GOP couldn't end up raising property taxes, so more of your tax dollars will prop up the Lottery

After weeks of debate and maneuvering, it turns out the GOP's changes to the Wisconsin state budget didn’t change anything when it came to property taxes.

In Senate Substitute Amendment 1 (SSA 1) to SB 59 and Assembly Substitute Amendment 1 (ASA 1) to AB 56, the Joint Finance Committee modified a number of the Governor's provisions affecting property tax levels. For counties, municipalities, and technical college districts, modifications included deleting the Governor's recommended changes to county and municipal levy limits and technical college revenue limits. The Committee modified the current law levy limit Page 2 adjustment for fees for covered services by deleting storm water management from the list of covered services. However, the effect of this modification would not have a measurable effect on county and municipal levies. Also, the Committee increased funding for the lottery and gaming property tax credit by transferring $30.2 million GPR in 2019-20 and $28.4 million GPR in 2020-21 to partially fund non-personnel lottery costs. As a result, an additional $58.6 million is available for property tax relief through the lottery and gaming credit. For school districts, several changes would be made under Joint Finance that would affect statewide school levies, including: (a) providing a revenue limit adjustment of $175 per pupil in 2019-20 and $179 per pupil in 2020-21; (b) setting the low revenue adjustment amount at $9,700 per pupil in 2019-20 and $10,000 per pupil in 2020-21; and (c) providing a base funding increase for general school aids of $83.2 million in 2019-20 and $246.7 million in 2020-21.

As a result of the preceding changes, gross property tax levies are estimated to increase on a statewide basis by 2.7% in 2019(20) and by 2.5% in 2020(21), and net tax levies would increase by an estimated 2.9% in 2019(20) and by 2.8% in 2020(21). These tax changes would result in tax bills for a median-valued home estimated at $2,927 in 2019(20) and $2,975 in 2020(21). These represent increases of $56 (2.0%) in 2019(20) and $48 (1.6%) in 2020(21), which would match the tax bill estimates under AB 56/SB 59.

As it was, property taxes were slated to go up on their own over the next 2 years because of higher property values and more building in the state.

Increases in statewide property values have occurred each year since 2013, including increases of 3.2% in 2017, and 4.0% in 2018 for a median-valued home. The median home value is projected to continue to increase by 4.0% in 2019 and 2.9% in 2020. Comparatively, total statewide equalized values are projected to increase 4.8% in 2019 and 4.1% in 2020.

Since total values are expected to increase faster than the median home value, the estimated property tax change on a median-valued home is less than the estimated rate of change of statewide tax levies. Under the preceding assumptions, statewide net levies are estimated to increase by 2.4% in 2019(20) and by 2.1% in 2020(21) under AB 56/SB 59. In comparison, the estimated net tax bill on a median-valued home is estimated to increase by 2.0% for 2019(20) and by 1.6% in 2020(21) under the bill. Tax bills are estimated at $2,927 for 2019(20) and $2,975 for 2020(21) under AB 56/SB 59.

And those increases may be underestimated, as the most recent home sales report from the Wisconsin Realtors Association shows prices are going up even more than that.

The median price of homes sold in Wisconsin was $203,000 in May — believed to be the first time it has topped the $200,000 milestone for the entire state.

A report Monday by the Wisconsin Realtors Association shows the state median hit that level with a big assist from a 13.1% rise in the median price of houses sold in southeast Wisconsin, where real estate agents say good suburban Milwaukee listings are in short supply.
Nonetheless, a general rise in home prices has been underway in Wisconsin since 2012, and that upward trajectory finally pushed the monthly state median past the $200,000 mark….

The median price of Wisconsin homes sold in May jumped 9.1%, to $203,000 from $186,000.

Somehow, I don’t think people in Wisconsin are getting 9.1% raises, so this may not necessarily be great news in the long run. It certainly is likely that situation will drive up assessed values and property taxes this year as a result.

The property tax increase under both the Evers budget and the JFC's changes is less than what we would have had under the situation Governor Walker left us in. The big reason why Evers’ budget reduced property taxes is because he wanted to put a lot more state money into K-12 public education, which counteracted some of the effect of the projected increase in property values.

Compared to current law estimates of $2,943 for 2019(20) and $2,988 for 2020(21), the estimated tax bill on a median-valued home would be $16 less (-0.5%) for 2020(21) and $13 less (-0.4%) for 2020(21) under the bill. The most significant factor leading to the overall change in the estimated tax bill for the median-valued home varies by year. The Governor's proposal to related to schools would have the greatest effect on the tax bill in the biennium. These provisions would result in estimated reductions to the school tax on the median-valued home of $25 in 2019(20) and $32 in 2020(21), after factoring in the current law credits in that year.

But given that Republicans in Joint Finance took out $900 million of Evers’ proposed increase to K-12 General School Aids, there was a potential for significant property tax increases without any other moves.

In addition, this other shell game will continues to grow under the GOP budget, which often ends up raising property taxes for the nearby public school district.

So the GOPs were now having to face having to be responsible for higher property taxes as the budget stood last week. So that explains this back policy choice on the last day of deliberations in the JFC, which was the final piece of a 22-part motion on taxes.

22. Increase GPR Funding for the Wisconsin Lottery. Provide $30,200,000 GPR in 2019-20 and $28,400,000 GPR in 2020-21 to support the Division of Lottery, for the purpose of increasing total GPR funding for the lottery to $70,200,000 in 2019-20 and $68,400,000 in 2020-21. Create two new annual GPR appropriations under the Division of Lottery for: (a) vendor fees ($17,826,000 annually); and (b) general program operations, excluding personnel and advertising expenses ($4,393,300 in 2019-20 and $2,593,300 in 2020-21). Provide an additional $7,980,700 GPR annually in the existing retailer compensation appropriation. Reduce SEG appropriations for vendor fees, general program operations, and retailer compensation by these amounts and make a corresponding increase in the SEG lottery credit appropriation to reflect the higher amount available for property tax relief.

So because they didn't want to be seen as having higher property taxes, the GOPs threw $58.6 million in tax dollars into the lottery at the last minute.

What a petty reason for bad policy! If they wanted to keep property taxes down, why didn’t they add that $58.6 million to schools or localities without raising their revenue limits by that amount? The same effect of “no additional property tax increase” would have happened, and we wouldn’t be adding to the Lottery shell game either.

I'd almost say Evers should veto this move out of general principle. But because he can't veto the expansion of the voucher program (the GOPs have basically made it an entitlement), property taxes WOULD then go up, and shameless GOPs would then blame the Gov for allowing taxes to go up. Pathetic stuff, really.