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.

The tools in Milwaukee's revenue toolbox

As the Public Policy Forum’s 2010-2011 Norman N. Gill Civic Engagement Fellow, I have completed my year-long project that analyzed how local governments raise revenue. The report, The tools in Milwaukee's revenue toolbox, stems from a 2009 Forum report that assessed the fiscal health of the City of Milwaukee. That report found that the city is over-reliant on state shared revenue as its main revenue source, and handcuffed by rising fringe benefit costs for city employees and growing expenditure pressures associated with police and fire services (which account for more than one half of all city operating expenditures).

Under the recently adopted state budget repair bill, the city has been granted cost-saving “tools” that will allow it to impose greater fringe benefit cost-sharing for non-public safety city employees. Yet, some city officials and policymakers are unsure if these tools, because they exempt public safety employees and are coupled with a cut in state shared revenue, will be enough to alter the city’s fiscal predicament. Consequently, my project explores the other side of the debate – the revenue toolbox. It asks what alternative revenue structures exist in other cities, and whether they are suitable for Milwaukee.

To answer these questions, we researched 15 cities that are comparable to Milwaukee, analyzed each city’s budget, and compared how each city generates revenue. Our key finding was that Milwaukee relies heavily on intergovernmental revenue (i.e. state shared revenue) to fund its budget (46% of general budget revenue), while the comparison cities raise the bulk of their revenues via the use of broad-based sales, property, and/or income taxes. In fact, no other city relies on intergovernmental revenue for even a third of its budget, and the vast majority has a dependence of less than 10%. Meanwhile, Milwaukee’s use of broad-based taxation for only 20% of its general budget pales in comparison to the other cities, the vast majority of whom use broad-based taxes for more than half of their general budgets.

Given these findings, we next examined the sales, income and property tax and their potential application in Milwaukee if city leaders were authorized to use them to reduce reliance on state shared revenue. Some of the insights we gleaned are as follows:

• Because Wisconsin has a relatively low sales tax compared to other states, implementing a city sales tax of .01% to 1% would not put Milwaukee out of line with comparable cities nationally, and could benefit the city by requiring non-residents to contribute toward the cost of city services. Milwaukee does not have the ideal sales tax base, however, because of the comparably low amount of retail sales that take place in the city, and because of Milwaukee’s high poverty rate.


• A city tax on individual income would allow for the possibility of shielding the poor from tax liability through specific tax rates for different income groups, or the ability to utilize deductions and credits. Also, such a tax potentially could be applied to non-residents who work in the city as well as residents, thus providing a mechanism to collect revenue from non-residents who use city services. On the other hand, even without a local income tax, residents in Milwaukee already have a relatively high state income tax burden, and adding an additional layer of income taxation could be harmful to the attraction of residents and businesses.


• Using a property tax to fund a greater proportion of the city budget could allow for a more predictable revenue stream because local governments would have some ability to change the tax rate to meet expenditure needs or to accommodate a decline in property values. Yet, because Milwaukee has comparably low assessed property values, funding a larger portion of the general budget with property taxes would require Milwaukee to add substantially to its already high property tax rates.


• An option in which city leaders were allowed to pursue a better balance of revenue sources by implementing a 1.0% city sales tax would allow for a sizeable decrease in property tax rates and reduced reliance on state shared revenue.

In the end, the report demonstrates that there are no easy answers to the City of Milwaukee’s revenue dilemma. In the event that the cost-saving tools contained in the budget repair bill are not enough to address Milwaukee’s longstanding fiscal problems, however, it also shows that it may be helpful to consider a balanced revenue structure that is more comparable to the other cities we studied.

Special thanks to the Gill family for their generous support of this project through the Norman N. Gill Fellowship, and the Public Policy Forum for their assistance and guidance throughout the year.

The cruel world of local government finance

In the weeks since release of the governor's proposed 2011-13 state budget, much has been spoken and written about the potential impacts of cuts in state aids on local government budgets and services. Yet, while much of the discussion has focused on high-profile cuts to shared revenues, municipal recycling grants and general transportation aids, buried within the budget are dozens of less-publicized, complicated provisions that also may have far-reaching impacts.

