Property tax levies decline for the first time in over a decade

The aggregate gross tax levy for southeast Wisconsin totaled $3.9 billion for 2012, a decrease of 0.3% over the previous year and the first decrease since at least 2000. Until this year’s slight decrease, the aggregate levy increased annually, although the rate of increase in the previous four years had been steadily slowing.

This finding highlights the Forum’s 2012 analysis of property values and property taxes within the seven-county southeast Wisconsin region, which was released today on our website.  The report’s primary objective is to measure trends in property values – one of the region’s most critical indicators of economic health – and examine how those trends impact the capacity of local governments and school districts to bring in the levy revenues required to deliver essential public services. 

The report finds that this relationship has been impacted significantly by the stringent limitations on property tax increases included in the most recent state budget.  The ability of municipalities and counties to increase their levies was generally capped at the percentage increase in net new construction, while new school district revenue caps required a 5.5% reduction in combined levies and state aids for 2012.

Because school districts account for the largest percentage of the aggregate tax levy in southeast Wisconsin at 45%, school district levies tend to drive overall changes to regional levies. The aggregate school district tax levy for southeast Wisconsin steadily increased from 2007 to 2011, before decreasing 1.2% in 2012. Also, for the first time since 2008, more municipalities (83) saw their corresponding school district tax rate decrease than increase.

This year’s report also analyzes property values, with specific consideration of multi-year trends. Total property values in southeast Wisconsin decreased 2.4% from 2010 to 2011 – the third consecutive year with a decrease, but a smaller decrease than the previous year.  Aggregate property values in every county in southeast Wisconsin decreased from 2010 to 2011 for the second year in a row.  These declining values also contribute to lower levies. 

Not surprisingly, property tax rates in southeast Wisconsin continued their upward trend in 2012.  The aggregate gross tax rate in the region increased $0.46 per $1,000 of property value, marking the fifth consecutive annual increase, though the rate of growth has slowed.  The aggregate gross tax rate in southeast Wisconsin is now $22.04 per $1,000 of assessed value. Tax rates typically can be expected to increase during a time of property value decrease, even under strict levy limits, as the drop in value requires a tax rate hike just to maintain a stable tax levy.

This year’s report was sponsored by Robert W. Baird & Co. To download the report, click here.