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The Wisconsin State Capitol building.
The bipartisan budget deal includes an increase to the program that reimburses municipalities for police, fire and waste management services provided to property tax-exempt state facilities.
Madison could gain more than $3 million in additional municipal payments under a budget deal expected to be taken up by both chambers of the Legislature as early as Wednesday.
Mayor Satya Rhodes-Conway called the increase “a significant step in the right direction” for “fairness” and property tax relief in a July 1 statement.
"The governor and legislative leaders from both parties recognized the need to correct this imbalance and delivered for local taxpayers across the state,” Rhodes-Conway said. “I’m grateful that our coalition-building and strategic advocacy have made a difference.”
The budget bill includes an additional $7 million in annual funding for the state program that reimburses municipalities for police, fire and waste management services provided to property tax-exempt state facilities.
State lawmakers have not fully funded the municipal services payments program since 1981 and have not increased its funding since 2003. When the state has less money available than it owes, it decreases the amount municipalities receive by a uniform percent. In 2024, the state paid 37.6% of what municipalities were owed; Madison was shorted $13 million. Under the proposed increase, the state would pay just under 52% of what municipalities are owed.
City of Madison Finance Director David Schmiedicke has not yet seen details of the package, but says in an email that a $7 million increase to the program’s funding would mean approximately $3 million more in payments to Madison.
The estimate is “preliminary and subject to change once the details of the proposal are available,” he warns.
Madison, along with such municipalities as Waukesha and Oshkosh, have criticized the program’s underfunding. Waukesha Mayor Shawn Reilly told Isthmus in February that the lack of funding for the program “pisses me off, to be honest.”
DJ Nichols, an attorney and city council member in Oshkosh, the third-largest provider of municipal services to state facilities, says the program’s underfunding “prevents municipalities from providing those high quality services at reasonable cost” and pushes costs to taxpayers through higher property taxes. The city received about $1.7 million less than what it was owed in 2024.
“We’ve worked hard to put this issue on the map, and we won’t stop until the state pays its full share,” says Nichols.
Increased funding for municipal payments was not in the bill written by Republican lawmakers on the Joint Finance Committee. But when Republican Sens. Chris Kapenga, Steve Nass and Rob Hutton signaled opposition to the committee's proposal, Republican leadership was forced to seek a deal with Senate Minority Leader Dianne Hesselbein, D-Middleton, and Democratic Gov. Tony Evers in exchange for Democrats’ votes. Those negotiations led to increases in funding for the Universities of Wisconsin, child care providers and, among other things, the municipal services payments program.
Sen. Kristin Dassler-Alfheim, D-Appleton, said in a July 1 statement that it is “encouraging” to see a funding increase for the program. She characterized the budget deal as a result of gains Democrats made in the state Senate under Wisconsin’s redistricted state legislative maps.
“The new, fair maps created a balanced government, and this is the result: a government that can work together to reach an agreement where everyone walks away wishing they’d gotten more but no one leaves feeling kicked in the teeth,” said Dassler-Alfheim.
Republican leaders had been reluctant to take up the increase. Assembly Speaker Robin Vos, R-Rochester, told Isthmus in February that fully funding the program was unlikely given state budgetary constraints. And opposition to liberal voting blocs and local governments in Madison and Milwaukee — cities with the most and second-most amount of state facilities — likely gave funding for the program no favors.
But Democrats throughout the budget process this year urged a funding increase for the program. Evers requested an additional $17 million annually for the program in his budget proposal; the additional funding was stripped when the Joint Finance Committee set funding levels “back to base” on May 8. Committee Democrats later proposed funding the program at 100% in a budget motion on June 12, but Republicans voted against the motion 12-4.
Sen. Kelda Roys, D-Madison, blasted Republicans for underfunding the program during the June 12 committee meeting.
“As a homeowner, I pay my property taxes. Otherwise the government takes my house,” said Roys. “All of us pay property taxes, but here the state is not paying its bills, and it's coming at the expense of municipalities, including the one I represent, Madison, which fared very poorly in the [2023] shared revenue deal relative to the communities that you guys represent.”
Added Roys: “It's really just disappointing to get lectures on fiscal responsibility and accounting practices, and then have motions like this that basically let the state off the hook from paying for the services that we receive from the municipalities.”
A handful of Assembly Republicans — Reps. Scott Allen, Rick Gundrum, David Armstrong, Dave Maxey, Jerry O’Connor, Clint Moses and Rob Swearingen — had sent a budget motion May 28 to the Joint Finance Committee to fully fund the program. But leadership never took up the motion.
Municipalities will likely continue to push for more funding in the future. Nichols has floated the idea of Oshkosh suing the state Legislature for underfunding the program, and that’s not off the table.
But, he says, “Let’s make sure the increase suggested overnight and the rest of the budget passes. After that we can continue advocating to ensure Oshkosh and the other 360 municipalities affected by the MSP are fully reimbursed for services we provide to the state. I’m just one of seven [on the city council], but in my view, all options remain on the table.”