One of those relatively obscure provisions is related to the new property tax levy limit on municipal and county governments. The limit itself has received considerable attention, as instead of having their annual allowable property tax growth capped at no lower than 3%, counties and municipalities would be capped at the greater of 0% or the percentage growth in equalized value resulting from new construction. Because the change in new construction is projected to be less than 1% in many counties and municipalities, that's a significant reduction.

But perhaps equally noteworthy is a provision that would require counties and municipalities to decrease their allowable levy in any year in which they experience a decrease in debt service on debt issued before July 1, 2005, by an amount equal to the decrease. In other words, if a local government is fortunate enough to experience a lower overall debt service payment from one year to the next, then instead of having the discretion to do as it pleases with those savings, it may be required to pass the savings back to its property taxpayers.

Without taking up the issue of whether the new provision is good or bad for those taxpayers, it does throw a curveball at those local governments that have consciously tried to keep a lid on their debt issuances as a strategy for obtaining long-term operating budget relief.

One such government is Milwaukee County. Despite the county's overall budget woes (as documented in several reports by the Public Policy Forum and others), one of its true fiscal success stories has been in the area of debt management. Just last month, for example, the Standard & Poor's ratings agency praised the county for its "moderate debt burden with rapid debt amortization."

As we explained in our recent Milwaukee County Executive Election Brief, after it decided to refinance a major portion of its debt in 2003, the county made a concerted and deliberate effort to keep a lid on annual borrowing. In fact, its discipline in adhering to self-imposed caps on general obligation bonding, while arguably contributing to its vast backlog of infrastructure needs, has positioned the county to benefit from a significant decrease in annual debt service payments by 2015. In that year, according to the county's 2011 budget, the annual debt service payment could drop from $63 million to $47 million.

Until recently, county fiscal officials viewed the funds freed up from potential reduced debt payments as a critical piece of a long-term approach to dissolving the county's structural deficit. In fact, given the painful nature of all other potential strategies, this was one of the few bright spots in the county's long-term fiscal picture.

If the new requirement that local governments reduce their levies commensurate with reductions in annual debt service payments is adopted, however, then one of the only promising tools in Milwaukee County's limited deficit-reduction toolbox will be eliminated. Such is the world of local government finance, where even the best laid plans can be wiped out by higher levels of government at a moment's notice.

Wither Madison, wither Milwaukee?

As the Public Policy Forum’s 2010-2011 Norman N. Gill Civic Engagement Fellow, I am honored to be working on a year-long project that will examine how municipal governments in Wisconsin raise and spend their tax dollars. Over the next five months, I will be sharing some of my research with the blog. Ultimately, my research will lead to a paper that will discuss alternatives to financing municipal governments.

The Forum previously documented the fiscal problems that arise from the City of Milwaukee’s reliance on shared revenue from the state to fund its general purpose budget. Indeed, intergovernmental revenue represents about 45% of Milwaukee’s general purpose budget, which makes it the largest source of revenue.

The early stages of my research indicate that it is rare for a city to depend so much on intergovernmental revenue. Columbus, Oklahoma City, and Boston, for example, all offer different models that cities use to fund their general budgets without as much dependence on external revenue sources.

Columbus funds its general budget primarily through a city income tax. In Ohio, state law requires all municipalities to impose a flat individual income tax, and the maximum rate that a municipality can impose without voter approval is 1%. Columbus, through voter approval, imposes a 2.5% tax on earned income such as wages, salaries, and net business proceeds generated in the city. As a result, more than 70% of the general budget’s funding comes from the municipal income tax. Milwaukee, of course, has no city income tax.

Oklahoma City, meanwhile, funds its general budget mostly with a sales tax. It levies a tax of 3.87% on sales in the city, and about half of that revenue goes directly into the general budget. In fact, Oklahoma City uses property tax revenue only for capital projects (such as roads) and not for operating expenses. Milwaukee has no city sales tax.

Boston, meanwhile, funds more than 60% of its general budget through the property tax. The property tax rate in Boston is $11.48 per $1,000 of housing value, which is considerably less than Milwaukee’s $27.70. Boston benefits from having more expensive property; in 2010, the total assessed value of Boston’s property was $87.3 billion, compared to $28.9 billion in Milwaukee. This enables Boston to raise more money at a lower rate. Regardless, Boston has at least identified a main, locally-controlled tax base (property) to fund its operating expenses. Milwaukee, where property tax revenue is about 21% of the general budget, has not.

