School Aid Boost, Lottery Credit Bolster Doyle's 'Freeze' Promise
Gov. Jim Doyle has long promised that the property tax "freeze" he signed in 2005 would keep this month's bills largely flat for the statewide average on a typical home while preserving the state's K-12 education system.
Whether his plan lives up to that pledge will be determined over the next few months as municipal property tax levies begin to roll into the state, giving a clearer picture of tax bills. A WisPolitics review of various community levies show homeowners will likely see a mixed bag across the state.
Generally, levies are expected to increase overall, said the head of the Wisconsin Taxpayers Alliance, while the impact on individual homeowners across the state will vary widely. Madison and Milwaukee predict the bills on their typical homes will be up, while Eau Claire expects bills on its average home to go down.
Should Doyle's plan hold up to his promise, helped in part by a more robust lottery credit, it could reduce complaints and slow the impetus for fundamental change to the system, some observers suggest. Currently, citizens, local government interest groups and some Dems are pushing for dramatic property tax changes to reduce annual angst among residential property taxpayers and allow schools and other local governments to rely less on the tax people seem to hate the most.
If Doyle is to propose major changes early next year, he'll have to do it while cutting a projected $1.6 billion deficit for the 2007-09 budget cycle. Mike Prentiss, a spokesman for Senate Minority Leader-elect Scott Fitzgerald, R-Juneau, said Senate Republicans will likely continue to push for more limits on property tax growth in the upcoming session.
Republicans have been critical of Doyle's efforts, saying their own plans, which he vetoed, would have produced better results for homeowners without the large infusion of state tax dollars for K-12 education. Doyle and Dems have countered the GOP plan would have devastated schools and local communities.
"Despite the governor's rhetoric to have frozen property taxes, he hasn't, and property taxes remain the No. 1 concern for homeowners," Prentiss said.
WisPolitics checked with municipalities around the state to see how the "freeze" is playing out with their bills.
In Madison, the typical home worth $239,449 will see a property tax bill $65.99 higher than the year before once all credits are figured in, according to the city comptroller. That bill of $4,601.14 amounts to an increase of 1.45 percent over the year before.
Milwaukee officials estimate the tax bill for an average home of $131,400 will be $2,944 this year, up $83. That increase amounts to just more than 2.8 percent.
Eau Claire finance director Rebecca Noland said the typical home there worth $125,000 will see a $75 decrease on the property tax bills going out this month. But she complained that while bills are going down, so are city services. She said the city has cut 26 positions since 2000 and will face a deficit of at least $1.5 million in next year's budget because of negotiated wage and benefit levels for city employees outpacing expected levy limits. She also said the city received complaints this year because it only partially mowed some parks in an effort to save money and it takes longer to plow the streets.
Local governments and the organizations that represent them have generally chafed at the limits, arguing they unfairly hurt slow- or no-growth communities and rob officials of local control. "Yes, the tax rate has dropped slightly, but the services have dropped a lot," Noland said.
According to Doyle's budget office, the mythical median-valued home in Wisconsin worth $153,500 saw a $24 increase on last year's property tax bill over the year before.
Budget director Dave Schmiedicke said he's expecting an increase of just a few dollars on the median-valued home for a statewide average this year, once new construction is factored into the levy increases and the lottery and school levy credits are applied. Schmiedicke said the increase he expects this year of a few dollars is partly due to a lottery tax credit that is projected to be $96 for the median-valued home, up from earlier projects of $86.
Using his veto pen, Doyle crafted restrictions on cities and counties to limit levy increases to a minimum of 2 percent or the change in net new construction from year-to-year, whichever was greater. He also pumped additional state aid into K-12 schools -- a sure way to contain property taxes since most of them go to fund education. Despite that infusion of cash, the school property tax levy statewide will be $3.78 billion, up about 5.4 percent.
The school credit is also up about $124 million, helping to offset much of the $195 million increase in the levy. WisTax president Todd Berry said Doyle was successful in holding down property tax increases last year largely because the extra money he put into K-12 education resulted in a slight decrease in the overall tax levy. That helped offset increases by other municipalities. He said the early indicators are that municipalities are again increasing their levies.
How that impacts individual homeowners will depend on a host of factors, including how much of that growth is from new construction, Berry said.
"You can pick and choose pieces of this or do calculations in a way where you can cast the levy information in a more favorable or less favorable light depending on your political angle, but the bottom line is gross levies on a statewide basis for most governments are going to be up more than last year," said Berry, a former assistant secretary in the Department of Revenue.
As property tax bills start to arrive later this month, various groups are pushing new plans for school funding. State Sen. Jon Erpenbach, D-Middleton, has proposed eliminating a series of sales tax exemptions to pay for schools. He then wants to take school funding off the property tax rolls and rely on the increased sales tax revenue to cover those costs.
Doyle has expressed opposition to the plan, as have Republicans who believe any relief for homeowners will be temporary. Allan Odden, a University of Wisconsin-Madison education professor, has also been working on a plan to restructure the state's school funding system. He predicts his proposal could double academic achievement among Wisconsin students - but for 6.8 percent more money than the state spends currently.
Municipalities have responded in a variety of ways to the limits Doyle created.
In Pewaukee, in relatively rich Waukesha County, the property tax levy will go down by almost $20,000, city administrator Tammy LaBorde said. The city accomplished that in part by not levying any taxes for road projects, instead deciding to use existing funds.
The city has also done a re-evaluation this year that upped assessed values to $2.6 billion from $2 billion for the city of 12,600. LaBorde said the typical home assessed at $250,000 last year is now valued at $330,000. The city's portion of the property tax bill on that home is expected to be $801.90, up slightly from $800 the year before.
Here's a sampling of what taxing districts have done with their levies:
*The Village of Kronenwetter, near Wausau, increased its property tax levy 5 percent. But because of new construction, the owner of a $100,000 home will pay $299.24 in village taxes, down almost $100.
*La Crosse County increased its levy 7.95 percent to $25.9 million, which will add $18.20 to the county portion of the tax bill for a $100,000 home.
*The Appleton School District levy will go up $1 million, about 1.9 percent, with the owner of a $150,000 home paying $27 more on that portion of the property tax bill.
*The Sauk-Prairie School District cut its levy to $11.9 million, down 2.1 percent from the year before.See more: http://www.wispolitics.com/index.iml?Article=78452
