Madison facing $27 million dollar deficit in 2025

MADISON, Wis. (WMDX) – With federal COVID relief dollars running dry, the city of Madison is facing a $27 million budget deficit in 2025. City finance officials gave a presentation to the Common Council on the state of Madison’s finances Tuesday night. State law mandates that city’s pass a balanced budget, meaning that Madison officials either need to bring in more revenue, or make significant cuts to their operating budget. 

Over the past several years, the city of Madison has heavily relied on federal COVID money to keep its programs afloat. Those COVID dollars are set to run out by the end of the year, and will not be available to the city to use in their 2025 budget. Additionally, Madison received the lowest per-capita increase in state aid when the state Legislature overhauled their shared revenue formula last year. 

Because the city’s various revenue streams have not kept pace with expenses since the COVID pandemic, the city now faces a $27 million deficit in 2025. That deficit is expected to grow to over $60 million by 2029 if no changes are made. That leaves city leaders with three options: either increase their revenue, cut their expenses, or some combination of the two. 

The city has limited options for raising their own revenues, outside of raising property taxes. These include things like raising the cost of fees, licenses, and fines, such as ambulance fees and parking tickets. The city currently brings in about $55 million in non-property tax local revenue, meaning that if they were to only raise fees to cover the deficit, they would need to increase their local revenue by about 50% in all areas. 

Additionally, city leaders could raise property taxes to help cover the deficit. To do this, the city would need to go to referendum, and ask voters to raise their own property taxes. Some city alders at Tuesday’s meeting worried that a referendum would be voted down, especially since the Madison School District is also debating going to referendum this fall. 

If the city can’t raise revenue, then they will have to cut expenses to balance their budget. $27 million is equivalent to around 270 positions throughout all of city government, and represents the entirety of Madison’s Streets Division general budget. This would represent a major reduction in city staff, and layoffs would likely have to occur in all areas of city government. 

The city could also roll back some of their newer programs, and reduce employee compensation and benefits. 

Madison finance department leaders say that balancing the budget would likely have to include both increasing revenues and cutting expenses. While cutting 270 positions throughout city government would result in major cutbacks to city services, raising $27 million in revenue would also put increased strain on city residents. 

Finance staff will continue meeting with both Mayor Satya Rhodes-Conway and city alders to discuss what the city needs to do to balance next year’s budget. The Madison Common Council will meet again on March 5 to discuss their values and priorities in city government before beginning the process of putting together a new budget. The Madison Common Council will pass a 2025 budget in November.