To be sure, these three distinct models to fund municipal budgets each have their own costs and benefits, which will be analyzed and discussed in my report. Yet, it is clear that Columbus, Oklahoma City, and Boston are relatively self-sustaining, while Milwaukee is enormously dependent on Madison for its survival.

The Forum is now accepting applications for the 2011-2012 fellowship year. For more information, go to the Norman N. Gill Civic Engagement Fellowship website. Applications are due April 30, 2011.

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.

Some states see economic benefit from prison farms

Milwaukee County Parks Director Sue Black's assertion last week that her department lacks the funds to take over the Farm and Fish Hatchery has reignited debate about the farm. This year's county budget transferred the program – a perennial target for cuts by the Walker administration -- from the sheriff’s office to the parks department midyear, at a reduced funding amount. The County Board's finance committee recommended a modified version of the plan to move the program, and the issue will be discussed by the full County Board on Thursday.

Supporters tout several benefits of the program: the harvested crops are donated to food pantries; the fish stock county ponds; and inmates learn work skills. Those less enthusiastic about the program question its appropriateness for a correctional environment and its necessity given the county's severe financial challenges.

Interestingly, Milwaukee's discussion about closing its farm due to lack of funds comes at a time when corrections facilities in other parts of the country are looking to prison and jail farms as a way to save money. Governing magazine, for example, cites two correctional gardens employed to feed inmates.

One Connecticut prison's savings of more than $5,000 in the summer of 2009 influenced the Corrections Commissioner to replicate prison farms across the state. Those prisons that already have gardens are being asked to expand them. In addition to lower food costs, savings include paying less to dispose of waste at the prison (kitchen scraps are composted), and not having to pay for flowers in landscaping (flowers are grown from donated seeds).

Meanwhile, an Ohio sheriff was so pleased with the way his jail farm is feeding the inmates that he plans to introduce a chicken-raising effort, estimating that for every 50 donated chickens the inmates raise, the jail cafeteria will get 300 pounds of meat. His actions, which in addition to growing food included eliminating all red meat and hot dinners, saved $25,000 on food costs in 2009.

Milwaukee's farm operation differs from the examples in Connecticut and Ohio in that the crops are used to feed the poor and not to feed the inmates. Prior to Milwaukee County's decision to privatize the House of Correction's food service in 2003, the crops were used to supplement inmate meals. Following privatization, however, Hunger Task Force stepped in to distribute the unwanted produce to area food pantries. In addition, while both the Connecticut prison and Ohio jail received their gardening supplies through donations, Milwaukee has found private support harder to come by.

It remains to be seen whether Milwaukee County's program will survive, but the Connecticut and Ohio programs show that in some cases prison farms may be opportunities for savings, as opposed to drains on already challenged budgets.

The People Speak: Citizens' views on water issues

The winter 2010 People Speak Poll, conducted in conjunction with the Center for Urban Initiatives and Research at UWM and The Business Journal Serving Greater Milwaukee, focuses on water issues including quality, quantity, governance, and economic development.

The People Speak is a tracking poll conducted at regular intervals throughout the year. Its purpose is to gather information from local citizens about their interests in, preferences for, and concerns about public policy. By gathering and reporting these citizens' perspectives, the partners hope to expand the public voice in policy matters affecting greater Milwaukee.

Highlights from the February 2010 poll of 429 residents in Milwaukee, Waukesha, Washington and Ozaukee counties include:

• Solid support for efforts to use the region's fresh water resources as an economic development tool.


• Concern for water quality in Lake Michigan, but confidence in the quality of local drinking water.


• Consensus on the need for and importance of water conservation in general, but not a tendency to conserve water on a household level.


• Moderate to strong support for allowing the City of Waukesha to access water from Lake Michigan, as long as the water is returned to the Great Lakes basin.


• Preference for regional water governance, rather than leaving it up to municipalities or the state.

In addition, the February findings on a more general set of public policy issues mirrored the September poll results in these ways:

• Evenly split opinions on whether to pursue high speed rail and commuter rail and whether to implement toll roads.


• Weak support for increased user fees or sales taxes to provide property tax relief.


