What's it worth? Property assessment can be confusing

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Dave Bretl | September 11, 2013

Aug. 15 used to be a bigger deal. That's the day that the Wisconsin Department of Revenue traditionally releases its calculation of equalized value throughout the state. “Equalized value” represents the value of all taxable property.

Ideally, it is the price that would be fetched if all taxable property in the state had been sold on Jan. 1. I don't think that it's just me, but I seem to recall that the state made a bigger deal about the announcement in the past.

Newspapers marked the occasion, as well, running stories about ever-increasing property values in the Badger State.

Now, it's possible that the guy who wrote those press releases retired or was downsized, but I'm always a little skeptical when government, at any level, stops promoting a particular piece of information. It also seems possible that at least one reason why the release of the equalized value report has been a lot more low key is because the news has not been particularly good; according to the latest report, equalized value in the state decreased by $3.5 billion, or 1 percent, during the past year. In our county, equalized value slipped by 4 percent between 2012 and 2013, erasing $500 million of property valuation from the tax rolls.

For most of the previous decade, Walworth County was a leader in the state when it came to increases in equalized value. This was the result, in part, of new houses and businesses being constructed. The lion's share of the growth, however, was attributable to market conditions. Equalized value increased at a double-digit pace each year during the period of 2005 to 2007, for example. This upward trend changed dramatically in 2010 when equalized value in the county fell by 3.59 percent, followed by annual decreases of 1.12 and 6.65 percent in 2011 and 2012, respectively. With newspaper stories touting increasing home sales and higher prices, I was surprised by the magnitude of this year's 4 percent drop.

Excel spreadsheets comparing the equalized value of all Wisconsin counties over time used to be available on the Internet. Perhaps they still are, and I just can't find them, or maybe the guy in charge of the press releases quit posting those spreadsheets as well. To satisfy my own curiosity, I reviewed the individual reports of all 72 counties during the period of 2009 to 2013. Because annual declines are based on the previous year, the overall decrease is actually greater than the sum of each individual year. Equalized value actually dropped by $2.5 billion, or 16 percent, in Walworth County during that time. Only two other Wisconsin counties, Adams and Kenosha, posted larger percentage decreases.

So, who cares about equalized value anyway? You should. It is the second variable that will be used to calculate the amount of property tax you will owe when bills are mailed out this December. In January, I receive my share of anxious calls wondering why the county raised its tax levy. A taxpayer has his or her bill in front of them showing that the amount of county tax that they owe has increased by several hundred dollars or more over the previous year. My explanation to them, that the county has not increased its tax levy for the past two years, is met with skepticism. Those folks who don't hang up the phone at this point get my best explanation of how equalized value impacts the taxes they owe. It is a confusing topic, which is a shame.

Taxpayers may not always agree about what they are paying for, but they should be able to understand how one of the biggest bills they will receive all year is calculated. I try a number of different ways to make the point, but the one that seems to work the best is the dinner check analogy. If the restaurant is government, and the diners are taxpayers, the check represents the tax levy.
There are lots of ways to figure out how to divide the check among the diners, or apportion the tax levy. Each person could pay an equal amount, for example, or a coin flip could decide who pays the entire bill. Under Wisconsin law, the dinner check is divided up based on the value of taxable property that each diner owns. City, village and town assessors (over 1,850 jurisdictions, statewide) determine this amount. The state does its best to try to “equalize” all of these assessments, which makes the system more fair but also more confusing. The bottom line is that if your assessment has increased, or even stayed the same over the past three years, it is likely that you will end up paying a larger share of the check. Other taxpayers, or diners in my analogy, whose assessments have decreased, will pay a smaller amount.

Assessors have a difficult job. They value property based on a number of different factors, including comparing your home to similar properties within the jurisdiction. The system also depends on taxpayers communicating with assessors. This can be done informally through an “open book” process or more formally at a board of review. If you have evidence that the value placed on your property is too high, you owe it yourself to call your city, town or village hall and learn how this process works, as well as the applicable deadlines. An excellent resource on this topic, 2013 Guide for Property Owners, can be found on the Department of Revenue website at www.revenue.wi.gov.

Dave Bretl is the Walworth County administrator. Contact him at (262) 741-4357 or visit www.co.walworth.wi.us.

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