Friday, July 9, 2010

Impacts of decreasing property values on government budgets come into focus

The Public Policy Forum's annual report on property values and taxes in southeast Wisconsin was released this morning with a not-so-surprising conclusion: property tax rates are on the rise as local governments and school districts struggle to maintain existing service levels in the face of declining values.

The Forum has been compiling taxing, spending and property valuation data from each of the region's seven counties and 146 municipalities since 1992. This year was the first in which property values in the region declined, with the aggregate value diminishing 1.3% between 2008 and 2009. Yet, despite this decline in value, the property taxes levied by local governments and school districts in the region increased by 3.9%, a reflection of the fact that the aggregate property tax rate in the region grew by $1.02 per $1,000 of value, or 5.3%.

The good news - if one can call it that - is that the average homeowner paid less in property taxes for the 2010 tax year than he or she paid in 2009. That's because one's property tax bill is determined not only by the tax rate, but by the assessed value of one's home. Because the value of the average residential property decreased by more than 9%, the average homeowner in the region actually saw his or her overall tax bill drop from $4,607 to $4,401.

So what's the takeway from all of these numbers? We suggest it's that state and local elected officials will continue to face a monumental challenge keeping rates down while maintaining existing service levels, and that property owners soon will notice the difference. Indeed, this data further illustrates the need for revenue diversification at the local level, a topic we're hoping receives greater attention as races for governor and the state legislature heat up.

To access the full report, click here.


Anonymous said...

In the report you mention that the gross levy in the town of Paris nearly doubled. In looking at DOR figures, it looks like their levy was only up about 20%. Am I missing something?

Jeff Schmidt said...

The State Department of Revenue provides us with the data each year. The data shows the Town of Paris with a gross tax levy of $2,548,278 in 2009 and a gross tax levy of $5,026,187 in 2010.