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Walworth Co. tax levy up 9.3 percent; Increase is largest in southeastern Wisconsin

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Kayla Bunge
August 17, 2008

Rising school taxes are driving Walworth County to the largest increase in property tax collections in five years among seven southeastern Wisconsin counties, according to a new study by the Public Policy Forum.


Walworth County’s school district levy increased 12.9 percent, driving the county’s overall levy increase of 9.3 percent.


Counties, municipalities and school districts in the seven counties—Walworth, Kenosha, Racine, Milwaukee, Waukesha Ozaukee and Washington—levied a total of nearly $3.6 billion in property taxes in 2008, up 6.1 percent from nearly $3.4 billion in 2007, according to the study.


While the cost of government is going up, the main driver behind the levy increase is rising school district levies, according to the study.


School district officials point to two big reasons for their levy increases:


-- The start of the county’s 10-year plan to shift special education costs from the county to the local school districts.


-- Referendums passed two years ago.


The town of Geneva saw the biggest jump in its gross tax levy at 20.6 percent—an increase largely driven by a 25.4 percent increase in the school district levy. The town covers five school districts, including the Lake Geneva elementary district and the Badger High School district.


Warren Flitcroft, business manager for the Lake Geneva schools, said the transfer of special education costs from the county to the school district hit hard. In the last two years, the district has absorbed the cost of 14 full-time special education teachers, he said.


“That’s hundreds of thousands of dollars we have to absorb, and that goes right to our local taxpayers,” he said. “Those costs aren’t spread countywide anymore. It’s community specific, now.”


Flitcroft said Walworth County school districts’ hands were tied with the plan to transfer special education costs. As districts spend money on teachers the county previously paid for, the districts’ per pupil spending goes up and state aid goes down because of the way the state aid formula works.


“We lost hundreds of thousands of dollars in state aid, and those costs all get borne by the local taxpayer,” he said. “There’s nothing we can do about it.”


Flitcroft said the district also is paying off two referendums totaling $19 million approved by residents in September 2006.


TIF districts

While rising school district levies are driving the county’s overall levy increase of 9.3 percent, that’s just one piece of the puzzle.


A few municipalities, including the city of Delavan and the village of Darien, saw increases in their gross tax levies of 14.4 percent and 19.8 percent, respectively, over last year because of increases in the tax incremental finance district tax levy—498.5 percent in Delavan and 31.9 percent in Darien.


Delavan City Administrator Joe Salitros said as the value of a TIF district goes up, so, too, does the amount of taxes collected.


The value of the TIF district on the city’s east side that includes Lake Lawn Resort and the Delavan Crossings shopping center on Highway 50 experienced millions of dollars in growth in the last two years, he said. Lake Lawn alone accounted for about $75 million in new value, he said.


“All the value that Lake Lawn has created, plus some created in the Delavan Crossings area, is coming online,” he said. “And that will only go up.”


But Salitros said that doesn’t mean residents’ property taxes are going up.


Property taxes are collected from entities within the TIF district to pay for expenses within the district, he said, and taxpayers outside the TIF district do not pay for those expenses.


Clerk/Treasurer Connie Machi said the situation is similar in Darien.


The TIF district on the village’s northwest side that includes manufacturing or commercial properties on Highway 14, Madison Street and Badger Parkway experienced significant growth in the last two years, she said. Professional Power Products and Tankcraft, which both built additions, and Maxxx Motorsports accounted for much of the new value.


Tax rates

Property tax rates could increase because the sluggish economy is slowing the growth in property values, according to the study.


The 3 cent increase this year in the gross tax rate for the seven-county region marks the first such increase in since 2001, according to the study.


The regional increase is attributable to a significant hike in Milwaukee County’s tax rate. Of the seven counties, five saw a decrease in the gross tax rate.


Walworth County’s gross tax rate was down 1.6 percent from last year, propped up by a 10.5 increase in equalized value.


But the study cautions that the slight increase regionally could mean the start of an upward swing in taxes.


“While small, this indicator, combined with the prospect of stagnant or decreasing home values, may signal a new trend of higher taxes,” the study reads.


Rising tax levies have been cushioned by increasing property values. Municipal governments have been able to cut their tax rates while still collecting the same amount money because of a growing tax base, according to the study.


But if property value increases slow or if property values drop, municipal governments will have to raise tax rates to continue operating as they do now, according to the study.


Click here to view a spreadsheet of data about taxes in Walworth County [PDF].

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