The decision on how to plug Madison’s $22 million operating budget hole is now up to voters.
At a special Aug. 20 Zoom meeting, Madison’s city council voted overwhelmingly to place a $22 million operating budget referendum on the Nov. 5 ballot. Only two council members — Ald. Isadore Knox and Ald. Barbara Harrington-McKinney — voted against the measure. This is the first time the city of Madison has asked voters to increase property taxes.
The city faces deep personnel and service cuts if the referendum does not pass in November. But several council members said that communicating the referendum’s purpose and fighting misinformation about city finances will be a challenge.
“Every conversation, it feels like I’m re-explaining what the facts are sometimes to the same person, because they’re getting misinformation from somewhere else,” Ald. Sabrina Madison told the council.
In public comments on Aug. 6, more residents opposed than supported the referendum. Opponents have said they cannot afford the additional taxes and suggest that the city should spend “within its means.”
Madison Mayor Satya Rhodes-Conway said in a Tuesday evening statement that, given the steep cuts the city otherwise faces, approving a referendum in November is the “only budgetary path in 2025 that protects our values as a community, while we work to address the chronic underfunding of local governments at the state level.”
The referendum would add $22 million in property taxes on an annual ongoing basis, with city officials estimating the monthly cost on an average-value Madison home would be $20. If it is not approved, the city would need to implement around 60 layoffs, or $6 million in cuts, in 2025.
City officials say inflation-driven increases in employee wages and benefits, the end of federal pandemic-era funding, and lost revenue throughout the COVID-19 pandemic helped set the stage for the city’s current budget gap. Due to a lack of other funding sources, Wisconsin municipalities are more reliant on property taxes than other states’ municipalities. With its combination of high property values and a high total population, Madison receives the third-lowest shared revenue payout of all Wisconsin municipalities, at $28 per capita.
Despite increased lobbying efforts at the state level, Madison officials say their revenue-raising options are limited. The city does plan to enact $10 million in special charges in 2025 — or 2027, if a referendum passes — in order to close some of its budget gap.
Ald. Marsha Rummel introduced an amendment at the council meeting that would have increased the referendum’s total cost to $29 million while eliminating $7 million in urban forestry fees. Rummel argued her approach was the more progressive option, but the amendment failed 17-2.
Ald. Regina Vidaver said she was worried that a higher sticker cost on the referendum would discourage Madisonians already skeptical about passing a referendum: “What we’ve seen is that we have enough of the populace that doesn’t support a referendum at all because they simply don’t understand why we’re here,” Vidaver said.
The city’s referendum will be on the ballot with two referendums totaling $607 million from the Madison school district. Dale Knapp, research director of the Wisconsin Counties Association, tells Isthmus that the increasing prevalence of municipal and school board referendums is tied to the state government’s decades-long erosion of local finance control.
The state Legislature established school board property tax limits in the 1993-95 state budget. Property tax limits have existed for municipalities since 2005, but were made permanent in 2011.
“Prior to the revenue limits, it was either the school board or the city council that determined how much they needed to raise property taxes to continue to fund,” Knapp says. “The Legislature essentially said, ‘No, we’re going to let your property taxes grow by these two different formulas.’ But if you need to exceed that, it’s not just the school board that can do that — the general public, your constituents, have to be on board with it.’”
