By james art As inflation has driven up the cost of services, Wisconsin’s local governments, including the city of Madison, have found themselves constrained by state laws limiting how they can raise money.
District 8 Ald. MGR Govindarajan told The Daily Cardinal that current state budgets and tax laws dating back to former Gov. Scott Walker’s administration have made it harder for Madison to provide residents with essential services.
“[City employees] they didn’t always get the inflation-adjusted wage increases they deserved,” Govindarajan said. “The city has grown quite a bit since 2012, but we’re still at the same level of service for garbage collection, for example.”
Despite those limitations, Govindarajan and other officials stressed that city leaders have not given up on their quest to increase benefits for Madison residents.
The GOP-controlled Legislature rejects the budget proposals
Madison Mayor Satya Rhodes-Conway held a press conference Oct. 3 at the Madison Public Library with state legislators to ask for more funding for Dane County cities.
Governor Tony Evers’ 2023-25 Budget proposal included revenue sharing that would have the state give municipalities a minimum of 95% of what they gave in the previous year.
In addition, proposal includes a 5 percent increase in state payments for municipal services such as police, waste disposal and utilities, and a 4 percent increase in general transportation aid for both counties and municipalities.
But on biennial budget passed by the Legislature, does not include these increases in shared revenue funding, leaving Dane County cities underfunded.
This is a result of Act 12 of 2023, which originally intended to give all municipalities more funding, but created a disparity between Madison and the rest of the state.
City Communications Manager Dylan Brogan told Cardinal Act 12 that he has changed “very little” in what Madison can accomplish with state funds, despite the fact that Madison has added 90,000 residents since 2000 and is the most the fastest growing city in the state.
“That’s a lot more people paying state sales and income taxes — some of which should help fund local governments,” Brogan said. “In 2024, Madison receives only $29 per resident through the shared revenue program. The average for cities in Wisconsin is $195.
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One special one impact of the revised revenue sharing is that underfunded communities may begin to see cuts in the availability of essential services, such as fire departments.
another impact the decline in shared revenue is making it increasingly difficult for governments to hire public defenders and district attorneys at competitive salaries, according to Wisconsin Public Radio. This leads to a a growing number backlogged in the court system backlogged backlogged cases.
Evers had earlier pushed for an increase in public defenders and assistant prosecutors in his budget proposal before Republicans cut it.
Raising revenue in municipalities is often difficult
In addition to shared revenue from the state, much of Madison budget is financed by taxation. Approximately 71% of the city’s annual revenue comes from property taxes.
“The way the state government expects local governments to be funded is through property tax,” Govindarajan said. “If local municipalities want to increase their budgets, they are forced to ask taxpayers to increase their own taxes to pay for city services.”
Wisconsin used to I count heavily on income and property taxes as part of its revenue stream until Walker’s election in 2010 signaled a shift toward fiscal conservatism and tax cuts. The cuts amounts to to a decrease of 4.4% per capita and created negative externalities for cities.
“Walker basically cut aid to local governments and then their ability to raise revenue,” Brogan said. “Before, you could raise property taxes based on inflation and net new construction. Well, he removed the inflatable part.
May 2011 Legislature Budget Writing Committee legislation on property tax limits changed the minimum tax increase for inflation from 3% to 0%, prohibiting municipalities from increasing their base levies by more than one percent that exceeds the total local government value of all taxable property.
While the introduction of levy limits was a response to then-rising municipal tax rates, the loss of these minimum caps on levies left low-growth municipalities unable to keep up with inflation, according to Wisconsin Political Forumnonpartisan policy research organization.
Brogan highlighted the town of Monona on Nov. 5 referendum about implementing a one-time $3 million increase in its property tax as an example of a city struggling to keep up with costs. 2024 Wisconsin Department of Revenue report found that Monona’s fee cap was only 0.45%.
“How on earth are they going to be able to keep up with this spending when their ability to raise property taxes can never be kept up?” Brogan said. “It’s something that we hope the state legislature will address at some point, and it’s just the tip of the iceberg of revenue limitations.”
In his 2023-25 budget proposalEvers proposed giving municipalities more leeway in choosing their own sales tax — known as a local sales tax — by allowing Milwaukee County to levy an additional 1 percent and other counties an additional 0.5 percent to their base.
But on budget does not contain these measures.
Rhodes-Conway cited the local sales tax option as one of the items that would help Dane County communities secure the funds needed to avoid service cuts during her Oct. 3 press conference.
The partisan divide and next steps for cities
When the biennial budget was passed in 2023, the Democrats unilaterally objected to it without party members voting in favor. One provision Democrats challenged was institution from cutting taxes when the state ran a $7 billion budget surplus.
“Republicans have been in charge of the legislature for 14 years now,” Brogan told the cardinal. “Gov. Evers proposed budgets that treated cities like Madison much better, but Republicans simply ripped that off and passed their own budget.
To combat the budget shortfall, the Nov. 5 election in Madison will include $22 million referendum funding on the ballot to increase the city’s property tax above state levels.
“We specifically came up with this number because it is necessary to continue our services,” Govindarajan said. “If the referendum passes, we will not add anything new. If we don’t get that $22 million, we have to cut services.
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