Saturday, June 24, 2017

The hidden ripoff- how "dark stores" raise your property taxes

Next week, there will be a hearing in the State Assembly’s Ways and Means Committee on two bills that seek to better define how commercial properties are assessed and taxed in Wisconsin. AB 386 deals with so-called “dark store” assessments on retail and other commercial property, while AB 387 has to do with the value of leased property.

The two bills have drawn sponsorship from a wide variety of legislators from both parties from numerous parts of the state – a rare feat in this Legislature. And if you look at the ripoff that retail businesses have been trying to pull on Wisconsin homeowners, you will see why these laws should be supported by anyone that is not a puppet for corporate retailers.

The leasing bill is intriguing (it values the property based on how much a renter would pay on the open market for the space vs the current below-market deal), but I want to concentrate on the “dark store” bill, since that has been an increasing issue in local communities, particularly as some retail stores close up in light of consumer tastes shifting to online shopping (Sears at Southridge Mall in Greendale being one of the latest victims).

A lawsuit in suburban Green Bay illustrates how this controversy is playing out throughout the state.
Big-box retailer Menards and the village of Howard continue to battle over a $6.7 million difference of opinion on how much the company's store on Woodman Drive is worth.

The next round will be fought in court, now that the retailer has sued the village in a dispute over Howard's 2017 assessment of its store, on 18.7 acres at 2300 Woodman Drive….

Howard assessed the store at $12.45 million. Menard Inc., which said it spent $10.6 million on land and building costs, claims the store should be assessed at $5.8 million. Menards compares the site to closed stores that include a Beaver Dam Home Depot, a Sheboygan Sears and the long-vacant Cub Foods on Green Bay's east side.

Cub Foods, on an eight-acre site, is assessed for $1.8 million and pays $40,000 a year in taxes. A redevelopment project beginning this month is projected to raise its value to $5.5 million.
That case will go to trial early next year, but for future cases, the dark store bill in the Legislature seeks to decide this question by telling assessors they should use the following criteria
1. Sales or rentals of properties exhibiting the same or a similar highest and best use with placement in the same real estate market segment.

2. Sales or rentals of properties that are similar to the property being assessed with regard to age, condition, use, type of construction, location, design, physical features, and economic characteristics…..

The bill also provides that a property is not comparable to the property being assessed if the seller has placed restrictions on the highest and best use of the property or if the property is dark property and the property being assessed is not dark property. The bill defines “dark property” as property that is vacant or unoccupied beyond the normal period for property in the same real estate market segment.

This store....

Is not this store...

The City of Wisconsin Rapids is among the latest communities to give support to the “dark store” bill, and said that it is a matter of tax fairness to keep homeowners from paying more than they should.
The goal of these bills is to avoid a large tax shift from commercial properties to other classes of property, primarily residential and small business. Alderperson Thaddeus Kubisiak, the council member who introduced the resolution, said, “this legislation will ensure that the dark store tax strategy being used by big box retail chains to cut their property tax bills in half in Michigan and other states does not take hold in Wisconsin.”

The legislation clarifies that when assessors use sales of comparable properties for determining the value of a property they must use properties that are within the same market segment and similar to the property being assessed with regard to age, condition, use, type of construction, location, design, and economic characteristics. Mayor Zachary Vruwink added, “These bills explicitly provide that assessors may not use a dark and vacant store as a comparable for property that is not dark or vacant.”
The City of Sheboygan’s Common Council also gave its unanimous support to the dark store bill this week, and pointed out how much of a tax shift happens in their community of less than 50,000 people.
Sheboygan officials said the city has already been hit by more than $550,000 in lost tax revenue in recent years following challenges by local businesses over their tax bills. The biggest loss came when the former owners of Memorial Mall won more than $800,000 in tax refunds two years ago over contested property assessments.

For the city, the mall case amounted to more than $530,000 in lost taxes between 2010 and 2016, with losses also hitting other local jurisdictions, according to information provided by the city. Local Walgreens stores have also seen reductions in their property bills following challenges to their assessments.
But the taxes aren’t really “lost”, as that $530,000 will now be an extra assessment put onto everyone else that owns property in the community, particularly homeowners. Dark-store assessments are a flat-out subsidy of retailers at the expense of the everyday resident.

