At its May 20, 2025 meeting, the Madison Common Council heard a detailed overview of the city’s operating and capital budgets from Christine Ko, Budget and Program Evaluation Manager, and Dave Schmidke, Finance Director.

The presentation explained that Madison’s budget is split into an operating budget (day-to-day services) and a capital budget (roads, buildings and other infrastructure). “The capital budget is primarily funded through borrowing,” Ko said, noting the capital budget includes a five‑year capital improvement plan. Schmidke summarized the city’s fiscal challenge: “the cost to maintain current service levels in the city goes up faster than we are allowed to increase our revenues.”

The finance team presented these headline figures for 2025: property tax is the largest single revenue source, comprising about 74% of the general fund or roughly $318,000,000; local revenues account for about $64,000,000; and intergovernmental revenues around $50,000,000. On the spending side, personnel costs are the largest category—about 62% of the budget, or $267,000,000—followed by debt service at roughly 16% or $71,000,000.

Schmidke said the city’s outstanding general obligation debt is about $650,000,000. He added that interest on that debt is “probably another 200 to 300,000,000 on top of that” principal figure. He also noted Madison’s general obligation debt is far below the constitutional limit that caps outstanding debt at no more than 5% of total property value.

The presentation described how a structural gap in ongoing revenues led to a referendum: the council and staff identified an ongoing shortfall of about $22,000,000, and voters approved a referendum to allow the levy to increase by that amount to fill the 2025 gap. Finance staff cautioned the referendum does not permanently close the city’s structural deficit; the five‑year outlook in staff materials shows another gap reopening before 2030 absent other changes.

Staff discussed how the city uses a mix of tools to manage risk and pay for capital: general obligation bonds (backed by property tax), revenue debt (backed by utilities and user fees), and smaller state loan programs. Schmidke said Madison’s bond rating is AAA, which lowers borrowing costs. He described different approaches to assessing long‑term infrastructure needs, noting the city has asset‑management work in pieces (for example, engineering’s Transportation Improvement Plan and the water utility’s capital plan) but not yet a fully integrated citywide asset management system.

Alders pressed staff on details in a question-and-answer period. Alder Okovich asked how much of debt service was principal versus interest; Schmidke replied that the outstanding $653 million number shown is principal and estimated interest would be an additional $200–$300 million. Okovich also asked about asset management; staff said agencies like engineering and the water utility maintain program-level plans and that capital requests published this summer reflect those plans, but an integrated, citywide asset management system is a work in progress.

Other questions covered midyear budget adjustments and reserves. Ko described the twice‑a‑year reconciliation process—midyear and year‑end appropriation adjustments—that compares budget to actuals and can adjust agency appropriations. Schmidke pointed to the city’s reserves and contingency tools for resiliency: a rainy‑day fund the city maintains at least at a 15% target and a contingent reserve (about 0.5% of the budget, roughly $2,000,000) for unexpected needs. He also noted the state’s Expenditure Restraint Program, which can provide roughly $7,000,000 in aid if the city meets the program’s spending growth limits.

Why this matters: Madison relies heavily on property tax and has limited alternative revenue authority compared with many other cities. The referendum gave temporary relief for 2025, but staff told the council they expect ongoing revenue pressure as costs (wages, healthcare, service expansion, and aging infrastructure) continue to rise.

The finance staff urged Alders and residents to engage in the budget process: operating requests will be published this summer, the executive budget will be released in October, and the finance committee will hold briefings and amendment sessions in August through October. Ko pointed Alders to cityofmadison.com/budget for detailed materials and agency capital requests published ahead of the executive budget.

Meeting notes: the presentation was informational; no formal council action on the budget occurred at this meeting. The meeting earlier adopted the consent agenda by unanimous voice vote and later adjourned by unanimous voice vote.