In budget deal, long-overdue help for Madison and other towns that can't tax state buildings

In an update on an issue I discussed at some length last September, the recently-signed Wisconsin state budget includes a long-overdue boost in state payments to local communities for providing services to state facilities.

State buildings are exempt from property taxes, but Wisconsin does compensate the cities, villages and townships where those facilities are located. The increased funding will affect hundreds of communities that house state facilities ranging from prisons to universities to office buildings.

The payouts partially cover the cost of providing garbage pickup, police response and fire and ambulance services. Under the preexisting budget, those payments were enough to offset roughly 37 percent of those estimated costs to local communities.

Wisconsin’s recently-enacted two-year budget allocates about $25 million [annually] for the Municipal Services Payment Program, which amounts to a statewide increase of about $7 million per fiscal year.

It’s the first time the state has increased its allocation for those municipal service payments in more than two decades. Under the changes, communities will be reimbursed for about half of their police, fire and garbage costs at state facilities.

Those payments should get coverage up to somewhere around 55-60% of costs, and don’t count toward state levy limits for local governments, which gets us back toward a percentage of coverage that we had around 15 years ago.

This a particularly big help to cities like Madison, where state-owned buildings would add a whole lot of property value to their communities if they counted, and who have been shortchanged on the amount of extra services their community has to take on because these facilities pay no property tax.

As part of that deal, it also looks like communities are getting an additional $3.34 million that helps pay for services to state facilities that don't use general tax dollars, such as Camp Randall Stadium and UW-System dorms. So it’s really a boost of a little over $10 million compared to where we were.

Now, one can argue that having state government services in a community allows for a larger pool of job opportunities than other places, and results in a bigger private sector tax base than would otherwise exist, as state employees like me own houses and spend money at private sector establishments like anyone else. But state employees like me pay taxes just like everyone else does, and it’s nice to see at least some of those funds going back to lessen my community’s need to rely on property taxes.

I also note that the local government fund that gives shared revenues is projected to give out an additional 4% over the next 2 years (a total increase of just over $83 million). So while the increases in shared revenues 2025-27 still doesn’t come close to making up for well over a decade of flat payments from the state as inflation led to costs going up, it’s at least a start in filling the gap, and hopefully it’ll limit the amount of cost cuts and tax-hiking referenda that we have seen in recent years across Wisconsin.

I just wish this City of Madison had held off for a year before putting a $22 million referendum on the ballot last November, because they now stand to have a few million more dollars coming in to prevent the need for such a tax increase (the hope that this would happen was a big reason why I voted no on the question).

But now that I think about it, maybe I'll drop my alder a line to let him know that maybe we don't need to tax to the max this year because the state finally gave some assistance to Madtown for having the city pick up the trash and help to provide safety services for the many state and university-owned buildings.