And I guess that explains why the greedheads at Wisconsin Manufacturers and Commerce are opposed to this bill, because those guys want all the giveaways that they can get, no matter who else pays the price for those subsidies. For a bunch of guys who complain about paying taxes, WMC sure doesn’t mind if everyone else has to pay up for their free ride!

Any legislator worth salt needs to get behind both of these bills and shoot them through as soon as possible, before more homeowners get screwed over by (elected and donation-receiving) judges decide in favor of these retailers. Sure, dark stores and sub-market assessments might not get a rube’s blood boiling like the thought of some poor black person getting welfare, but it is a much bigger theft from the little guy.

Thursday, June 22, 2017

Dem K-12 plan goes big. Wisconsinites should listen

One of the issues still to be figured out in this budget is the largest expense of state tax dollars- K-12 education funding. And even though their party has been locked out of these closed-door GOP meetings on the budget, the Democratic members of the Joint Finance Committee decided to have a say in the debate about what to do for the next 2 years anyway, and released their own K-12 funding plan.

In looking at that Dem plan, a few things stand out as sizable differences from prior K-12 plans submitted by Governor Walker, as well as the Assembly GOP.

1.The most obvious difference is that JFC Dems are choosing General Aids to be the source of their additional K-12 funding increases, on top of Walker’s and WisGOP’s plans to have the increases concentrated in per-pupil aids. This means that poorer districts with lower tax bases and stagnant populations are likely to receive the largest benefit from the Dems’ plan.

2.The plan also gets rid of two property tax credits- the School Levy credit and the First Dollar credit) and instead folds that $1.09 billion into General Aids. The idea is that this would give districts the flexibility to use that money for classroom expenses or other items instead of requiring it to be given away as property tax relief, like today.

3.It keeps the amount of aid per voucher student at 2017’s levels, instead of increasing it like Republicans plan to do, and it gets rid of the money-funnelling mechanism where a public school district loses funding for every resident student that uses a voucher. It also sets limits on the amount of voucher students a school could take, as well as the amount of voucher students attending from a single district.

4.The end of voucher money-funneling and increased General Aids still means that property taxes for schools would be reduced $25 million below Walker’s proposed. This is even taking into account that the Dem bill allows districts to go over their revenue limits to do energy efficiency projects, and to enhance school safety.

5.It fully funds sparsity aids for small, rural school districts, instead of prorating it like in Walker’s K-12 budget, and includes funding to help forgive student loans and ongoing education costs for teachers that would take jobs in small, rural districts.

6.There are also significant increases to Special Education aids (which haven’t been increased in 8 years), money to increase reimbursement to districts that offer breakfast, and $8.7 million a year for schools to offer assistance for issues related to Alcohol and Other Drug Abuse.

An obvious roadblock to this ambitious plan is the price tag- nearly $728 million above Walker’s proposed increases to K-12 education (although it’s pretty close to the $654 million that the M&A tax credit giveaway is scheduled to cost in the next budget, now that I think of it). And do I think any of these proposals will be seriously considered as the GOP-controlled Legislature tries to break their logjam that’s already going to make this budget go past the July 1 start of the 2018 Fiscal Year? No, of course not.

But it’s a marker that Dems are throwing down, and it also counteracts the common GOP meme that “Dems have no ideas to offer.” And the Dems’ ideas match up with the proposals of State Superintendent Tony Evers’ “Fair Funding for the Future”, which seems to be a good place to be in given that Evers won 70 of Wisconsin’s 72 counties months ago as he cruised to a 3rd term in office.

So with this K-12 proposal that finally restores our public schools to their pre-Act 10 levels, it sure seems like Dems are more in line with the desires of Wisconsinites than the ALEC-owned puppets of Betsy DeVos and convicted criminal Scott Jensen that make up today’s WisGOP. And Dems would be wise to go out of their way to push that message out to the rural areas of the state that need their public schools to be supported more than ever.

