As we hit early December, many Wisconsinites will be getting their property tax bills in the near future. And after
a masive number of school and local government referendum votes last month (or both, as we dealt with in Madison), many of us will likely see higher bills on this year's mailings.
In 2024, the approved referenda authorized a total of $4.4 billion in new funds for school districts, $3.3 billion of which will come from debt. This was by far the most ever in a calendar year, breaking the old record of $2.7 billion (unadjusted for inflation) in 2020. It in part reflected that the total amount of money requested via referendum reached a new high of $5.9 billion, up from 2022’s previous record of $3.3 billion.
These results translated to a school referendum passage rate for all of 2024 of 70.1%. While voters approved the large majority of referenda, it marks a 10 percentage-point decline from 2022 and was the lowest passage rate in a midterm or presidential election year since 2014. This decrease continues a recent trend of declining passage rates since 2018.
In addition to school referenda, voters also decided at least 14 municipality referenda to exceed levy limits in the Nov. 5 election. (These totals may not be complete but reflect all those included in data from the Wisconsin Elections Commission.) Of these 14, voters approved seven, authorizing those cities, villages, and towns to increase their property tax levy for operations above state-imposed limits to fund specified services, such as public safety, local roads, parks, or general services.
In the fall and spring elections combined, voters approved 17 out of 31 municipal and county referenda total statewide. This year saw the second-most municipal and county referenda approved to increase property taxes of any year on record, behind only 2022, when 29 passed.
And what those referenda allow school districts and municipalities to do is to exceed limits put on certain types of revenues under state law. For K-12 schools and technical colleges, those revenue limits are for a combined amount of state aids and property taxes, while for municipalities, the limits on overall property tax levy increases are based on the amount of
"net new construction", which the Wisconsin Department of Revenue calculates as follows:
It includes changes to equalized value due to new building construction and land improvements minus changes to equalized value due to the demolition/destruction of buildings and removal of land improvements.
That causes some perverse incentives that I think could cause overbuilding to allow for a larger amount of resources to be used. But the bigger problem has been that the rate of inflation has had very little to do with the increases (or lack of increases) in these levy limits. And it ignores the fact that the median sales price of a Wisconsin home increased by more than 140% between October 2011 and October 2024, and 58% in the last 5 years, as that jump in home values has not translated into added resource capacity for schools and communities.
In this time, Wisconsin's public schools and communities have had the amount of shared revenues fall well short of the rate of inflation since 2011 (in fact, municipal general shared revenues were lower in 2024 than it was in 2011) and had their tax-raising abilities limited (which often has led to increases in property taxes via referenda). But oddly, the state has been spending increasing amounts of tax dollars to limit how much the average Wisconsinite ends up paying in property taxes, with over $2 billion set aside in this year for that purpose.
Items such as the First Dollar, School Levy, and Lottery Credits are taken directly off of a Wisconsin home owner's bill. The First Dollar Credit is largely equal for all properties regardless of the property's value, but the School Levy and Lottery Credits are taken off proportionally, with higher-value homes getting larger credits.
Here's how last year's bill looked for us, for example, and you can see the reductions of all 3 of these items from our 2023 bill.
With that in mind, I have a modest proposal for the next state budget.
Why don't we send $1 bilion of the $1.275 billion in School Levy Credits to K-12 public school districts, and then raise their revenue limits by $600 million? This would be a $400 million property tax cut for Wisconsin homeowners, and also add needed resources to classrooms without having to go through the obnoxious cycle of referenda and/or budget cuts in a time when state finances are bursting.
We also can bump up the First Dollar Credit (maybe to $250 million vs $150 million), so property tax breaks are less related to property value and more evenly distributed to all Wisconsinites. Lastly, we should stop funding the Lottery Credit with General Fund dollars, and instead distribute that $83.5 million to local communities. We can combine those added tax dollars with a reform to the tight levy limits that not only accounts for
the increased state aids from 2023's shared revenue reforms that started this Fall, but also allows for the higher tax base and inflation to be factors in increasing the amount of resources available for those communities to provide resources.
I know there are a lot of interlocking pieces with this, and I'm kind of rambling in a few directions. But there's no reason we can't use the 2025-27 to make a long-lasting reform that adds more state funding and lowers property taxes for Wisconsinites when it comes to paying for their public schools and municipal services, and also expand the capacity for local school and government services. We also can make those property tax cuts less regressive than the ones we have today by changing the source of where the added funding is coming from.
Seems like something Dems should jump on for this upcoming session, and wrong-foot Republicans like Robbin' Vos,
who are perfectly fine with this regressive, underfunded system that results in increasing numbers of property tax increases through referendum. We can do this better, and we don't need to keep going down a road that few everyday Wisconsinites are satisfied with.
I see that professor and former Wisconsinite Derek Gottlieb just published a column in the Journal-Sentinel also calling out the GOP's two-step routine school referenda.
ReplyDelete" Like some James Bond movie villain, the Legislature has set up a diabolical game for its citizens to play every election cycle. We can have predictable and stable housing costs, or we can have adequately-funded schools, but we can’t have both. And we citizens have to fight each other on a regular basis to decide which will prevail. Lawmakers sit by idly and watch it all happen – cackling and petting a hairless cat, I imagine.
Those additional property taxes are not mere inconveniences. It isn’t just “pain” for some of our neighbors. It isn’t just an additional “pinch” in the wallet. With one vote, the neighborhoods and the school districts where some folks have lived for decades have become unaffordable to them.
And for communities that voted down a school referendum, the results are no less devastating. A failed referendum often means that schools have to cut teachers, shut down electives and defer renovations to crumbling buildings. With one vote, the schools and communities where folks have hoped to raise their kids or spend their careers have become uninhabitable to them."
And people like Robbin' Vos shrug and say "well, not our fault they raised their own taxes."
This is why I voted NO on the operating referenda for Madison schools and the City, not because I wanted budget cuts, but because there's gotta be a better way than we are doing it now, and I don't think we need to keep playing the WisGOP game.