When public officials say they need more money, they know most people will just take them at their word. School districts have understood this for years, and now municipalities are starting to catch on too.
Voters in the City of Madison approved a $22 million operating referendum in November. This spring, the Village of Oregon is asking for $1.95 million and the City of Brookfield wants $6 million. For the record, those are permanent increases in the local tax levy.
In each of these situations there’s a common theme. Facts don’t matter when the government is trying to get more of your money. The MacIver Institute caught on to this reality years ago.
Take Madison for example. In the runup to the referendum, city officials claimed the city was facing financial ruin if voters didn’t approve it. A key claim was that the city’s budget faced a deficit every year since 2011. MacIver quickly discovered from the city’s own documents that that deficit was pure fantasy. At the start of every year the city predicted a deficit, and at the end of the year it wound up with a budget surplus. Not only that, but the budget surplus grew every year. In 2023, it topped $30 million. As a result, the city’s fund balance grew every year too. At the end of 2023, the city had over $120 million cash in the bank. The narrative that the city was broke was an inexcusable lie. Voters fell for it anyway.
The Village of Oregon is playing similar games. In addition to wanting to hire more police officers and librarians, Village leaders say they can’t keep up with rising costs and that revenue growth hasn’t kept up with inflation. Let’s see.
In an attempt to prove that state aid is flat, Village Administrator Martin Shanks stated, “the Village of Oregon received just $458,623 in shared revenue in 2024. For comparison, in 2003, the Village received $414,154. If shared revenue was adjusted for inflation, Oregon would have received more than $700,000 in 2024.”
First, shared revenue payments peaked in 2003. After that the program was drastically cut back. Two years ago, the state decided to change that policy and began providing 20% of the state’s sales tax revenues to local governments. Shared revenue aid jumped by 32% and continues to climb.
The Village of Oregon actually received $531,589 in 2024 according to the Department of Revenue, which is 16% more than what Shanks told the public. It’s also more than double what the village got the year before. In other words, it is disingenuous for local governments to complain about state aid after such a windfall, which lawmakers intend to maintain well into the future.
As for its complaints about inflation, let’s just look to see how recent village revenues compare to inflation, rather than picking a random historical point from over 20 years ago. Over the past four years, the average rate of inflation was 4.9%. Meanwhile, Oregon’s average general fund revenue growth was 6.1%. Obviously, the village is doing just fine managing and keeping ahead of inflation.
The village’s revenue growth is also outpacing its expenses more every year.
Then, there’s the fund balance. If a school district or municipality were in real financial trouble, that fund would be drying up fast. Instead, in Oregon, we find a growing fund balance. It’s current budget projects the fund balance will grow by $14 million this year.
Finally, one of the easiest checks that we always like to run at MacIver is called the current ratio. It’s simply an organization’s current assets divided by its current liabilities. You can usually find that data easily in its most recent audit. Many municipalities and some school districts post copies right on their website. The current ratio tells you if the organization is able to pay all its obligations with readily available resources. Investors like to see that companies have a current ratio that’s at least 1.5. Oregon’s current ratio is 3.7, which is phenomenal.
The Village of Oregon is not in financial trouble by any standard. It is experiencing very healthy revenue growth that is outpacing its expenses with plenty left over for its rainy day fund. It can easily resource its emerging requirement with existing resources.
Brookfield predicts that its expenditures funded by property taxes will exceed its levy limits starting this year. The gap will start at $2.1 million in 2025 and grow to $7.5 million by 2029.
This one is really easy to debunk.
That supposed gap includes over $4 million a year for debt service. That’s a problem because debt service is not subject to levy limits, according to the Legislative Fiscal Bureau.
If you remove debt service from the city’s math and spread the remaining costs out over the applicable time period, there is no budget gap. The total amount of debt service included in the city’s math is $29.6 million. The total excess levy limit is $24.7 million. That results in a $4.9 million surplus by 2029 for the fund balance.
Speaking of fund balance, the City of Brookfield’s general fund balance has been growing steadily over the past few years. It grew by $2.3 million from 2021 to 2024, totaling $19 million at the start of last year.
Municipal referendums are rare in Wisconsin, but these recent examples seem to indicate that could be changing. Voters should be just as weary with them as they should be with school referendums. As these examples show, government officials will never be completely forthright when they're trying to convince voters to give them more money.
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