Madison property tax referendum on cusp of victory; results mixed in other communities

Madison is on the cusp of averting cuts to city services as voters seem poised to back a $22 million property tax referendum on Tuesday, which would deliver an indisputable win for Mayor Satya Rhodes-Conway as the city pivots to lobbying the state Legislature for budget relief in the years ahead.

The success of the city's first-ever referendum would spare services from an austerity budget that would have rolled back transit services, weekend library hours, brush collection, ice rinks, nonprofit funding and more. Until 2030, the city would be able to rely on the $22 million to close its accelerating mismatch between its spending and revenue sources, which have long been heavily restrained by state law.

The referendum's passage would effectively maintain the status quo in the city's budget. In the years ahead, the city still faces financial limitations in its ability to hire new staff, launch new programs and staff expanded facilities.

The referendum, especially when paired with the two Madison School District referendums which passed on Tuesday, has raised some concerns about creating higher housing costs in Madison.

The average Madison home valued at $457,300 this year will see property taxes increase $230 to $3,330 with the referendum's victory. Taxes on the same home will increase an additional $83 under normal city tax levies, for a total increase of $313.

It's estimated that annual property taxes on the average apartment unit valued at about $169,000 would go up by $85 due to the referendum.

Even though it appears successful, the referendum did underperform the School District's two ballot questions: a $507 million capital referendum and $100 million operating referendum.

The money from the referendum does not alone close the city's budget gap in the years ahead. Between 2026 and 2029, the city will tap $18 million of its reserves and rely on a new, untested infrastructure charge paid by property owners that would be the first of its kind in Wisconsin, according to the mayor's office's five-year budget plan. That charge would account for $10 million of the city's budget in 2027 and $20 million by 2029.

Properties would be billed based on the amount of vehicle traffic they generate.

In a report on the city's budget last month, the Wisconsin Policy Forum noted that the charge resembles other charges municipalities have tried to pass that were ultimately struck down by the state Supreme Court.

"It is possible this fee could also face legal challenges that could either delay the process of receiving revenues or even prevent it altogether," the report said. "If that were to occur, the city might need to turn to other budget steps such as further cuts or use of reserves."

Underpinning the city's message on the referendum was the real limits placed on it by state law which hinder how much revenue it can bring in via property taxes and other fees.

Property tax levy rules enacted by former Gov. Scott Walker in 2011 only allow the city to raise its levy by a net new construction factor every year. To illustrate, the $1.1 billion worth of new construction in the city this year adds only $9.6 million in new property tax revenue.

Other sources of state financial support have declined relative to inflation since 2011.

Total state aid for the city, which stood at $44 million this year, is $6.7 million lower than it was in 2011. Madison also saw limited benefit from historic shared revenue legislation passed in 2023. The city gets $29 per resident from the state, the second-lowest amount of Wisconsin's more than 1,800 municipalities.

Fixing state law and boosting state aid will be the foundation of the lobbying push city leaders have pledged to launch in the years ahead.

Legislative options already getting floated include pinning property tax levies and shared revenue to inflation, reimbursing cities more for the emergency services they provide to state-owned buildings, and creating a local sales tax or a regional transit authority.

Rhodes-Conway has said she's already pivoting to that in conversations with lawmakers in both parties. The city also plans to hire a new lobbyist ahead of state budget talks next year.

No success in Fitchburg

Budget constraints and the ability of city services to keep up with population prompted other referendums in Dane County, with mixed success.

A majority of Fitchburg residents voted against a $3.6 million property tax referendum that the city hoped to use to expand its police and fire departments and public transit system.

City leaders have said Fitchburg's rapid population growth is straining those and other essential services. They said a referendum was necessary because the allowable tax levy increase for 2025 — a number tied by state law to the net value of new development that occurs within the city's limits each year — would let Fitchburg preserve existing services but would not be enough for it to accommodate the increasing demand for those services.

The Fitchburg community appeared unconvinced.

The referendum failed 53% to 47%, according to unofficial election results published by the county.

Fitchburg's population has climbed by a third in the past decade to over 30,000. It's the third-most-populous city in Dane County, after Madison and Sun Prairie. Leaders there say staffing has not kept up with Fitchburg's ongoing transition from a largely agricultural city to an increasingly urban one.

Agard has served in the state Legislature since 2013, including a year as Senate minority leader.

The Fitchburg City Council opted to put a referendum on the ballot this year amid concerns that stretching the same resources across more residents would result in less police availability, longer fire response times and extended waits for roads to be repaved.

The city intended to use the extra money to hire three police officers, a lieutenant and a sergeant, six firefighters and three additional city staff, operate the new police facility that is expected to open in a few years, pay for night and weekend service on two weekday-only Metro Transit bus routes, introduce paratransit and absorb other operating costs.

It also sought to boost starting wages for some city employees. Base pay for part-time firefighters in Fitchburg is $12 per hour, and the city wanted to use the added tax revenue to rely more on full-time firefighters, while raising the base pay of the remaining part-time firefighters to $15 per hour.

Mayor Julia Arata-Fratta has said previously that Fitchburg will still have to come up with the money to pay for some services, like operating its new police facility. She has not specified where that funding will come from.

Monona voters say yes

Monona voters on Tuesday narrowly approved a $3 million operating budget referendum, which officials said was needed to maintain current services and boost pay to better retain and recruit staff.

The vote was 50.3% to 49.7%, according to the Dane County Clerk's unofficial tally.

The measure will allow the city to raise nearly $13 million in property taxes next year, instead of nearly $10 million under state limits. On an average home worth $435,000, residents will pay about $713 more a year.

Some $1.1 million of the $3 million will go to staff salary increases and $134,000 will cover overtime pay next year. Another $850,000 will pay for the increased cost of services next year, with $871,000 going to additional operating cost expenses in 2026 to 2029.

"We're appreciative of the support," said Neil Stechschulte, city administrator. "Now we have to follow up on our end of the bargain and make sure we're continuing to provide a sound level of service."

If the referendum hadn't passed, city leaders planned to implement a $40 wheel tax per vehicle and start a special charge for refuse and recycling pickup. The city was also looking at keeping some public safety jobs open, reducing brush and yard waste pickup and cutting back hours at the library, pool and senior center, among other steps.

Monona, like other municipalities, is restricted by revenue limits passed by the state Legislature. Property tax increases can't exceed the percentage increase in value from net new construction.

In Monona, a landlocked community of 8,800 people immediately southeast of Madison, that means no money could have been added to the city's budget next year for operating expense increases without voters approving additional funds through a referendum.

Inflation has increased costs, demand for emergency services has gone up, and staff salaries need to rise due to recent turnover and wages being lower than peer communities, a report in June said.

In a survey in June, 59% of respondents said they would definitely or probably support a $3 million referendum. Asked about a potential $4 million referendum, which would allow for hiring additional staff, 43% were in favor. On a third option, seeking $4.3 million for even more staff, 32% were in support.

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David Wahlberg | Wisconsin State Journal

Nicole Pollack | Wisconsin State Journal Growth and development reporter