Key Points
Madison's budget has historically shown overestimated expenses and underestimated revenues.
Madison’s revenues have outpaced expenses for a decade, with a current budget surplus.
Independent auditors report Madison's finances are solid, with a surplus and strong investment income.
The city's AAA bond rating highlights its stable economic base.
Differences in accounting methods between GAAP (used by auditors) and city budgeting lead to conflicting financial outlooks.
The City of Madison says it’s facing financial ruin if voters don’t approve a $22 million referendum to permanently increase property taxes, but independent accountants who audit the city’s books say the city’s finances are fantastic.
Madison's annual audits show that the city's budget planners always overestimate expenses and frequently underestimate revenues. Chart: MacIver Institute.
If you're considering a "Yes" vote on Madison's referendum to increase property taxes, this is a must-read. William Osmulski’s recent article on city finances offers insights that may change your perspective on the necessity of this permanent tax hike, with detailed analysis from independent auditors and financial experts challenging the city’s claims of financial hardship.
This insightful and fact-filled article published by Osmulski, Content Director for the John K. MacIver Institute, brings new perspectives to the ongoing discussion about Madison’s finances. Osmulski, who specializes in transportation, public finance, and property taxes, examines the contradiction between city hall's claim of financial hardship and the findings of Madison's auditors and investors who paint a more optimistic picture.
The John K. MacIver Institute for Public Policy, a Wisconsin-based conservative think tank, promotes free markets, individual freedom, and responsible government. With research and commentary on public policy in Wisconsin, MacIver aims to provide citizens with accurate information to encourage less spending, fiscal honesty, and reasonable regulation. As a member of the State Policy Network (SPN), MacIver is connected to a national organization supporting state-level conservative and libertarian think tanks.
The article, titled "Madison Says It’s Broke, Auditors and Investors Disagree," was published on October 28, 2024. It suggests that Madison’s financial situation is stronger than city officials claim, even as city hall advocates for a permanent increase in property taxes. City leaders argue that a budget gap requires additional revenue, warning that without it, essential services will face cuts. However, Osmulski’s analysis—backed by independent auditors and financial experts—presents a counter-narrative that questions the necessity of the proposed tax hike. Here are some of the article’s key insights:
Madison’s revenues have outpaced expenses consistently over the past decade, resulting in a budget surplus that is underemphasized in the mayor's narrative.
The city’s stable investment income provides an additional financial cushion, reinforcing its overall economic health.
Madison’s top-tier bond rating underscores the city’s reliable fiscal management, countering the “budget crisis” perception.
The discrepancy in financial outlooks can be attributed to the differing accounting methods used. Auditors follow GAAP (Generally Accepted Accounting Principles), which shows a surplus, while the city’s budgeting approach restricts this view.
Annual audits show that Madison hasn’t had an actual deficit since 2016. Chart: MacIver Institute.
This article raises a critical question: If Madison’s financial position is as robust as the auditors and investors suggest, why are taxpayers being asked to approve a permanent increase in property taxes? For anyone following Madison’s finances and the referendum to permanently increase property taxes, the MacIver article offers essential context to understand the city’s fiscal health beyond the narrative from city hall.
To dive deeper into these findings, check out the full article on the MacIver Institute website: "Madison Says It’s Broke, Auditors and Investors Disagree."
Given Madison's strong reserves, consistent overestimation of expenses, and underestimation of revenues, a permanent increase in property taxes appears to be premature.
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© Alex Saloutos 2024.