Walters: Homeowners' court victory creates uncertainty for property assessments
Homes make up 72 percent of all real property in Wisconsin. Homeowners will pay more than two-thirds of the $9.6 billion in net property taxes that state and local governments will collect this year. The state Constitution requires a “uniform” tax system.
That’s why homeowners, tax assessors, government officials and business leaders say they need time to sort through the implications of a state Supreme Court ruling in a case that began 2013, when a Racine County couple refused to let an appraiser inside their home as part of the process of setting its taxable value.
The assessed value of the home of Vincent Milewski and Morganne MacDonald went up by 12 percent ($273,900 to $307,100) after they refused an interior inspection request from the appraisal company hired by the Town of Dover to update town property values. Neighbors who allowed interior inspections saw their values lowered.
The couple sued, citing the state law that says homeowners who refuse to allow an interior inspection cannot protest the new value assigned to that home --a value that will be the basis of their next property tax bill.
But that law is unconstitutional, the state Supreme Court ruled on July 7. Five justices said penalizing homeowners who don’t open their homes to government appraisers violates the U.S. Constitution clause prohibiting illegal searches.
The couple “may not be denied due process with respect to the revaluation of their home,” said Justice Daniel Kelly, who wrote the opinion. “Their taxes have increased, but without any corresponding opportunities for administrative or judicial review of the added burden.”
Mark Hanson, Madison’s city assessor and president of the Wisconsin Association of Assessing Officers, said there are lots of questions about what the ruling may mean. “Its impact may be almost nothing [or] a lot of changes.”
Those questions include:
--Although the case only dealt with the rights of homeowners, did it also give the owners of other types of property -- commercial and manufacturing property, for example -- the same “thou shall not enter” right?
--What are the implications for counties that rely the most on homeowners to pay property taxes? Residential property makes up 85 percent of all Door County property values; Walworth County, 83 percent, and Ozaukee County, 82 percent, for example. But residential property makes up only 51 percent of Lafayette County’s tax base.
According to the state Revenue Department, 71 percent of Rock County’s tax base is residential property.
--Will local assessors ask judges to issue warrants requiring interior home inspections? Building inspectors can now request warrants to investigate health and safety issues.
--How will local boards of review, which set property values, respond to two sets of homeowners: those who allow assessors into their homes and those who don’t.
The decision “will add expense for the municipalities in both the upfront costs for the assessor and the board of review process,” said Mike Koles, executive director of the Wisconsin Towns Association.;
--Will the new process favor wealthy homeowners?
When it asked the Supreme Court to uphold current law, a Town of Dover lawyer argued that throwing out the current rule could mean “wealthy homeowners will be able to avoid paying their fair share of taxes by hiding their interior improvements.”
But Mark O’Connell, executive director of the Wisconsin Counties Association, and Jerry Deschane, executive director of the League of Wisconsin Municipalities, said Wisconsin’s system of assessing property and levying property taxes will evolve and survive.
“The decision will add somewhat to the difficulty of assessing property, but the court has decided that is the price to be paid for protecting the constitutional rights of property owners,” said Deschane.
“Property owners who object to their assessment will still bear the burden of proving that their property was assessed inaccurately,” Deschane added. Kelly made the same point in the ruling.
Rick Esenberg, of the Wisconsin Institute of Law & Liberty, said the Supreme Court got it right.
“It is unreasonable to require everyone to let the government into your home just because the government wants to impose a tax,” Essenberg said.
“To be sure, it might be difficult to win such a challenge, since the homeowner has the burden of proof,” Essenberg added. “But the law said he or she couldn’t even try…. It was pretty clear that Vince and Morganne were being penalized for saying no.”
Steven Walters is a senior producer for the nonprofit public affairs channel WisconsinEye. Contact him at firstname.lastname@example.org.