Levy limit, inflation pinch ‘challenging’ city budget

Levy limits and inflation are key factors in what is being called a challenging 2026 City of Port Washington budget, a spending plan that allows the city to maintain current services without adding staff and includes a 25% increase in the debt service levy to pay for the public safety building currently under construction.

In the budget report, City Administrator Melissa Gossett said the 2026 budget is “one of the most challenging in recent memory, shaped by continued revenue constraints, rising costs and difficult choices.”

It’s a challenge being faced throughout the state, Finance Director Mark Emanuelson said.

“That’s been driving every municipality’s budget for the last 10 years,” he said. 

Levy limits, which are based on the amount of new construction in a community, don’t allow communities to keep up with inflation, he said.

For 2026, he said, the city is allowed to increase its general fund levy 1.34%, while inflation is expected to be close to 3.5%.

“That means we’ve got a problem from the beginning to just maintain services,” Emanuelson said. “Our costs are going up faster than net new construction. It doesn’t give you anything for inflation.

“It’s a challenge we face every year.”

No new positions were included in the budget and no new vehicles, except for a new fire department pumper truck ordered by the city about two years ago, Ald. Dan Benning, chairman of the General Government and Finance Committee, said.

The committee’s goal this year, he said, was to maintain current service levels.

“This year is probably a little tougher than in past years,” he said. “There’s just not much fat left anymore.

“With limited new development in the community, there’s no added revenue. We just haven’t had anything (development that’s) significant.”

Benning noted that the city consolidated some administrative jobs and cross-trained employees to help trim costs. For example, he said, the city’s recreation coordinator’s workload is slower in winter so she will help out at the senior center then.

“The staff gets creative and collaborates wherever they can,” he said.

Although the Police Department sought three new officers, Benning said, “We just can’t afford it.”

Some communities are paying for operating expenses by borrowing money since debt service payments don’t fall under the levy limits, Benning said, but then they’re paying interest for ongoing expenses.

“That’s not fiscally responsible,” he said.

The proposed 2026 expenditure budget of $12.8 million is 4% more than the 2025 budget. 

The levy needed to support the general fund budget is $4.1 million, an increase of 1.3%, but after the debt service levy of $5.4 million and a library fund levy of $604,000 are added, the total tax levy would be $10.1 million, up 12%.

The debt service levy reflects a 25.3% increase.

“This is when the public safety building hits (the tax bill),” Emanuelson said.

The city’s tax rate is expected to be $5.53 per $1,000 of assessed valuation. This is a decrease from last year because properties in the city were reassessed this year.

Reassessments don’t increase taxes but instead reflect a more accurate gauge of property values and spread the tax burden more fairly. 

The average house in the city increased in value by 40%, Emanuelson said.

“Our community has been fairly prosperous,” he said.

For a house valued at $400,000, the city portion of the tax bill would increase by $229, he said, from $1,981 last year to $2, 210 this year.

The proposed budget was to be presented to the Common Council Tuesday, but officials postponed the review until the council’s Tuesday, Oct. 21, meeting.

A public hearing on the budget will be held at the council’s Tuesday, Nov. 4, meeting. Aldermen will vote on the spending plan that night. 

Benning said that the city needs to grow and develop in order to increase the levy.

“Unless we keep growing, we’re going to have to cut staff, cut services,” he said.

“I know there are some people who are struggling with some of the development, but that’s the only way we’re going to be able to survive.”

The city has struck a deal with Vantage Data Centers that will place the $120 million value of the property it purchased and annexed to the city on the tax rolls next year, which officials said will decrease taxes by $170 per household the following year.

“It’s not huge but it’s not nothing,” Benning said, noting that it won’t change the levy limit but it will provide some property tax relief.