WisGOP budget sins continue, no matter whose plan it is

We’re going to wrap up another week in June without any meetings of the state’s Joint Finance Committee, which means there is virtually no chance of getting the Wisconsin state budget done on time. In isolation, this isn’t a big deal in the short term, but the underlying divide between Republicans in the two houses of the Legislature seems to still be out there, and they don’t seem to be getting much closer to an overall solution, and progress is limited to fits and starts.

Given the statements from Assembly Speaker Robbin' Vos and JFC Co-Chair John Nygren in this summary, we may see some action on K-12 spending by June 30, but that the main events will still largely be held behind closed doors without Dems or the public being allowed to give input on shaping things.
The Joint Finance Committee won’t meet this week, though Nygren said it’s possible the committee will meet next week to finalize education and a few other topics where there is no disagreement. Transportation and tax cuts won’t likely be resolved before July 1, when the new budget calendar begins.

If a budget isn’t signed into law by then, funding for state government will continue at current levels. In 2015 the budget wasn’t signed until mid-July, and Vos and Nygren remained hopeful this year’s budget would be completed by then.

Vos said he preferred to continue meeting with Senate Republicans to work out a deal before scheduling another budget committee meeting.

“It’s not for lack of working on the budget, it’s just doing it in a process to try to find consensus,” Vos said.
The biggest difference is still in transportation funding, where Senate GOP Leader Scott Fitzgerald’s solution to rising debt costs and increasing potholes is to follow Governor Walker’s plan of kissing up to DC lobbyist Grover Norquist with a “no tax, no fee” pledge, and borrowing into oblivion- except Scotty Fitz and the Senate GOP want to use even more debt to hamper schools and the poor even more for the future!
Fitzgerald spokeswoman Myranda Tanck said $350 million of that borrowing would be supported by Wisconsin's general fund, which gets its revenue from income and sales taxes and pays for expenses like schools, prisons and health care for the poor, elderly and those with disabilities.

Most borrowing for roads is typically paid back by Wisconsin's dedicated transportation fund, which gets its revenue from gas taxes and vehicle registration fees.

Tanck said paying for the new borrowing Fitzgerald supports would cost the state's general fund a total of $8 million in the next budget.
This is a horrible idea that somehow not only continues the problems of excessive debt in the Transportation Fund, but also raises expenses in a General Fund that already is looking at a $1 billion deficit starting in 2019, in part due to similar borrowing stunts that have been pushed off debt payments into future years.

To their (limited) credit, the Assembly GOP doesn’t seem too keen on keeping the cycle of “borrow and pay later” as a strategy for DOT funding, as both Vos and Nygren are saying that continued reliance on borrowing without a long-term plan on revenue isn’t an acceptable answer to them (Vos called more borrowing “a Band-Aid to us.”).

But the real problem with this budget remains the same issue that hit most places run by Republicans after a while- tax cuts to the rich and corporate mean that there isn’t enough revenue to fulfill all the needs that still exist (along with a refusal to raise taxes for items such as transportation). At the same time, gimmicks that were used to balance the books have already had their benefits be used up. In Wisconsin these gimmicks include the one-time savings of Act 10 (and the resulting damage to the economy), skipped debt payments, and massive DOT borrowing. Now these bills are coming due.

And there is little evidence that there will any kind of population or job boom or outside help from DC that’ll bail this budget out. In fact, Wisconsin’s population growth has slowed to near zero and 2016 featured our slowest job growth in 7 years. On top of that, the Trump/GOP gang in DC wants to cut spending and/or pass the burden of paying for programs down to the states…when states like Wisconsin don’t have enough money to begin with.

The GOPs that are huddling in the Capitol won’t say that in public, but I sure will. It is their negligence and “politics over policy” mentality that has caused this mess of a budget, and no solution they will end up with over the coming weeks (or months?) will solve the problems that they have caused.

Wednesday, June 21, 2017

In DC or in Madison, closed-door, GOP-only legislation is bad news

With the state budget still in a three-way logjam between Assembly Republicans, Senate Republicans, and Republican Governor Scott Walker, there were plans for a closed-door summit Tuesday at the Capitol between legislative leaders to try to get things moving on a budget that is supposed to be passed into law within 10 days.
Assembly Speaker Robin Vos, R-Rochester, and Sen. Scott Fitzgerald, R-Juneau, are set to meet tomorrow with representatives from the Legislative Fiscal Bureau to “discuss a number of outstanding budget issues,” according to Fitzgerald spokeswoman Myranda Tanck.

