Wisconsin cities and villages saw a sharp rise in spending in 2023, a trend fueled in part by sustained inflation and the rising cost of core services such as police, fire protection, and street maintenance.
According to data released by the Wisconsin Policy Forum, the average operating spending per resident increased by 7.1% last year, climbing from $1,112 in 2022 to $1,192 in 2023.
The spike in municipal spending reflects a nationwide struggle to manage post-pandemic inflation while maintaining essential services. Local governments across the state have been forced to adapt to surging costs for labor, equipment, and fuel, particularly in public safety and infrastructure. At the same time, limited state aid and revenue caps have restricted how much flexibility many municipalities have to adjust.
Wisconsin’s municipal budgets are traditionally lean, with strict levy limits imposed at the state level. But inflation, which reached 6.5% nationally in 2022 and remained elevated into 2023, pushed up the baseline costs for virtually every line item in local government. Police budgets grew by 4.8%, fire and EMS costs rose by 5.8%, and street maintenance spending increased 5.0%. These services form the bulk of what the Forum defines as “basic spending,” which itself rose 3.6% overall.
Notably, general government spending, the administrative core of local operations, fell by 3.9%. Analysts attribute this to the off-cycle election year, which typically requires fewer resources for ballot administration, poll staffing, and related costs.
Despite the overall jump in expenditures, municipal leaders in Wisconsin continue to face structural constraints. State law ties local property tax growth to new construction, and shared revenue from the state has remained flat for years despite repeated calls for reform. As a result, local officials often must choose between cutting services or depleting reserves.
At the same time, Wisconsin’s total municipal property tax levy climbed past $3 billion for the first time in 2024, marking a 4.0% increase over the prior year and a 38% jump compared to 2014. However, that sharp increase in total tax collection occurred alongside a paradoxical trend: the average municipal tax rate actually fell to its lowest level in a decade.
The average municipal tax rate per $1,000 of equalized value dropped to $5.70 in 2024, down from $5.87 in 2023 and significantly below the $7.80 peak in 2015. That decline is explained by surging property values across Wisconsin, which have grown far faster than local tax levies.
Even as cities and villages collected more in property taxes, the relative burden on each $1,000 of value decreased. This has been framed by some analysts as a silent tax shift—residents may pay more in dollars, but face a lower rate on paper due to inflation in housing assessments.
The unequal pace of value growth also raises equity concerns. In fast-growing or gentrifying areas, rising assessments may lead to steep tax increases for homeowners, even if the municipal rate stays flat or falls. In contrast, slower-growth areas may struggle to raise enough revenue for services under the state’s levy cap formula, which pegs allowable increases to new construction.
While inflation appears to be slowing in 2025, its fiscal aftershocks continue to ripple through local governments. Insurance costs have spiked, and delayed capital projects now come with higher bids. In some cases, local leaders are tapping into fund balances or issuing short-term debt to cover basic service needs.
The data from Wisconsin Policy Forum’s 2025 Municipal DataTool offers a rare statewide look at how 606 cities and villages are navigating these constraints. Though the numbers vary by region, the overall trend is clear: inflation has permanently altered the cost structure of municipal governance.
Unless the state reforms its aid and revenue system, local officials may face increasingly difficult decisions about what they can afford to provide to Wisconsin residents in the months ahead.
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Yuri A. and Aaron of L.A. Photography (via Shutterstock)
