Oshkosh staff warn of $3.4 million operating gap; council briefed on levy limits, shared revenue and fees

City staff told the Oshkosh City Council during a budget briefing that preliminary projections show an operating gap of about $3.4 million for the coming budget period and outlined several revenue and expense pressures the council will need to address.

The presentation said police, fire and EMS together make up “over 50% of our budget,” while salary and benefits account for roughly 70% of the general fund, leaving limited room to cut without reducing services. Staff estimated salary adjustments would add more than $2 million and noted medical trend increases at about $800,000 in the current outlook.

The presenter also highlighted state policy constraints that affect local revenues. Staff summarized Wisconsin Act 12 changes that tied shared revenue to sales tax and added maintenance-of-effort requirements for police and fire, and said the city remains frustrated that municipal services payments are well below full funding. "If they funded us at 100%, we would be getting about $3.9 million. Instead, last year we got about $1.7 million," the presenter said, noting this leaves roughly $2.2 million of costs borne by Oshkosh taxpayers (about $80 annually for a $225,000 home, per staff estimate).

Council members and staff discussed levy limits and the effect of net new construction on levy capacity. Staff explained that unused levy capacity is lost in later years and that the practical levy constraint is the taxpayers' ability to afford increases. "Once you don't take the levy adjustment, you lose it," a staff member said while explaining why the council has to balance service levels and taxpayer tolerance.

To close the gap staff outlined mitigation options under consideration: reducing costs where possible, raising selective fees, pursuing fund development and exploring referendums, and pursuing additional state funding or sales-tax–linked revenue. Staff also raised the possibility of targeting peak-tourism periods for a short-term sales tax increment and referenced county-level sales tax approaches as one model for infrastructure funding.

Staff warned that some revenue items remain estimates. They explicitly labeled the shared-revenue increase in the presentation as provisional — "I put 2% in there and that's how I came up with the 225," a staff member said — and noted the official shared-revenue percentage will not be known until July or August.

The briefing described one-time and structural items that affect 2026 projections: special revenue funds being closed and moved into the general fund (about $1.24 million in transfers), and a $2.3 million reduction in ambulance revenue tied to the elimination of a contracted service by a neighboring town.

The council was given a timeline for further review: an August 31 workshop on facilities and infrastructure, a September 22 workshop on vehicles and equipment, additional operating budget workshops in October, a public budget hearing on November 2 and potential budget adoption on November 17. Staff said further analysis and refinements will continue through those steps.