By Bill Osmulski for The MacIver Institute
On the one hand, Republican state lawmakers want to use the state’s anticipated revenue surplus to provide some local property tax relief. On the other hand, several bills are working their way through the Capitol that could have the opposite effect on local property taxes. The following five bills have the potential to lead to higher local property taxes throughout the state.
1. Enabling Local Government To Hold Referendums
SB 291/ AB310 – Relating to: holding a referendum to increase a political subdivision’s levy limit.
How it could raise your taxes: Over the past ten years, Wisconsin school districts have asked for a total of $11.6 billion through referendums and voters approved $8 billion of them. Local governments want to have that same ability to raise revenue.
Local governments currently can hold referendums to increase property taxes, but few ever do. They say the reason is timing.
Every year in August, the Wisconsin Department of Revenue tells local governments how high they can increase their property taxes. Local governments use that information to write their budgets for the next year. Most don’t complete that process until October or November. Local governments need all that information before they can write a referendum question. However, they say by the time they get that information, it is too late to hold a referendum.
The legislature wants to change those requirements to fix this logistics problem for local governments. This bill would allow local governments to use estimates instead of official figures for their referendum questions. This will enable them to realistically hold those referendums, which will ask voters to voluntarily raise their property taxes to increase the local government’s budget. School districts already have this ability, and exercise it regularly. This bill will make it just as easy for local governments to hold referendums as it currently is for school districts.
The League of Wisconsin Municipalities confirmed local governments will be able to hold local referendums in the spring and summer in its testimony. During odd numbered years, the referendums could even be held during special elections at any time.
Next action: Assembly floor vote on Tuesday, Jan. 21.
Chance of approval: Very high. This proposal has strong bi-partisan support, including from lawmakers who typically defend taxpayers.
2. Bringing Back the Energy Efficiency Exemption for Schools
SB 494/AB 553 – Relating to: the school district revenue limit adjustment for energy efficiency projects. (FE)
How it could raise your taxes: This bill would allow school districts to borrow as much money as they want without going to referendum for projects that will save energy. In 2017, the last time schools could do this, they put local taxpayers on the hook for $603.7 million. This time around the program would be less open ended, but the concept would be the same. Schools could borrow money, raising local property taxes, without going to referendum.
Supporters of this bill argue that it requires vendors to provide a money back guarantee on the energy savings. Also, those energy savings must equal 80 percent of the initial investment within 20 years. The problem is that the district might enjoy those savings, but the taxpayers will still be the ones paying off the bonds. No one is talking about paying back property taxpayers for their investment.
School administrators said they are excited about the possibility of borrowing large sums of money for deferred maintenance without having to bother with referendums. According to the School Administrators Alliance’s testimony, the Janesville School District hopes to use this borrowing authority to raise $120 million without voter approval. Clinton Community hopes to use it to fund $42 million projects that its voters rejected.
Next action: The Senate can take up this bill at any time for a floor vote. The Assembly Committee on Education will hold an executive hearing on it on Tuesday, Jan. 21.
Chance of approval: High. This is a bipartisan bill, and it has the support of Assembly leadership.
3. Replacing Fees With Higher Taxes
SB 487/AB 472 – Relating to: an exception from local levy limits for certain amounts levied for charges assessed by a joint emergency medical services department.
How it could raise your taxes: Every local government has a limit on how much revenue it can collect. That includes property taxes and fees for services. When a local government collects fees from neighboring communities to provide ambulance services, that lowers property taxes for its own residents. This bill would say those fees would no longer count towards the levy limit, which means residents will have to pay higher property taxes to make up the difference.
“The bill would allow local governments who belong to a joint emergency services district to increase revenue through local property tax levies,” according to the Department of Revenue.
Next action: Senate floor vote.
Chance of approval: High. The Assembly passed this bill in October on a voice vote, which means the Senate can decide to vote on it with very short notice.
4. Paying Taxes For Eliminated Services
SB 441/ AB490 – Relating to: changes to the local levy limit calculation for a political subdivision that transfers responsibility to provide a governmental service to another governmental unit.
How it could raise your taxes: This bill is designed to encourage local governments to use shared services to increase efficiency, but unfortunately it comes at a cost to taxpayers.
When one community eliminates services, the state doesn’t allow it to increase its tax levy as much for the next year as it would otherwise. That’s designed to give local taxpayers a break, so they don’t have to pay their local government for services it’s no longer providing. It might only be a one-year break, but this bill gets rid of it all together.
On top of that, the bill also allows the community that picks up the new service to increase its tax levy higher than before to support that new cost. It’s already state law that fees collected for shared fire departments don’t count towards the tax levy, meaning property tax payers could get higher bills to make up the difference. This bill could hit those local taxpayers again.
“Since 2011, the service transfer reduction has reduced property tax levies by $3,427,700,” according to the Department of Revenue. That ends under this bill.
Next action: Senate floor vote. The Assembly passed this bill on Jan. 15th.
Chance of Approval: Low. The Assembly passed this bill along party lines. That increases the odds that Evers’ would veto it, even with Sen. Mark Miller (D-Monona) as a sponsor in the Senate.
5. Punishing Voters For Rejecting Their School’s Referendum
SB 437/ AB473 – Relating to: the revenue limit ceiling for school districts. (Freedom Area School District)
How it could raise your taxes: In 2018, the State of Wisconsin increased school property taxes in “low revenue districts.” It ensured that every district in the state can collect at least $9,400 in revenue per student in 2019. It was set to increase $100 every year until 2023, when it would have reached $9,800. That was designed to help districts that were set to collect less than that, due to the state’s school funding formula, but it often means a significant tax hike on local property owners to make up the difference. The last state budget raised the minimum authorization even higher. It is now $9,700 for 2019 and $10,000 for 2020.
This bill is a special carve out for the Freedom Area School District, which tried and failed to pass an operating referendum in 2019. The district’s ceiling was $9,400, but the state already ignored the referendum penalty once this session, by increasing that to $9,575 due to declining enrollment. If this new bill is passed, Freedom will be allowed to increase its revenue another $125 per student, for the full $9,700 per student. This means local taxpayers could be responsible for paying an additional $203,625 in property taxes right after they voted no new taxes in a referendum.
Next action: Senate floor vote on Tuesday, Jan. 21. and the Assembly Education Committee will also hold an executive session on the bill that day as well.
Chance of approval: High. Voting this bill out of committee so late in the session is a good indication that it’s been green-lighted for final approval. Strong bipartisan support also increases its chances for success.
Bill Osmulski is the news director for the MacIver News Service, a division of the MacIver Institute, a Madison-based free market think tank. Reposted with permission.