David Schmiedicke,
Finance Director
Learn about City of Madison, Wisconsin, including Featured News, Key Projects, and The Team.
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Consistently ranked one of the best places to live in America, Madison offers all the amenities of a large city without all the hassle. Not only is Madison the state capital and home to the state flagship university, it is a thriving and growing city that invests in talent, research, jobs, and culture. Nestled between two lakes, with a total of five lakes within the city’s vicinity, Madison is a naturally beautiful city with a variety of outdoor activities for every season. The city facilitates a range of cultural events year-round and takes advantage of its many parks for art, food, and musical festivals.
To learn more, please visit the City website here.
New York, December 20, 2023 -- Moody's Investors Service has assigned Aaa ratings
to the City of Madison, WI's General Obligation Corporate Purpose Bonds, Series 2024-
A with an expected par amount of $28.6 million. Moody's maintains the city's Aaa issuer
rating and Aaa rating on the outstanding general obligation unlimited tax (GOULT)
bonds. Following the sale, the city will have about $642 million in GOULT debt
outstanding. The outlook is stable.
RATINGS RATIONALE
The Aaa rating reflects the strong, diverse economy with significant institutional
presence and above-average resident income. The financial position is consistently
solid. These positive attributes offset the limited revenue raising flexibility and slightly
elevated long-term leverage.
The Aaa GOULT rating is equivalent to the Aaa issuer rating because of the city's full
faith and credit pledge and authorization to levy a dedicated property tax that is
unlimited as to rate or amount.
RATING OUTLOOK
The stable outlook reflects the expectation that the credit quality will remain strong,
supported by continued economic growth, long-standing government and higher
education presences within the city and continued financial stability.
FACTORS THAT COULD LEAD TO AN UPGRADE OF THE RATING
-Not applicable
FACTORS THAT COULD LEAD TO A DOWNGRADE OF THE RATING
- Material narrowing of reserves or liquidity
- Notable growth in long-term leverage
LEGAL SECURITY
The upcoming sale and outstanding GOULT debt is backed by the city's full faith and
credit pledge and the authority to levy a dedicated property tax unlimited as to rate and
amount.
USE OF PROCEEDS
Proceeds from the Series 2024-A bonds will finance the construction of a public parking
garage facility.
PROFILE
Madison is the state capital of Wisconsin (Aa1 stable) and is home to the flagship
campus of the University of Wisconsin. It is the state's second largest city with an
estimated population of just under 266,000.
METHODOLOGY
The principal methodology used in this rating was US Cities and Counties Methodology
published in November 2022 and available at
https://ratings.moodys.com/rmcdocuments/386953. Alternatively, please see the Rating Methodologies page
on https://ratings.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and sensitivity analysis, see
the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure
form. Moody's Rating Symbols and Definitions can be found
on https://ratings.moodys.com/rating-definitions.
For ratings issued on a program, series, category/class of debt or security this
announcement provides certain regulatory disclosures in relation to each rating of a
subsequently issued bond or note of the same series, category/class of debt, security or
pursuant to a program for which the ratings are derived exclusively from existing ratings
in accordance with Moody's rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation to the credit rating
action on the support provider and in relation to each particular credit rating action for
securities that derive their credit ratings from the support provider's credit rating. For
provisional ratings, this announcement provides certain regulatory disclosures in
relation to the provisional rating assigned, and in relation to a definitive rating that may
be assigned subsequent to the final issuance of the debt, in each case where the
transaction structure and terms have not changed prior to the assignment of the
definitive rating in a manner that would have affected the rating. For further information
please see the issuer/deal page for the respective issuer on https://ratings.moodys.com.
Regulatory disclosures contained in this press release apply to the credit rating and, if
applicable, the related rating outlook or rating review.
Please see https://ratings.moodys.com for any updates on changes to the lead rating
analyst and to the Moody's legal entity that has issued the rating.
Please see the issuer/deal page on https://ratings.moodys.com for additional regulatory
disclosures for each credit rating.
Amy Hellmann
Lead Analyst
REGIONAL_MIDWEST
Moody's Investors Service, Inc.
Zephyrhills
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Benjamin VanMetre
Additional Contact
REGIONAL_MIDWEST
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
I want to thank the Common Council for their work to pass a budget that continues to invest in our critical community services and infrastructure. The City’s budget process is never easy, and there are always more community needs and more good ideas than funding can support. This is made more difficult by a State legislature that provides minimal direct support and severely restricts Madison’s access to revenue sources available elsewhere. The result is that, every year, the costs to deliver City services - like libraries, emergency response, transit, snow plowing, and more - increase faster than our revenues do to pay for those services. While we have mastered the art of doing more with less, it is increasingly challenging to deliver the high quality services that Madisonians are accustomed to in a rapidly growing city.