Tanck declined to name the issues, saying she couldn’t “guarantee they will get to all of the outstanding items nor what exactly will come up.”

Individuals with knowledge of the meeting said K-12 education would be on the agenda, as Assembly Republicans and the Senate GOP try to reconcile differences surrounding per-pupil funding levels and approaches to low revenue limits, among other things.
Notice who’s not part of those meetings? DEMOCRATIC LEGISLATORS AND THE PUBLIC. Sounds just like DC and the TrumpCare bill, doesn’t it?

This has gotten so bad that even some Republicans are going public and saying that WisGOP leadership should clean up the secrective way they have been handling the budget. It’s a draft proposal that’s being sponsored by Rep. Scott Allen and Sen. Steve Nass (!), is intended to limit the last-minute add-ons and notorious “999” maneuvers that seem to be coming more frequently and in larger scale in recent years. These are ideas that more of us from all political persuasions should get behind.
The bill provides that the Joint Committee on Finance may not consider or take executive action on any motion relating to the biennial budget bill unless the motion has been distributed to all members of JCF at least 48 hours before JCF considers or takes executive action on the motion. The motion must also be posted on the Legislative Fiscal Bureau Internet site at least 48 hours before JCF considers or takes executive action on the motion.
That works for me, because these sneak-attack omnibuses are garbage that don’t help anyone but the inner circle of connected individuals that are telling their puppets in the Legislature to insert these things.

However, there is a loophole in this bill that might need to be ironed out.
The provisions of the bill, however, do not apply to a motion that relates to an emergency, as determined by three-fourths of the members of JCF, or to a motion that contains minor substantive differences from a motion that has met the bill's requirements.
The ¾ threshold to define an “emergency” sounds like a lot, but it would simply be a 12-4 party-line vote among the GOPs that currently control Joint Finance today. By that definition, they could just yell “Emergency!” and nothing would change from the secrecy and last-minute omnibuses of today.

So maybe make that threshold be 13-3 (so a minority party member has to say “yes”), or make it only so that items outside of the 2-year budget document are the only ones that can be “emergencies”, so this designation is limited to items such as repairs from a storm, where money needs to be released immediately.

Even with the Kochs’ Americans for Prosperity and the Racine Journal-Times offering public support for the “Budget Transparency Act”, I don’t see the GOPs in legislative leadership taking the hint in June 2017. Instead, WisGOP’s legislative leadership is following the example of Mitch McConnell’s GOP Senate and preferring to do their work in the dark, without any input from the other party or the taxpayers that pay their salary.

And just like what’s happening in DC, the GOPs were reporting "progress" in the budget talks, but we in the public have no idea what that really means and no documents that can help us figure out what's changed. You can bet we won't find out until the Joint Finance Committee calls a hasty meeting to cram through much of these outstanding budget issues, and the outcome won't end up helping anyone except for a few self-interested jagbags and their politicians they own.

Monday, June 19, 2017

Senate GOP K-12 plan has familiar problem- WHERE'S THE MONEY?

Even though the 2017 Fiscal Year ends a week from Friday, there is still plenty left to decide on the 2-year state budget that is supposed to be in place for July 1 (even though it likely won't be in place). One of the biggest items of debate involves K-12 spending, where Assembly Republicans came out with a plan a couple of weeks ago that would allow for some reallocation of money that would give more flexibility for districts who are currently not allowed to spend as much per student as richer and larger districts (I discussed much of this proposal in this post).

Well today, we found out through the Journal-Sentinel's Jason Stein that the Senate GOP is working out a K-12 plan of their own. Like the Assembly GOP, the Senate GOP plans would push more money toward school districts with low revenue and spending limits, but it wouldn’t use property taxes to do it.
GOP senators have come up with an education framework that would use state money to help those districts — meeting part of the Assembly's goal — while also accommodating Walker's target of holding the line on property taxes.

Senate Majority Leader Scott Fitzgerald (R-Juneau) confirmed the plan and said he and his colleagues are still discussing how much state money to pour into it.