• Weak support for a mayoral takeover of Milwaukee Public Schools.

The February poll also revealed growing sentiment that jobs are the most important issue facing the region, growing pessimism regarding the direction of the United States government, and virtually no support for using sales tax dollars to pay for a new arena for the Milwaukee Bucks.

For full results, go to the poll website.

Slow growth in property values could mean higher tax rates

After several successive years of property tax rate decreases and a slight increase in 2008, gross property tax rates in Southeastern Wisconsin increased 2.8% in 2009, according to the Public Policy Forum’s latest report on property taxes and values, which can be accessed here. A pull-out poster listing property values and tax rates for individual municipalities can be accessed here.


Not surprisingly, the increase in property tax rates coincides with slowing growth in property values in the region. After enjoying robust property value growth for the past several years, municipalities and counties saw a significant slowdown in 2008. Property values for 2009 are due to be released later this month.


The fact that property tax rates in the region already have begun to increase as the growth in property values simply has slowed does not bode well for 2010 budgets. Considering the high likelihood that property values in the region will decline in many Southeastern Wisconsin counties and municipalities in 2009, this finding illustrates the difficult challenge faced by local officials in controlling property tax rates, particularly when other negative factors produced by the economic downturn are factored into the equation.


The following are additional findings from our analysis of property taxes and values in Southeastern Wisconsin:

• Growth in property values in Southeastern Wisconsin has slowed dramatically, even prior to the onset of the economic downturn. The total equalized property value for Southeastern Wisconsin increased 2.2% from 2007 to 2008, the smallest increase in a decade. Meanwhile, 28 municipalities in Southeastern Wisconsin had a decrease in their total value from 2007 to 2008. In 2007, only three municipalities had a decrease, and in 2006 only one municipality lost value.

• The impact of this reduced growth on property tax rates has been significant. The gross tax rate for southeastern Wisconsin was $19.34 per $1,000 of property value in 2009, an increase of $0.53 over the 2008 rate of $18.81. This was the second year in row with an increase, though the 2008 increase was only $0.03, and was largely attributable to a significant increase in Milwaukee County. The region experienced a $1.11 decrease in 2007 and annual decreases in each additional prior year going back to at least 2001.

• In 2008, the average residential equalized value in the region increased only 0.9%. This reduced growth rate contributed to higher property tax rates in each county in 2009. The gross tax rate for Southeastern Wisconsin increased 2.8% in 2009, and the gross tax bill increased 3.8%. Put another way, the average property taxpayer in Southeastern Wisconsin is beginning to see his or her tax bill and rate increase steadily despite significantly reduced growth in the value of his or her property.

• To illustrate the potential 2010 impact of stagnant property values on property taxpayers, we developed projections for property tax rates in each Southeastern Wisconsin county assuming that 2009 equalized values will stay the same, and that the property tax levy in each county increases based on five-year averages. Our projections indicate that for the region as a whole, the gross tax rate would increase $0.92, which would amount to a $219 property tax increase for the average residential property in Southeastern Wisconsin.
  

By analyzing the strong linkage between property values and property tax rates, our report highlights the severe challenges that local elected officials will face in developing 2010 budgets that minimize property tax rate increases while providing the necessary resources to maintain existing levels of government services.

In a separate assessment of the fiscal condition of Milwaukee County government, and a similar soon-to-be-released analysis of the fiscal condition of the city of Milwaukee government, we note the problematic nature of over-reliance on one or two significant sources of revenue. This report amplifies that issue, and suggests the need for renewed debate and discussion regarding revenue diversification for counties, municipalities and school districts in Southeastern Wisconsin.

PPF Pearls: What may Milwaukee have in common with Baltimore?

The City of Baltimore has filed a federal lawsuit against Wells Fargo bank, alleging that the bank pushed high-interest subprime mortgages on homebuyers, and deliberately did so more often to African-American borrowers than to whites.

Baltimore is seeking damages from Wells Fargo because more than half of the Baltimore homes on which Wells Fargo has foreclosed since 2005 are now vacant, with 71% in predominantly African-American neighborhoods. The city argues that the resulting hit to property values in those neighborhoods has affected the city's bottom line, both by decreasing property tax revenues and increasing demand for services.

