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Milton assessment error will cause headaches

MILTON — A $31 million assessment error in Milton should shake itself out over the next three years, but it will make for some ups and downs for municipal budgets in the meantime.

Milton School District and city of Milton officials are trying to figure out how the mistake affects their bottom lines as they try to understand how the mistake was made in the first place.

Because of a paperwork error, the city reported $31.6 million in extra value in one of its tax incremental financing districts, according to a letter from the Wisconsin Department of Revenue. At the same time, it undervalued its non-TIF property value by the same amount.

When a TIF district is established, any new property taxes go into the TIF fund that promotes development in the district, instead of to taxing jurisdictions such as the county and school district.

That means $31.6 million in property value that should have been taxed by the school district, county, state and Blackhawk Technical College is now off-limits. That's more than 10 percent of the $305 million the city actually reported in non-TIF property value in 2009.

Once property values are confirmed to the Department of Revenue, the department can't change them for the coming year. So the department will collect taxes as if the Milton total were correct and then adjust tax bills the following year to make up the difference.

Letters from the Department of Revenue and the city's contracted assessor, Accurate Appraisal of Menasha, each blame the other for the mistake.

But bottom line, the mistake causes extra headaches for the city and other taxing agencies, especially the school district, Mayor Tom Chesmore said.

"It's just an absolute mess," he said.

City residents will pay about $200,000 less toward the Milton School District levy in 2009-10 than they should, said District Business Manager Dianne Meyer. Residents of other municipalities will make up the difference. That will be reversed in 2010-11, with city residents paying $200,000 extra.

Without the mistake, the district would have been able to lower the tax rate it approved Monday from $7.91 per $1,000 to $7.76, Meyer said.

The mistake also will cause the district to get more state aid than it's supposed to in 2010-11 and less aid than it's supposed to in 2011-12, meaning the levy will go down in 2010-11 and back up in 2011-12. The numbers should balance each other out, assuming the state uses the same aid formula both years, Meyer said.

The city will have to put extra money in the TIF fund to cover the mistakenly added value, according to a letter from the city's financial advisor, Ehlers & Associates.

It could adjust by taking money out of its fund balance and paying itself back from money that would have gone into the TIF in future years, the letter says.

The city plans to have representatives from Ehlers & Associates and Accurate Appraisal at its budget workshop Thursday, City Administrator Todd Schmidt wrote on his blog, "Milton Matters."

Schmidt referred questions about the issue to the blog entry Tuesday afternoon and could not be reached for comment after the entry was posted.