Madison mandates 2% budget cuts for water and sewer utilities amid 2027 shortfall

Madison mandates 2% budget cuts for water and sewer utilities amid 2027 shortfallThe city's enterprise funds, including water, sewer, and stormwater, must identify operational cuts and freeze new hiring to help manage the overall cost of government.

Finance Director David Schmidke announced that enterprise funds will be subject to a mandatory 2% budget reduction plan.

Water, sewer, and stormwater utilities cannot request new positions or supplemental funding above their baseline cost-to-continue needs.

The austerity measures aim to mitigate the affordability impact of utility fees on residents as the city faces an $11.7 million budget gap.

The council approved several infrastructure contracts via the consent agenda, including an amendment with Carollo Engineers for a major sanitary sewer study.

The City of Madison, Wisconsin, is extending its austerity measures to enterprise funds for the 2027 budget cycle, requiring the water, sewer, and stormwater utilities to submit 2% budget reduction plans. During the July 7, 2026, Common Council meeting, Finance Director David Schmidke outlined the city's challenging budget outlook, noting an $11.7 million gap between allowable revenues and the cost to maintain current services. While enterprise funds like water and sewer operate separately from the general fund, Schmidke stated that the 2% reduction mandate is being extended to them "because of the sort of overall cost of government effect and affordability effect of those fees." Under the 2027 budget guidance, water and wastewater department heads must absorb a baseline 0.25% efficiency reduction and maintain an average 3% salary savings rate. Furthermore, the utilities are prohibited from requesting new positions or supplemental funding above their baseline cost-to-continue needs. "Agencies cannot ask for any new positions or any supplemental requests," Schmidke confirmed to the council. While the budget guidance strictly limits new initiatives, utilities are permitted to reallocate funds within their existing budgets to meet core priorities, provided they still achieve the mandated cuts. Grant-funded programs remain exempt from the reduction requirements. Despite the impending operational restrictions, capital infrastructure work is advancing. During the same meeting, the council unanimously approved several water-related contracts via its consent agenda. These included a contract amendment with Carollo Engineers for the Campus, Downtown, and East Washington Ave Sanitary Sewer Study, and a non-competitive contract amendment with Maguire Iron, Inc. for maintenance services at Reservoir 20. Additional approvals included stormwater management contracts for the Midpoint Meadows and Westwind developments, as well as the introduction of a capital budget amendment to award the Fordem Avenue-First Street Relief Sanitary Sewer contract.