Oshkosh officials warn shrinking levy room, rising personnel costs squeeze 2026 budget

City Manager Rebecca Grill told the Oshkosh City Council at a June budget workshop that the city faces tight choices for the 2026 operating budget as state levy rules and rising personnel costs compress available revenue.

Grill said the city must reckon with an “overreliance on property taxes in the state of Wisconsin” and recent changes in state revenue-sharing, noting Act 12 of 2023 redirected a portion of sales tax to supplement police, fire and EMS funding. “We have the expenditure restraint program…we're under the levy limits,” Grill said, explaining how those rules limit the city’s ability to raise levy revenue beyond net new construction and authorized debt adjustments.

The briefing said personnel costs account for more than 75% of the general fund and that police and fire already represent roughly 30% and 31% of the general fund respectively. Finance staff laid out high‑level budget assumptions used for planning: a $2.0 million placeholder for cost‑of‑living and salary increases and an $850,000 conservative estimate for other personnel cost pressure, producing roughly $2.8 million in projected personnel-related cost increases.

Julie, the finance director, walked council members through levy limit mechanics, including “net new construction” (the one‑year increase in taxable value from new and improved buildings) and the debt service adjustment, an item that has been used increasingly to raise levy beyond net new construction. Julie said the city’s net new construction for 2024 allowed about $234,000 of levy increase on a base levy near $34 million, and that the debt adjustment lines have risen in recent years (the presentation cited roughly $12.9 million used in the 2024 worksheet).

Grill and Julie presented mitigation options that are largely one‑time or short‑term: draw down fund balance, reduce salary and benefit budgets, implement vacancy savings, reduce staff, cut services, change fees, or pursue referendums — noting referendums and structural state changes are unlikely near term. Longer‑term structural remedies discussed included exploring a joint fire department and advocating for state policy changes such as restoring a levy floor or altering municipal funding formulas.

Council members pressed staff about the scale of trimming options and the limits of cutting services. One council member said: “There’s not a lot of fat in this budget that we could just easily trim,” and city staff replied that departmental vacancy savings and a conservative approach to benefit and WRS projections could produce some savings, but not enough to close projected gaps alone.

City staff framed the workshop as an early, high‑level review to inform later CIP and operating budget work, with an expectation of another CIP workshop in August and final operating budget hearings in October and November.

Ending

No formal decisions were taken at the workshop. Staff said they will continue detailed department reviews, return with updated CIP and operating budgets in subsequent workshops, and provide final budget documents for council action in the fall.