John Woods
Former Madison Mayor Paul Soglin.
Soglin says a group of mostly white, college-educated progressives, is leading the city astray.
Madison is facing a fiscal crisis unprecedented in scope and depth. Unfortunately there is an elitism in a portion of our community, led by mostly white, college-educated progressives, who profess to support efforts to end racial inequities, build a just community, and provide affordable housing.
I do not question their commitment to those goals, but I do believe they are misguided in ignoring the pending economic crisis. Simply put, they do not understand the economic crisis facing our local government.
The mess is the result of a series of financial decisions made over the past five years; it is not a result of the pandemic. In fact the fiscal relief provided by the federal government through the American Rescue Plan Act (ARPA) only masked the poorly thought-out decisions pushed forward by Mayor Satya Rhodes-Conway.
The city council ratified these decisions either because members did not understand the consequences or because they were intimidated, or both. Multiple council members said to me, “There are some things I want to accomplish for my district, but if I cross the mayor and her majority, I cannot get them done. I have to go along to get along.” As Dave Cieslewicz recently wrote in a Citizen Dave post, “the dire warnings about looming deficits didn’t seem to resonate.”
The problem began in November 2019 when the 2020 budget was adopted and before anyone had heard of COVID-19. Rhodes-Conway got around a state statute that prohibits the use of borrowed money to fund the operating budget.
She took $6.1 million of “Reoffering Premium” — additional funds cities receive from lenders on capital budget loans — to fund the operating budget. Since then the city has applied $32 million of borrowed money to the operating budget. Current and future taxpayers will be paying for the mounting debt service because of this decision.
She did not stop there. There are years when the “Rainy Day Fund” exceeds the city’s needs. It is okay to take the excessive amount — for 2024 that was more than $9 million— but as every accounting and financial professional who works in the area of municipal finance knows, it should be used for one-time expenditures, like rebuilding a road or library, not to fund the operating budget.
There are more budgeting travesties, but the point is clear. Unwise budgeting practices have led to a crisis where in the next two years the city faces a deficit of $35-$50 million that in five years will grow to $75-$95 million. This has nothing to do with the pandemic.
As the Wisconsin State Journal noted in its Nov. 26 editorial, “Taxpayers of modest means — the elderly on fixed incomes, young adults trying to make it on starting salaries, young families working low-wage jobs — deserve more concern. Even if most Madisonians don’t pay property taxes directly to the city because they don’t own homes, they’re still paying through higher rents."
In his post about the city’s financial state, Dave Cieslewicz takes the opportunity to attack me, for whatever reason, but he does not provide a realistic solution to the fiscal crisis facing the city — a disaster created by the current mayor. Keep in mind that the federal COVID funds, designed to make up for revenue deficits created by the pandemic, were far greater than what Madison lost from a decline in the property tax base, income from bus riders, rentals at Monona Terrace convention center, building permit fees and traffic citations.
The city’s Finance Department made it clear that only one half of the tens of millions of ARPA funds were needed to cover the losses and that the financial base is now stable. I have no quarrel that the remaining millions were spent on good works, most going to help Madisonians cope with the economic chaos created by the pandemic. The problem is that there was no consideration or plan to contend with what would happen when the federal funds ran out and reality set in.
Cieslewicz is just plain wrong when he says: “And then things work out. They just do. And they will again. It might very well take a referendum to increase taxes beyond state limits, but after the big pandemic disruption that shouldn’t come as a surprise…We’ll be fine.”
While the concerns raised here are focused on 2025 and beyond, there will be a more immediate hit. When tax bills go out in December, no one will be spared, not homeowners who directly pay property taxes, or renters, who will experience significant rent increases to cover their landlords’ taxes.
Over the decades Madison, unlike many other cities, was fortunate to be able to spend more money on "good works" — community services — than law enforcement. In hard times we were able to maintain staff and services while other cities were forced to lay off workers and make deep budget cuts that hurt everyone. This was possible because we balanced the ability of renters and homeowners to pay for public services with the needs of the community. A city cannot do "good works" if it is financially challenged and if property taxes make housing unaffordable for homeowners and renters alike. Sadly we are already there.
[Editor's note: This column was corrected to note that the city in recent years has applied $32 million of borrowed money to the operating budget, not $38 million.]
Paul Soglin served three tenures — 22 years — as Madison mayor.