Despite these funding challenges, there are a few bright spots that I am pleased we were able to advance in this budget. I appreciate the Council’s support for our key priorities around violence prevention, safety, housing, and sustainability. I am particularly excited about the following:
Today, Mayor Satya Rhodes-Conway released her proposed 2024 Executive Operating Budget at the Madison Central Library. The City of Madison’s operating budget funds the numerous services, programs, and skilled staff that sustain high-quality City services and keep Madison a strong and vibrant community. The operating budget released today complements the 2024 Executive Capital Budget, released in September, which funds City infrastructure, buildings, and other capital investments.
The 2024 operating budget strives to maintain a high level of service for residents in a fast-growing city while facing the reality that Madison does not receive its fair share of state funding, and is unable to utilize revenue streams that are commonly available to cities in other states because of state restrictions. If annual state aid had simply kept pace with inflation from 2000 levels, Madison’s share would be $9 million higher than it is today. Instead, Madison recently received the lowest increase in state aid per capita of all major cities.
“Madison is the fastest growing city in Wisconsin, and that is in large part due to the high quality of life created by local investments,” said Mayor Rhodes-Conway. “Our challenge now, as it has been for many years, is to find ways to maintain the City services our residents expect while facing extraordinary fiscal constraints imposed by a state legislature determined to undermine a City that is a key contributor to our state’s economic success.”
Madison has delivered quality services to its residents for many years, boasting exceptional parks, libraries, transit, water systems, snow plowing, and more. It has done so with fewer revenue sources than cities in almost any other state in the country, forcing a disproportionate reliance on local property taxes. Unlike most major cities throughout the country, Madison is not permitted to have a local sales or income tax, to fund essential services like transit via regional authorities, or to institute progressive fee structures.
Additionally, the State Legislature’s restrictions on property taxes make it virtually impossible for City revenues to keep up with the cost to provide services. Since at least 2011, Madison has had an annual gap between the cost to serve residents and the funding available to do so – called a structural deficit. As Madison has grown, so has that gap. And while the City has been able to find efficiencies, it has meant that City services have been limited in their ability to scale in kind. Today, there are 10% fewer city employees per 1,000 residents than there were in 2011.
This is why the City has been forced to take the unusual step of implementing a 1% across-the-board reduction to agency budgets, a measure which will save $3 million.
Compounding the issue, the 2024 budget represents the last year of federal and local COVID relief funds to support City programs, with nearly $17 million of these and other one-time funds allocated to balance the budget next year. As a result, the forecast beyond 2024 is bleak. Maintaining current service levels to residents (e.g., libraries, snow plowing, parks, etc.) is expected cost $75 million more than our maximum allowable revenues by 2029.
“If we are to keep Madison a place we all want to live, work and play, we have to keep investing in the staffing and infrastructure that supports our vibrant economy and diverse community. We have to have resources to tackle the challenges that are holding back our economy, like lack of housing and childcare. But the Republican-led State Legislature has told us loud and clear that we have no option but to raise property taxes to do so. It’s clear there will be little “sharing” of income and sales taxes sent to the state’s coffers by Madison’s hard working families. Because of their mean-spirited policies, we will face significant challenges in future budgets without fundamental changes,” the Mayor said.
Despite the restrictions from the state, the Mayor’s proposed budget makes modest investments to improve city services. Changes in the 2024 Executive Operating Budget include:
· Additional funding for free and fair elections in 2024, including a presidential election.
· A new civilian Emergency Medical Services (EMS) coordinator in the Fire Department to support our top-notch paramedic and emergency services programs.
· A contract with a 3rd party transport system to more efficiently take residents to Wisconsin’s secure mental health treatment facility in Winnebago.
· A City-wide public information officer to help engage and respond to residents about City services, a top priority of the City’s Neighborhood Resource Teams.
· A combined park ranger and parking enforcement officer position to ensure overnight enforcement.
· New positions to support an expanded electric transit vehicle fleet.
· A modest pay increase to general municipal employees to provide parity with unionized employees, keep up with inflation, and secure a quality workforce.
· Increased City support for community programs and services that address basic needs such as housing stability, early childhood care and positive youth development, employment training and career development, successful aging, crisis intervention and prevention, and access to neighborhood-focused resources. This budget provides a 5 percent cost-of-living adjustment over previous contract cycles to help these organizations recruit and retain key staff and respond to the effects of higher inflation.
The Mayor’s Executive Budget will be introduced at Common Council October 3. Staff will present briefings to the Finance Committee on October 9 and 10, and the Finance Committee will consider amendments at the meeting planned on October 23. Final Common Council action is scheduled for November 14-16. The full 2024 Executive Operating Budget can be viewed at https://www.cityofmadison.com/finance/budget/2024-budget/2024-operating-budget.