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Oshkosh officials warn tight levy limits, rising personnel costs squeeze 2026 budget
Summary
City staff told the Oshkosh City Council at a June workshop that reliance on property tax revenue, new state rules and growing debt service are constraining the 2026 operating and capital budgets and leave little room for strategic initiatives.
City Manager Rebecca Grill told the Oshkosh City Council Wednesday that the 2026 budget will be constrained by state levy limits, changes to state aid and rising personnel and debt costs, and that staff planned no decisions at the workshop.
The warning matters because personnel costs make up roughly three-quarters of the city’s budget and public safety accounts for a large share of the general fund, leaving little room to add services or absorb rising costs. Grill said the session was intended as “more of a from a questions component” and to present a high-level view of budget challenges before staff and council move to specific operating and CIP decisions.
Grill described several structural constraints: an overreliance on property taxes compared with other states’ use of sales taxes and fees; recent state actions (identified in the meeting as “Act 12 (2023)”) that reallocated a share of sales tax toward specific services; and limits tied to Wisconsin’s levy-limit calculations, which rely on “net new construction” rather than inflation or CPI.
She explained the city’s municipal services payment (MSP) entitlement — described in the workshop as about $2.7 million in the city’s calculation and resulting in roughly $72 of annual impact for the average home — is not a guaranteed long-term mitigation for the budget gap. Grill also summarized the expenditure restraint program (ERP) history and said Oshkosh is no longer in the ERP formula that previously provided a meaningful state payment in exchange for constrained spending.
Grill highlighted the “debt adjustment” line on the levy-limit worksheet that allows municipalities to increase the levy by the amount of general-obligation debt principal and interest due the next year. She said the city has been using a growing share of that adjustment, shrinking the margin that previously allowed modest levy increases even when net new construction was low.
“Personnel costs are set more than 75% of our budget,” Grill said, noting that the police and fire budgets together represent about 61% of the general fund (police roughly 30%, fire roughly 31.18% per workshop slides). That concentration, she said, makes future budget choices — cuts, service reductions, vacancy savings or referenda — difficult to sustain without affecting operations.
Council members and staff discussed mitigation options presented by finance director Julie, including short-term measures (one-time fund-balance use, vacancy savings, fee increases) and longer-term changes (joint fire department, statutory changes to levy limits, or changes to funding structure). Grill cautioned that state-level changes are unlikely in the near term and that MSP funding should not be counted on as a guaranteed fix.
The workshop also outlined a schedule of further budget work: an additional CIP workshop in August, a possible October workshop and a public hearing on Oct. 28, with final action on the 2026 operations budget planned for the Nov. 11 council meeting.
Ending: City staff framed the meeting as the start of a multimonth process and asked the council for questions and guidance before staff return with more detailed CIP and operating proposals.
