the county's sales tax shortfall was estimated at about $5.6 million under a flat remainder‑of‑year assumption. Paul cautioned that the office had only about a month and a half of collection data and that the sales tax outlook could change. He said a $2.5 million surplus in fringe benefits (largely from pension and WRS contribution timing) partially offsets that shortfall.
Paul said healthcare costs were not looking favorable through the first quarter because prescription drug spending has increased year over year, though rebates may offset some of that pressure. He said investment earnings are being monitored and the county is projecting roughly a $5 million surplus possibility from investment earnings depending on market conditions.
During Q&A, Supervisor Roland and others asked whether end‑of‑year adjustments similar to last year (investment earnings and departmental surpluses) could improve the picture; Paul and Joe Lamers (director of SBP) said there were possible levers — investment mark‑to‑market recoveries, departmental surpluses (including DHHS) and rebate timing — but those are uncertain and timing dependent. Lamers said sales tax performance over the next months will be determinative and that a modest increase in sales tax growth could materially close the gap.
Supervisor Anne O'Connor asked about the per‑bed cost of placements such as Lincoln Hills; Lamers said placement costs are very high — between $400,000 and $500,000 per bed per year — and that small changes in placement counts can materially affect DHHS spending.
Ending: The comptroller's office will continue monitoring sales tax collections, healthcare spending and investment returns and update projections as new data becomes available. The committee received the report; no formal action was taken.