"It's the same concept that the Assembly had targeted," Fitzgerald said. But "the state would pay for it."
If the Senate GOP wants to trade state funds for extra funding and keep property taxes down, that makes sense in theory. Except there’s one big thing missing- THERE’S NO STATE MONEY TO GIVE OUT.

As I’ve mentioned several times throughout this budget process, Scott Walker’s original 2017-19 budget had only $12 million in breathing room built into it, and a $1 billion deficit looms for the next budget. And with the Legislative Fiscal Bureau saying last month that they saw no need to increase revenue projections, and some expenses being re-estimated to end up costing more than what was projected in the budget, that tightness hasn’t subsided over the 4 months this budget has been debated.

Now, maybe some funds can be cleared up by getting rid of Gov Walker’s stupid plans for a sales tax holiday, and perhaps legislators could avoid losing $200 million in revenue to give a $1-a-week income tax cut. And maybe that extra money is enough to have the state backfill this revenue limit increase to low-spending schools.

But we haven't heard that the WisGOPs are going to dump the $1-a-week income tax gimmick, and even if they do, using state money to give relief to low-revenue districts means extra spending will be projected in the next budget (and there already isn’t enough state funding to pay for what's already on the books, let alone more). So there’s a connected shoe to drop here on taxes, either in the 2017-19 budget talks, or in the next 2 years. Because the math tells you that there is no way that WisGOP can continue all of these pre-election property tax handouts and the related state spending increases without raising taxes on someone in some other fashion.

That part of the shell game is what we have to watch for in these coming weeks, because that’s likely to be buried in some late-night maneuver that WisGOP isn’t going to want to promote. I’m not seeing how else they can pull off their big talk of “lower taxes and more spending.”

Hey SCOTUS- I got a redistricting map for ya!

The biggest news affecting Wisconsin didn't happen in the state today, but instead happened in DC, as the US Supreme Court chose to give a closer to look as to whether the Wisconsin GOP illegally gerrymandered the state in 2011.
The U.S. Supreme Court agreed on Monday to decide whether the U.S. Constitution limits how far lawmakers can go to redraw voting districts to favor one political party over another in a case that could have huge consequences for American elections....

The justices will take up Wisconsin's appeal of a lower court ruling last November that state Republican lawmakers violated the Constitution when they created state legislative districts with the partisan aim of hobbling Democrats in legislative races. The case will be one of the biggest heard by the Supreme Court during its term that begins in October.

The case involves a long-standing practice known as gerrymandering, a term meaning manipulating electoral boundaries for an unfair political advantage. The lower court ruled that the Republican-led legislature's redrawing of state legislative districts in 2011 amounted to "an unconstitutional partisan gerrymander."

A panel of three federal judges in Madison ruled 2-1 that the way the Republicans redrew the districts violated the U.S. Constitution's guarantees of equal protection under the law and free speech by undercutting the ability of Democratic voters to turn their votes into seats in Wisconsin's legislature.
The unfortunate news is that SCOTUS also stayed that lower court's decision requiring the Legislature to redraw the maps by November 1, which means the current districts stay in place until the decision.

Given that SCOTUS won't rule on the case for the better part of 12 months, it probably makes sense that the districts can't be redrawn before the 2018 elections, which means GOPs get a "mission accomplished" for the 2010s, since only the 2020 elections would be affected (maps will get redrawn anyway after the 2020 Census). Granted, the precedent that could be set would be a much bigger deal in the long-run, as it would give limits to partisan hackery in redistricting. But for Wisconsin politics, the damage from this gerrymander will have already been done.

However, if SCOTUS does get pissed off at WisGOP and feels the need to redraw Wisconsin's districts ASAP, I'm glad to be of assistance. With a huge boost from Twitter superstar/redistricting fan BobbyBigWheel, and the awesome Dave's redistricting website, I worked out a new Assembly map of Wisconsin.

To give a comparison, here's what the current, 99-member Assembly redistricting map looks like.

And here's what my map looks like. I tried to ignore the hometown of a legislator, and generally ignored the partisan leanings of a place. I did keep in mind which areas could be majority-minority districts in the Milwaukee area (both African-American and Hispanic), and tried to keep cities, counties and metor areas together as much as possible.

