
As Madison seeks to balance its 2025 budget, the city will largely do so on its own. Mayor Satya Rhodes-Conway, the Common Council, and ultimately the voters themselves will have to decide the right level of city services and spending for next year and beyond. Then city taxpayers will have to dig – and perhaps do so deeply – to fund that increase without new infusions of state or federal funds.
The mayor and Common Council members have placed a $22 million referendum on the Nov. 5 ballot to help fund increased spending for city operations. After years of tight state limits on Madison’s tax levy and three years of rapid inflation, the mayor says the increase is needed to give raises to staff, reduce employee turnover, and ensure services remain at high levels. Under her proposed 2025 budget, nearly three-quarters of the revenues in the city’s main fund would come from property taxes on the owners of homes and businesses in the city.
That rising share illustrates – perhaps better than any other statistic – the predicament for the city and its residents and taxpayers. Though property values in Madison have skyrocketed and its population is growing, state law limits any increases in the city’s tax levy for operations to the growth in new construction within its territory. Development in the city is outpacing the state average, but still fell well short of the inflation rate in recent years, which has driven up costs for both Madison residents and the city budget.
Towns and cities across the state face a similar challenge, but many of them received help in 2024 in the form of a massive boost in a form of state aid known as shared revenue. Yet as last year’s budget brief showed, Madison received the least additional aid per resident of any municipality in the state.
To be sure, the city benefits mightily from being the seat of state government and the home to the world-class research institution that is the University of Wisconsin-Madison. These assets have long buoyed the city’s economy and property values, and state officials have some justification in being reluctant to provide direct aid to the city. At the same time, however, state law also limits what Madison officials can do to tap the city’s high property values to fund services with local funds.
In recent years, city spending has been increasing at a rapid clip. Since 2021, that spending has been propped up in part with federal pandemic relief aid, but this year essentially marks the end of that source of support. The city retains ample reserves of its own – enough to fund this spending for a period of time into the future but not forever. In addition, this option would weaken the city’s traditional strong finances and credit rating and leave city employees and residents more exposed to the impact of future crises.
If successful, the referendum would not solve all the city’s challenges but would bring a measure of fiscal stability to the city budget. If it fails, the problems would be greater still, with the city cutting some services, dipping into its reserves, and leaning heavily on an undrafted and untested new infrastructure special charge. As always, we take no position on the referendum or city budget as a whole. Yet as members of the Common Council and the voters themselves consider these questions, we hope this brief offers insights that will help them to make these difficult decisions for themselves.