Other cities around the country are watching Baltimore's suit quite closely, including, perhaps, Milwaukee. The Public Policy Forum's 2002 study of affordable housing in the Milwaukee region found a pattern of higher subprime loans to African-Americans than to whites. We found that in 1999, 41% of all mortgage loans to African-American homebuyers in the Milwaukee region were subprime, compared to just 8% of all loans to white homebuyers. This put us way ahead of the rest of the nation--the national subprime lending rate to African-American homebuyers that year was 19% (the white rate was 4%).

If Baltimore is successful in recovering damages from Wells Fargo, more cities will likely file more suits against this and other banks. What's the likelihood of Milwaukee being one of them?

If history is any guide, remember that Milwaukee was just the second government to seek damages from paint manufacturers due to the negative health impacts of lead paint on city children. On the other hand, while Rhode Island won that first suit against the paint manufacturers, Milwaukee ended up losing (after appealing all the way up to the state supreme court). The city might be reluctant to attempt another novel law suit.

The housing crash and your property tax bill

Milwaukee seems to be weathering the housing crisis relatively well. Foreclosure rates in 2007 in metro Milwaukee were lower than in most other metro areas and housing prices in metro Milwaukee, alone among the largest 25 cities in the country, rose between Oct. 2007 and Oct. 2008. Other more current indicators, however, are more troubling to local homeowners.

The Milwaukee Rising blog of former Journal Sentinel reporter Gretchen Schuldt has analysis of the weekly home sales reports in the Sunday Milwaukee Journal Sentinel, comparing the sales price to the assessed value of each property. The most recent week analyzed has sales prices in the City of Milwaukee averaging 35% less than assessed value. The prior week averaged 43% less than assessed value. What makes these numbers especially troubling is that Milwaukee's assessments are as current as possible; the City reassesses property values annually as of Jan. 1.

While these low prices are a bargain hunter's dream, they are a mayor's nightmare--declining market values will drive down assessed values. For most of the past eight years, increases in assessed values have allowed the City to enjoy growth in the tax levy without raising tax rates. If home sales are routinely below assessed value in 2009, then assessments will be reduced, causing the city to either slash costs to accommodate a smaller levy or raise tax rates to maintain or grow the levy.

Increased tax rates would seem likely, but cuts in services will be considered as well. Milwaukee homeowners may soon feel the triple whammy of lost value, higher taxes, and fewer services.

A ray of hope in Milwaukee County's annual budget fracas?

With the dust finally settled on this year's Milwaukee County budget debate, it's hard to avoid thinking of the movie "Groundhog Day".

Once again, the county executive submitted a budget that did not raise property taxes and that was heavy on privatization, reduction of full-time parks workers and cuts in programs treasured by the county board. Once again, the county board denied most outsourcing, restored positions and added funds for favored programs. Once again, the county executive vetoed most of what the board restored, and once again, the board overrode most of his vetoes.

Most disconcerting, as we pointed out in our 2009 county budget brief and budget testimony, is that once again, the county did virtually nothing to address its perennial and growing structural imbalance. To hammer home that point, our budget testimony cited the components that added up to a $41 million budget hole for 2010 even before the ink was dry on the 2009 budget. The county budget office recently conducted its own review and trumped our estimate by an additional $16 million. That's right - while the 2009 budget technically is balanced, for 2010 the county already is looking at a $57 million hole, meaning we're likely to see the Groundhog Day scenario surface all over again.

Or are we? Tucked into the county executive's veto message is the following ray of hope:

During deliberations on the 2009 budget a number of Supervisors expressed a desire to move forward with a strategic planning process to provide an improved framework for making budgetary decisions...As a result, I have directed the Director of the Department of Administrative Services to immediately begin working with the County Board staff on the
following fundamental components of an integrated strategic planning and budget process:

• Creation of a 5-year financial forecast that defines the County's budgetary structural deficit and resulting fiscal challenges,


• Identification of County financial policies and practices that need to be strengthened or modified,


• Development of a new process for estimating County revenues that ensures that revenue estimates made during all phases of the budget process are realistic and based on solid analysis, and


• Development of a space plan that identifies County facilities that are currently underutilized, estimates the potential market value of County facilities and plans for the potential relocation of County functions to maximize the utilization of County facilities while vacating and making surplus underutilized facilities.

