Region's property taxes kept under control in 2011

The Public Policy Forum's annual analysis of property values and property taxes in the seven-county southeast Wisconsin region - released this morning - finds that the amount of gross property taxes levied by local governments, school districts, technical colleges, special districts and other entities across the region increased by just 1.5% in 2011. That's the lowest year-to-year increase since at least 2000, and well below the 10-year average of 4.3%.

The relatively small increase in total levies, however, was accompanied by a 6% increase in the aggregated gross tax rate for municipalities and school districts in the region, from $20.36 per $1,000 of property value in 2010 to $21.58 in 2011.

For those who might be confused about how levies could increase only slightly when rates increased substantially, the key is property values. A municipality’s tax levy is determined by both the total property value in the municipality and the tax rate that is applied to that value.

Because property values decreased 4.2% between 2009 and 2010, local taxing entities needed to collectively increase the tax rate by $1.22 to realize the 1.5% increase in the amount of property tax levied. Conversely, five years ago, when property values in southeast Wisconsin increased nearly 11%, the region’s local governments and school districts were able to collectively increase tax levies by 5%, while at the same time decreasing the aggregate tax rate by $1.10 per $1,000 of assessed value.

The relatively small property tax increase is good news for taxpayers, but the report points out that it also may raise questions regarding the capacity of the property tax to support desired levels of local government services. Indeed, such annual increases are likely to become the norm – even after the economy rebounds – in light of strict new property tax limits adopted by state government.

Whether the breadth and quality of local government services will suffer with lower property tax capacity remains to be seen. This is an issue that bears watching, however, and one that may produce a need for renewed debate and discussion of revenue diversification for local governments and school districts in Wisconsin, strategies to share or consolidate local government and school district services, or acceptance of lower service levels.

The full report can be accessed here, and our media release here.