Steven Walters: Ten ways to explain that property tax bill
It's the envelope in the December mail that doesn't wish you happy holidays or ask you to buy something. Instead, it says: “Here's how much you owe in property taxes. How do you want to pay it?”
Here are 10 questions and answers about Wisconsin's property tax system.
Q: This bill tells me what my share is, but how much is Wisconsin's total property tax levy?
A: More than $10.6 billion this year, which is a one-year increase of 1.3 percent.
But tax credits will offset that by about $1 billion, according to the Legislative Fiscal Bureau, the Legislature's nonpartisan budget office. You pay a “net”—or after credits—amount, if you live in your home. If the credits were abolished, your tax bill would be much higher.
Q: How does that $10.6 billion compare to other state and local taxes?
A: The $10.6 billion property tax levy is the largest state or local tax. By comparison, Wisconsin residents paid $7.49 billion in personal income taxes last year and $4.4 billion in sales taxes.
Q: Are Wisconsin property taxes among the highest in the nation?
A: Yes, although there are different estimates of how we rank nationally.
In a January report, the fiscal bureau said Wisconsin property taxes amounted to $46.15 of every $1,000 of personal income in 2010, which was ninth highest in the nation, and property taxes totaled $1,694 per capita in the same year, or 13th highest nationally.
Q: The fine print on my tax bill is confusing. Exactly what do my property taxes pay for?
A: The Wisconsin Taxpayers Alliance offered this breakdown of what property taxes pay for statewide: K-12 schools, 44.5 percent; cities, villages, towns, 23.9 percent; counties, 19 percent; technical colleges, 7.5 percent; special-purpose units of local government, 4.4 percent; and state government, 0.8 percent.
Q: Who pays that $10.6 billion in property taxes?
A: Homeowners pay about 70 percent of it, up significantly from the 50 percent they paid in 1970. Owners of businesses pay about 22 percent; manufacturers, 3.6 percent; and owners of agricultural land, 2.5 percent.
Q: Why do homeowners pay 70 percent of all property taxes?
A: Home values increased the most in past decades, although they tumbled in the recent recession. And, starting in the 1970s, manufacturers and farmers got past governors and legislators to give them big property tax breaks.
Q: Republican Gov. Scott Walker repeatedly says spending controls he and Republican legislators imposed on local governments have “controlled” property taxes. Is that true?
A: Look at your tax bill. Compare it to what you paid last year and the year before. You be the judge.
Here's what the fiscal bureau says: The mythical median-valued home in Wisconsin was assessed at $148,000 this year, and its owner just opened a tax bill for $2,925—$18 less than last year and $28 less than two years ago.
However, the owner of that average home saw the assessed value of that home drop by 6.1 percent over those same two years—falling from $157,692 in 2011 to $148,000 in 2013. So it's good news that the average tax bill went down $28 over two years, but it's bad news that the home's assessed value dropped by $9,692.
Todd Berry, taxpayers alliance president, calls statewide averages such as this meaningless because local government spending decisions can still trigger a 5 percent or 6 percent one-year increase in your tax bill.
Q: Will my property tax bill go up next year?
A: The fiscal bureau projects a $29—or 1 percent—increase on that median-valued home next year, but that's a best guess at this point.
Q: Why does this property tax bill make me angry?
A: Some theories: Because, unlike the 5 percent sales paid on a purchase-by-purchase basis, it comes in one bill? Because it comes at the same time that buying holiday gifts stretches your family budget? Because you just talked to your relatives in Minnesota who have a nicer house, and they told you their property tax bill is only $1,560? Because—remember—Wisconsin property taxes are among the highest in the nation?
Q: Just curious: That $10.6 billion in property taxes is what percentage of all property values statewide?
A: In August, the state Department of Revenue estimated the value of all property at $467.5 billion. So the property tax levy this year will equal 2.2 percent of statewide property values.
Steven Walters is a senior producer for the nonprofit public affairs channel WisconsinEye. Email firstname.lastname@example.org.