Monday, March 30, 2015

Tiny property tax cut not worth messing up Wisconsin schools...again

Today was the release of the Legislative Fiscal Bureau's rundown on what property taxes are projected to do in Wisconsin during the two year's of Governor Walker's next budget. It's a clear reminder of the choices that this Governor has made, which value the pose of cutting a few dollars in property taxes over boosting education and quality of life, and I wonder how many Wisconsinites agree with this trade-off, now that we've seen the harmful effects of these choices.

Governor Walker's budget has one provision geared toward lowering property taxes- redirecting added state aids toward schools and turning it into a write-off for taxes instead. And it also includes a budget trick of sending two years of the expanded school aids into one fiscal year, which is the only way both years of the budget can balance under this gimmick.
The Governor's budget bill (AB 21/SB 21) would provide funding increases for general school aids and the school levy tax credit. Relative to 2014-15, funding for general school aids would remain unchanged at $4,476.0 million in 2015-16 and would increase in 2016-17 by $108.1 million (2.4%) to $4,584.1 million. Funding for the school levy tax credit has equaled $747.4 million since the 2008(09) property tax year. The bill proposes an increase in tax credit funding of $105.6 million for both the 2015(16) and 2016(17) property tax years, although the combined amounts ($211.2 million) would be expended in the 2016-17 state fiscal year. This occurs because the increase for 2015(16) would be paid in July, 2016, on the same payment date for credit payments under current law. However, the increase for 2016(17) would be paid in June, 2017, on a new payment date to be created by the bill. Both payment dates are in the 2016-17 state fiscal year. Otherwise, the bill would continue the policies affecting property taxes that were contained in 2013 Wisconsin Act 20, the 2013-15 biennial budget act, and in 2013 Wisconsin Act 145, which increased funding for technical college districts and established a revenue limit for these districts.
And on the surface, the LFB indicates that this move will indeed lead to lower property taxes for the average Wisconsin homeowner, continuing the reductions that happened in this Winter's property tax bills that are the result of a similar gimmick increase in aid for the state's technical colleges that was mentioned above. And neither increase in hundreds of millions of dollars of spending has been offset by an increase in taxes.
Since total values are expected to increase faster than the median home value, the estimated tax change on a median-valued home is less than the estimated rate of change in statewide tax levies. Under the preceding assumptions, statewide net levies are estimated to increase by 0.8% in 2015(16) and by 0.9% in 2016(17). In comparison, the estimated tax bill on a median-valued home is estimated to decrease by 0.3% in 2015(16) and 0.1% in 2016(17). Tax bills are estimated at $2,832 (-$94) for 2014(15), $2,824 (-$8) for 2015(16), and $2,821 (-$3) for 2016(17) under the provisions proposed by the Governor in the biennial budget bills.

The most significant factor leading to the overall decrease in the estimated tax bill for the median-valued home varies by year. For the 2015(16) levy, the proposed increase in the school levy credit reduces taxes on this home by an estimated $33 compared to current law. For the 2016(17) levy, the proposed increase in general school aids leads to an estimated tax reduction on this home of $34 compared to the base funding level for these aids.
But the tax cuts come at what price? Look at all of the school districts in Wisconsin that are facing massive budget cuts for the next school year because of this and other Walker decisions on funding, including the huge amount of districts that are holding voter referenda in 8 days just to keep the lights on and buildings up to date. Madison's request for $41 million to update buildings is merely one of 57 such districts in Wisconsin that are asking the voters for their approval next week.
The largest question in the state is a $49 million construction referendum in Port Washington, while Wausau is asking for $39.5 million for construction projects and to pay for operations. Verona is requesting $8.3 million to buy land for future facilities, while River Ridge in Grant County wants $9.9 million to create one campus in Patch Grove for all grades in the 501-student district.

Other districts in southern Wisconsin are requesting funds just to help maintain educational programming or to retain smaller class sizes. Cambria-Friesland, Highland, Jefferson, Wisconsin Heights and Mauston are among those asking for money to cover operational expenses.

In Benton, one of the state’s smallest districts, requests to exceed the state-imposed spending limits have become a regular occurrence.

Voters in the 255-student school district have approved three-year non-recurring referendums in 2006, 2009 and 2012. If the latest referendum asking for an additional $300,000 in each of the next three years is approved, it would extend the streak to 12 consecutive years.
In its analysis, the LFB is counting on total tax levies for schools statewide to go up 1.2% next year, and down 0.9% this year. Obviously, if these referenda go through, I would think the average homeowners in those districts will be seeing their tax bills go up much higher than that. But if they don't approve, then their public schools and communities suffer, and in some of the smaller districts, may dissolve entirely.

A whole lot of the financial stresses that have led to all of this referenda could be calmed with one simple move- by sending Walker's $211 million in added funding away from property tax relief, and instead send it to the schools themselves. It wouldn't change or raise state taxes one cent, and the LFB estimates that it would only result in seeing the average home have property tax increases of just over 1% each year- well below the expected increase in home values (as Wisconsin finally begins to take part in the Obama Recovery, despite Walker's best efforts). At the same time, it would avoid a whole lot of this dragging down of local communities, forcing hard choices between raising taxes and hurting schools, and causing unneeded strife and wounds that may last beyond April 7.

But noooo, Scott Walker has to strike a pose to claim that he cut taxes to out-of-state rubes voting in GOP primaries in 2016, regardless of what kind of anger and damage that he leaves behind here in Wisconsin. Apparently Scott Walker has yet to understand the wisdom of one Marge Gunderson, who lives in the state that's kicked our ass economically, and understand that there's more to life than a few dollars.

PS- If dollars and cents are more your thing, note this loss in home value during the Age of Fitzwalkerstan. This is from the same LFB reports on property taxes.

Median home value, Wisconsin
2010- $167,974
2013- $147,989
2016 (projected)- $159,205

So were the handful of dollars you saved in one year of property taxes worth the $20,000 in wealth you may have lost in the first three years under Walker, or the $8,700 you'll still be out after 6 years? If your answer is yes, you are one screwed-up dimwit.


  1. "Since total values are expected to increase faster than the median home value"

    Translation: those owning more expensive homes will see them appreciate at a faster rate than those with less expensive homes.

    1. And if your home has appreciated (often because you live in a place that values good schools), you've gotten a double-whammy, as average property tax RATES have gone up.

      2010 $17.38
      2013 $19.77
      2016 (projected) $17.72