Despite an increase in home values not seen since before the recession, the Legislative Fiscal Bureau (LFB) still estimates that property taxes will go down slightly on the median-valued home in Wisconsin.
Using 2016 as the base year, the property tax bill will still drop $6 in 2017 and another $2 in 2018 on a median-valued home. This drop in the typical property tax bill is less than the LFB’s estimate in March when they estimated the drop to be $20 in 2017 and another $1 in 2018.
The reason for the revised estimate of the typical state property tax bill on a median-valued home is the revised estimate upward of home values in Wisconsin.
“The primary factor impacting the reestimate is that home values appreciated at a higher rate in 2017 (3.19%) than estimated (2.40%) under AB 64/SB 30 [the proposed budget],” the report states. “This is the highest rate of increase since before the recession, when the 2007 equalized values included a 3.76% increase in residential value due to economic factors. For 2016, that factor equaled 1.92%.”
In addition, “the higher home value growth rate caused the difference between that rate and the growth rate in statewide non-TID property values to diminish. As a result, property taxes will shift to residential property from other properties.”
A TID, or Tax Incremental finance District, is used by municipalities to increase property values in the district by directing the property taxes collected from the district to be used for its re-development. An example would be Milwaukee Mayor Tom Barrett’s decision to create two TIDs in downtown Milwaukee to finance the city’s portion of the construction of the streetcar system, essentially taking those properties off the tax rolls and shifting the property tax burden for city functions to other property owners.
The state Department of Revenue says property taxes as a percentage of personal income is currently the lowest it’s been in Wisconsin since 1946. Expect to see Wisconsin newspapers spinning the latest LFB report as, “property tax bills to be higher than expected” despite the fact that property taxes are still going down, not up.