Consultants warn Marshfield of levy gap, recommend referendum and long‑range planning

Marshfield — Consultants from Ehlers told the Marshfield Common Council on Jan. 14 that the city faces persistent budget pressure and a projected levy deficit beginning next year unless officials pursue new revenue, reduce services or secure voter approval for a levy‑limit increase.

The presentation, led remotely by Kayla Thorpe of Ehlers and introduced by Finance Director Jennifer Salinski, showed modeled scenarios for the city’s capital improvement plan, debt issuances and five‑year operating projections. Thorpe said the plan projects a $1.3 million levy deficit starting next year and noted continuing structural pressure from inflation and low net new construction.

Why it matters: the city’s annual ability to increase its property tax levy is tied to net new construction under Wisconsin law, not inflation, and many municipalities now face a widening gap between rising costs and what levy limits allow. Thorpe told the council the Ehlers model is intended to give elected officials a clearer, long‑range picture to guide decisions about services, capital spending and the possible April referendum the city is preparing.

Key findings and context

- Levy gap: Ehlers’ projection shows a levy deficit in 2025; Thorpe said the model “is showing a $1,300,000 levy deficit,” and that the gap could remain within the planning period absent changes to revenues, services, or a successful referendum. The presentation did not model the proposed April referendum.

- Levy need vs. allowable levy: The report separates “levy need” (what expenditures require) from “allowable levy” (what state levy limits permit). Thorpe said that, under current assumptions, the city will not be able to legally increase the levy to cover roughly $1.0–$1.3 million in projected recurring expenditures.

- Debt and capital: The city’s debt policy and statutory limits provide capacity to borrow for capital; Ehlers modeled debt issuances tied to the CIP and recommended smoothing debt service to avoid sharp tax‑rate swings. The plan shows borrowing needs concentrated in 2025–26 driven by police and street projects, with additional issuances through 2029 depending on project choices.

- Fund balance and credit: The report compared Marshfield’s unassigned fund balance to Moody’s guidance. The city’s policy target (25–30% of expenditures) is below Moody’s increasing informal benchmarks; Thorpe said Moody’s expectations rose after COVID because agencies want larger buffers for unforeseen shocks.

- Staffing and operating pressures: Ehlers noted about 10 vacant full‑time positions at the time of the plan and warned that prolonged vacancies can raise overtime costs and increase burnout. Consultants recommended prioritizing which positions must be funded versus which could be deferred.

Council reaction and next steps

Council members asked about the scale of the levy impact on homeowners and the interactions between enterprise funds (for example, EMS) and the general fund. Thorpe and staff explained that the analysis focuses on tax‑levy supported funds and that enterprise funds were modeled only to the extent they affect the levy (for instance, debt allocations tied to enterprise facilities). Thorpe provided an example: under the modeled scenarios, the annual levy increase needed to maintain current services could be on the order of $2 million, though the modeled household impact would vary by assessed value and county.

The consultant and staff recommended a mix of strategies: pursue allowable non‑levy revenues (fee adjustments, special charges), prioritize capital projects, review service levels with a community survey, continue long‑range planning, and, if necessary, seek voter approval via a levy‑limit referendum. The council is already planning a referendum for April; Ehlers said the model can be rerun to show the referendum’s potential effect.

Thorpe closed by urging regular review of financial policies, continued economic development to increase net new construction, and careful use of fund balance only for one‑time needs or short cash‑flow bridges.

The presentation drew extended council discussion; staff said the capital improvement and budget processes will continue in the coming months and that the council will see more detail before final decisions.