The city of Madison may no longer be dealing as directly with COVID-19, but it is still grappling with its consequences. In many ways, the outlook for 2023 shows a city in recovery: revenues have been boosted by new development, more motorists parking downtown, and a returning travel industry, opening the way for new potential investments in city services.
Yet, as deliberations continue on Mayor Satya Rhodes-Conway’s proposed budget for 2023, the city also faces the challenges brought on by the pandemic and recent economic shifts. A lack of affordable housing and homelessness persist while city revenues from transit riders and parking have yet to fully rebound. Inflation and a rise in turnover in key agencies like the police department are pushing the city to increase pay for workers, which adds to its long-term costs.
Here, the Forum digs into the city’s budget with its fourth annual brief. We find a city with largely healthy finances, including a strong local economy, robust reserves, high service levels, modest liabilities for pension and retiree health care benefits, and the best possible bond rating from Moody’s Investors Service.
At the same time, however, we see some cause for long-term concern. Increased borrowing and rising debt payments are pushing relatively high property taxes upward and gobbling up a larger share of the budget. Within two years, federal pandemic aid to the city will run out and, over the longer term, state caps on property taxes and some fees will limit Madison’s ability to increase its revenues to keep up with other rising costs, including inflationary pay increases for workers.
Compared to the budget problems facing city leaders in Milwaukee, officials in Madison are in an enviable position. The capital city’s stronger economy and finances allow the mayor to propose a variety of new positions to provide new mental health services aimed at improving safety, better transit service, greater access to contraception, additional funding for affordable housing, and more.
Still, Madison has its own challenges, including the need to manage a growing population with lower levels of state aid, which creates greater pressure on local revenues like the property tax. That makes the wise use of those local dollars an even greater priority for the city’s residents and taxpayers.
In this brief, we provide details on the city’s financial strengths and challenges and how they play out in the 2023 budget. Our hope is to provide greater clarity about Madison’s current and future fiscal outlook as the city’s leaders and the public consider the city’s tax and spending plans for the year ahead. Continue reading…