One of the biggest changes between my map and the current WisGOP one is in Western Milwaukee County, where I tried to end districts at or near the county line. This results in one Wauwatosa-centric district and a district largely based in West Allis/West Milwaukee, instead of the current WisGOP imperialism that splits up Tosa and ‘Stallis into numerous districts, with the voting power of those Assembly districts and Leah Vukmir’s Senate district residing in Waukesha County.

You'll also see that I repeated the pattern on the North side of Milwaukee County, where I put Whitefish Bay, Brown Deer and Glendale together. This avoids the atrocity that we see now where Whitefish Bay is in the district as Mequon and Grafton, and Brown Deer and part of Glendale are in the same district as Germantown and Menomonee Falls. All of these communities are currently "represented" by State Sen. Alberta Darling, who really speaks for the WOW Counties, and not where she lives in Milwaukee County.

I also tried to keep Appleton and Green Bay regions together, particularly on the Senate side (each 3 Assembly seats = 1 Senate district), which is different than the current WisGOP maps where the countryside is included to dilute pro-Dem city votes in those areas.

Lastly, I wanted to make sure suburban and rural Dane County wasn’t being watered down by more conservative districts to the east and north, like the current WisGOP map does. So you’ll see those districts are almost entirely within Dane County, and stay within the Madison TV/radio market. This avoids the issue of having someone like Joel Kleefisch live in Oconomowoc, but “represent” Eastern Dane County under WisGOP's maps.

And while WisGOP would still be likely to hold the Assembly in a 50-50 year under this statewide map, due to “Great Sort” reasons, it wouldn’t be near the absurd levels that they have today, and would result in actual changes of power when the people demand it. That would lead to a level of responsiveness to the public that should be better for a whole lot of us that live in this state. And maybe we could start to get this state back towards sanity and stop falling further behind without any needed changes occurring.

I'd been working on this on and off for about a month as a spare-time brain teaser (yes, this makes me a nerd), but feel free to let me know what you think.

Sunday, June 18, 2017

Household vs payrolls? Which number's closer to the truth?

Just a quick follow up from my questioning of the significant difference between Wisconsin's payroll "jobs" survey, and the household "employed/unemployed" survey.

Let's add a wider perspective of other states into this equation, based on Friday's release of the state-by-state jobs figures by the Bureau of Labor Statistics. If you go by the payroll figures over the last 12 months, Wisconsin is in its typical place during the Age of Fitzwalkerstan- in the bottom half of job growth in the Midwest, and well behind our neighbors in Minnesota.

Change in private sector jobs, May 2016 - May 2017
Minn +1.86%
Mich +1.64%
Ind. +1.36%
Iowa +1.31%
Wis. +1.22%
Ohio +1.09%
Ill. +0.70%

But if you look at the household survey, the numbers are very different. This chart shows the 12-month difference in jobs reported in the payroll survey and number of people described as "employed" in the household survey, and you'll notice that while some states are right in line, other states like Ohio and Wisconsin have major gaps.

Which goes back to my point from a few days ago- why is there such a huge gap in these two surveys in Wisconsin, and which number is likely to be correct? one thing that I want to see is if this disparity is reduced over the next few months.

Seasonal vs. non-seasonal totals, March - May 2017
Payroll jobs
Non-seasonal total +69,300
Seasonally adjusted +11,700

Household employment
Non-seasonal total +54,300
Seasonally adjusted +29,500

Yes, it looks like Wisconsin is adding jobs above and beyond the typical increase in April and May as the weather warms, but can you explain how this is such a difference? When the total number of people reporting as employed becomes more than twice as many people working when the "seasonal adjustment" hits? That has to be changed in the upcoming months, and let's see what happens to those unemployment numbers in the coming months- particularly when we constantly hear businesses complaining about the inability to find workers in a time when workers are usually added.

The answer will likely become clearer in the next 2 1/2 months leading up to the next release of the "gold standard" Quarterly Census of Employment and Wages (QCEW) in early September. But there are jobs reports in the meantime to come out, and we need the picture to clear up soon enough.