Fact Check: Would Milwaukee Bankruptcy Hurt Wisconsin?

May 15, 2023

Wisconsin lawmakers are fast tracking a plan to bailout Milwaukee to prevent it from declaring bankruptcy. AB245 was introduced earlier this month and it’s already scheduled for a floor vote on May 17th.

Lawmakers claim if Milwaukee declared bankruptcy, it would be devastating for everyone in Wisconsin if that happened. They point to Detroit‘s 2013 bankruptcy as proof.┬áThat caught our attention at the MacIver Institute. We wanted to know, how exactly did Detroit’s bankruptcy affect the rest of Michigan?

Did Detroit’s bankruptcy affect Michigan’s bond rating? Did Michigan lose population because of Detroit’s bankruptcy? Did MIchigan lose industry because of Detroit’s bankruptcy?

The answers to those questions could provide critical insight into what might happen if Milwaukee declared bankruptcy. Like Milwaukee, it’s the largest city in a midwestern state with a strong manufacturing background. Michigan tried everything to bail Detroit out of its self-made financial problems, including several revenue raising options not available to any other city in the state, direct intervention, and eventually allowing it to declare bankruptcy. Wisconsin is starting down that same path with Milwaukee. It is currently trying to give Milwaukee the ability to raise a special 2% sales tax available to no other local government in the state.

MacIver’s Bill Osmulski talked to James Hohman, Director of Fiscal Policy at Michigan’s Mackinac Center for Public Policy, about the situation surrounding Detroit, and what it might mean for Milwaukee and for Wisconsin.

Here’s a hint: