Tuesday, January 31, 2017

Property tax rates up under Walker, and dollars heading up too

A common refrain from Governor Walker is “I reduced property taxes in Wisconsin for the average homeowner,” as a means of justifying his theft of take-home pay from public employees and his gutting of city and county services. It frequently includes this type of chart

If you look at the Legislative Fiscal Bureau’s paper on property taxes in Wisconsin, theis skin-deep claim is true – the typical Wisconsin homeowner is paying less in property taxes than they did when Walker took office after the 2010 elections (although your own situation may vary).

Property taxes, median-value home, Wisconsin
2010 $2,963
2011 $2,953
2012 $2,943
2013 $2,926
2014 $2,831
2015 $2,849

Of course, there has been a significant price to pay for that, including an unfunded $406 million-a-year giveaway to Technical Colleges which could only be used for property tax relief instead of instruction or facilities, and hundreds of millions in added property tax credits which also haven’t been paid for. This drives up state spending, and combined with revenue shortfalls hitting the state’s General Fund in each of the last 3 years, this has meant further funding cuts and potholes throughout the state.

But if all you care about is how much your property tax bill is, maybe you’re cool with all that. But there’s a second reason this “lower property tax bills by all means” policy by Walker and WisGOP isn’t all it’s cracked up to be- because despite the lower number, you’re actually paying more of your home’s value in property taxes.

How is this so? Because while the typical Wisconsin homeowner was “saving money” in property taxes, the value of their home went down nearly $20,000 in 7 years as Wisconsin’s housing market deflated during Bush’s Great Recession and the immediate aftermath. And the recovery in the Age of Fitzwalkerstan was slow through 2015.

So these lower values means that the property tax RATE in the state has jumped significantly in the same time, rising by more than 19% between 2008 and 2013, and it’s still up more than 12% since 2008.

(chart reflects property taxes per $1,000 in value)

The flip side of this is that if your home wasn’t one of those which lost value, you’re very likely paying more in property taxes than you did 5 years ago, and Walker’s claim of “lower property taxes” is already BS to you (I feel ya).

You’ll note that Wisconsin property values finally started to make a comeback in 2014, and this trend seems to be accelerating because, as the pro-Walker Wisconsin Realtors Association was happy to point out, 2016 was a record year for Wisconsin home sales and prices.
Wisconsin’s housing market ended a record-setting year with solid growth, pushing annual sales to an all-time high and driving prices up well above the pace of inflation, according to the most recent analysis of the existing home market by the Wisconsin REALTORS® Association (WRA). December home sales rose 4.1 percent compared to December 2015, and median prices rose 7.4 percent to $161,000. Home sales for the year 2016 increased 6.1 percent compared to 2015, making this the strongest year for sales since the WRA recalibrated its tracking system in 2005. Median prices for the year rose to $165,000, which is 5.9 percent higher than 2015. By comparison, the average inflation rate for 2016 was just 1.3 percent according to the U.S. Bureau of Labor Statistics.

“This has been a truly remarkable year for housing in the state with sales exceeding 81,000 units for the first time on record,” said WRA board chairman Erik Sjowall. The previous peak recorded using the current tracking system was last year when just over 76,000 homes sold. Comparing 2016 sales to the previous year, solid growth was seen in every region of the state. The most robust sales were seen in the North region, up 7.8 percent; the Southeast region, up 7.2 percent; and the Northeast region, up 6.8 percent. Home sales were also healthy in the West, which was up 5.9 percent; the South Central, up 3.7 percent; and the Central, up 3.6 percent. “We’ve been experiencing very low inventory this past year, and the supply continued to tighten in December, which makes these record sales all the more impressive,” said Sjowall. Statewide, there were just 4.9 months of inventory in December, with the available homes dropping to 33,560. While inventory levels naturally fall during winter months, this is the lowest level seen since the WRA began tracking these figures in late 2009.
Sounds great, except now you have to pay higher property taxes on those higher-valued homes. And that will be especially true in western and northern Wisconsin, where home sale prices were up 8.1% and 6.8%, respectively- with several of those counties seeing prices jump by double digits. Wonder what all the voters in the many Obama/Trump counties in those regions will think in November 2018 when their property taxes are jacked up and their wages still suck?

Now combine those increased home prices (and associated higher assessments being given out) with continued state shared revenue cuts leading to a massive amount of school referenda, and you’ve got two items that are likely to make property taxes go up this December. Now here’s a third- there will be an inevitable drop in the lottery tax credit, after the State Legislature decided to cash out a windfall in the Lottery Fund that resulted from one-time extra sales due to the $1.4 billion Powerball jackpot that we had this time last year (a move I criticized when it came up in October).

Sure, the bump up in the Lottery credit is nice for me this year compared to last year - we got $150 taken off our taxes compared to $127 the year before - but this also means that if the Lottery Credit reverts to its more-typical 2015 amount (which it is projected to do), then I have a built-in $20+ increase into my property tax bill next winter even if everything else remains the same.

With the current housing bubble comeback in Wisconsin and these other forces working to make property taxes go back up, it makes me wonder if Gov Walker and the GOP might finally do the responsible thing, and use a part of the savings that we might have in this year’s budget to give more shared revenues to communities on a one-time basis for 2017. Such a move would limit the coming property tax hikes, while also finally allowing local communities and schools get back some of the funding that has been taken from them over the last 6-8 years. This would seem especially prudent given that the LFB paper on property taxes notes that local governments in Wisconsin are disproportionately reliant on getting money from other levels of government like the state and the feds (44.0% vs 36.3% average for the US).

Or, maybe this time they’ll listen to rural members of both parties, and allow local communities to levy a sales tax to help pay for their roads, taking pressure off of the property tax and reducing the need to put in wheel taxes (which many Wisconsin communities have already had to do in the past few years).

HAHAHAHA!!! Who the hell am I kidding? We all know that they’ll blow it on some stupid tax cut gimmick that sounds good to non-thinking rubes in a campaign ad, but will further restrict local government and cause things to fall apart even more. Silly me, why would I ever expect honesty and big-picture thinking from this crew!

1 comment:

  1. Jake, thanks so very much for this post. Feels like you are the only other person in the state who gets what this admin has done to us. Most Americans hold their savings in their home. To loose on that (and not have it recover as in some markets) is a huge economic hit. I can't understand why the Democrats ignore this. I've talked to many and they shrug and walk away. Thoughts? Stuff like he's stealing your retirement.