Janesville61.6°

Milton error means higher tax for some

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FRANK J. SCHULTZ
October 30, 2009
— If you live in the Milton School District but not in the city of Milton, your property taxes this year will be higher than they should have been.

And if you live in the city of Milton, the school taxes will be lower that they should have been.


But in subsequent years, taxes will be adjusted so that in the end, you will have paid the proper amount of property tax. At least, that's what the state Department of Revenue has told Diane Meyer, business manager for the school district.


The reason for the tax imbalance is an error in reporting the value of a Tax Incremental Finance district in the city of Milton.


State law requires local taxing jurisdictions to live with the error, which in effect reduces the city's property valuation by $31.6 million.


The school district's tax levy—the total amount of taxes it collects—will not change, but this year's tax rates will go up because the tax is shared by a smaller overall property valuation, Meyer said.


The imbalance will average about 15 cents per $1,000 of property value in the school district, said Diane Meyer, or $15 on a $100,000 property.


That means Milton city property owners will pay about 15 cents less per $1,000, while the rest of the school district will pay 15 cents more.


The 15 cents is an estimate based on equalized property values, not your local municipality's assessed values, which are the basis for actual tax bills.


Being overcharged on their taxes this year will be property owners in the portion of the city of Janesville in the Milton district and townships or portions of the townships of Fulton, Harmony, Janesville, Johnston, Koshkonong, Lima and Milton.


The city of Janesville holds the largest largest amount of property value in the Milton School District, by the way, about 31 percent of the district's total.


Similarly affected is every property owner who pays taxes to Rock County and to Blackhawk Technical College, but the impact is less, said Rock County Finance Director Jeff Smith.


County taxes outside the city of Milton, based on the proposal now before the county board, would increase by less than 2 cents per $1,000 of equalized valuation because of the error in Milton, Smith said.


The error also puts a whammy on the Milton School District's state aid payments in 2010-11 and 2011-12, Meyer said. That's because the state aid formula uses a springtime property valuation, and the state, again, is not allowed to adjust that number to correct the valuation error, Meyer has learned.


"That means our 2010-11 general aid will be more than what it should be because it's based on the spring valuation, which undervalues properties," Meyer said.


But then in 2011-12, the property valuation will be corrected, and the district will get less aid, Meyer said.


But that doesn't necessarily mean that the aid will balance out in the end. That's because state lawmakers have not even begun to talk about how much money will be available for state school aid in 2011-12.


If lawmakers change the general-aid formula, the state aid appropriation or the school revenue limits, the district might not be made whole, Meyer said.


But if all factors remain equal, the district will get more aid and levy less that it otherwise would have in 2010-11 and then get less aid and levy more than it should have in 2011-12.


The district found out about the error before the school board set the tax levy, but state officials said the law did not allow the district to adjust its levy, Meyer said.


Meyer said the school board's legislative committee may ask that the law be changed so that in the future, officials would be able to adjust to such an error before tax levies are set.



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