While implementation of these measures certainly won't solve the county's budget problems, they would at least position the county executive and board to debate the 2010 budget with a common understanding of the five-year fiscal outlook and with some critical tools for ensuring that the process is objective and realistic. Might that, in turn, finally move the county past Groundhog Day and toward some long-term budget solutions? We can only hope so.

Taxing work: How does your municipality rank?

This year, for the first time, the Public Policy Forum has created a poster ranking all 147 municipalities in southeastern Wisconsin on the basis of the following information: property values, per capita property value, 5 year change in property values, gross tax levy*, 5 year change in the tax levy, and net tax rate**.

Of the ten municipalities with the highest tax rates in southeastern Wisconsin, all but two - the villages of Darien and Sharon in Walworth County - were located in Milwaukee County. The village of West Milwaukee (Milwaukee County) topped the list with a net tax rate of $25.55 per $1,000 of assessed property value.

Not surprisingly the city of Milwaukee had the largest overall tax base (or property value) in the region. But, surprisingly, the city of Brookfield (Waukesha County) came in second, larger than even the cities of Kenosha (Kenosha County), which was third, and Racine (Racine County), which was 10th! The largest property value increase in the region occurred in the village of Merton (Waukesha County), where it more than doubled over the last five years.

Southeastern Wisconsin had $178 billion in property value in 2006, a 44% increase from five years ago. Its per-capita property value was $89,844. The region’s gross tax levy in 2007 was $3 billion, an increase of 18% from five years ago, and the net tax rate was $17.52.

The poster, Southeastern Wisconsin Property Taxes 2007, was funded by Cook & Franke S.C., Robert W. Baird & Co. Inc., and the Greater Milwaukee Association of Realtors, and was done as a part of the Forum’s property values and property tax reports.

*Gross tax levy is the amount of money that each taxing jurisdiction budgets to receive from property taxes.
**Net tax rate is determined by dividing the amount of the gross tax levy minus the state tax credits by the total equalized value.

Walworth is the new Waukesha

Walworth County has surpassed Waukesha County as southeastern Wisconsin’s wealthiest county in terms of per-capita property value. According to the Milwaukee-based Public Policy Forum’s latest property value report, Walworth County’s 2006 per-capita property value is $132,391, compared to $130,348 for Waukesha County. Its per-capita property value increased 12.8% from 2005-2006, the highest among the seven counties that comprise southeastern Wisconsin.

“Walworth is an emerging story in our region and needs to be respected as one of its key players,” says Forum President Jeff Browne.

Waukesha County per-capita property value increased 8.2%; Milwaukee County’s increased 12.5%, second to Walworth County.

During the same period, the city of Milwaukee’s overall tax base grew 15.1% in 2006, the largest increase for the city since 1992. “Starting in 2003, when the city of Milwaukee’s one-year increases began to accelerate, the region’s increases surpassed the state and for the second consecutive year, the city’s increase was greater than both the region and the state,” says Browne. “You can make the case that when the city does well, the rest of region follows suit and does well also. The city essentially fuels the region.”

Walworth County had the largest overall tax-base growth, 14.2%, in the region from 2005 to 2006. It also had the highest growth among the seven counties in residential and manufacturing tax bases. Waukesha County, on the other hand, grew much slower last year. Its overall tax base increased only 8.9%, sixth among the region’s seven counties. “Apparently a certain level of wealth is reached and things tend to slow down a bit, particularly in a region that is only holding its own economically,” says Browne. “Ozaukee County another relatively wealthy county in the region had the slowest tax-base growth in southeastern Wisconsin, at 7.3%.”

Milwaukee County’s total tax base – which grew 12.2% in 2006, second to Walworth – far surpassed other counties in the region in value. Its overall tax base was $63.6 billion; Waukesha County was next highest at $49.5 billion, followed by Racine at $14.8 billion.

The tax base for all of southeastern Wisconsin grew 10.7% from 2005 to 2006, to $178.3 billion. The state grew 9.6%.

The Forum report looked at three primary categories of property value: residential, commercial, and manufacturing. Those categories comprise the greatest portion of the tax base. Residential and commercial property made up 94% of the region’s total tax base. Manufacturing accounted for 2.5% of the tax base.

Related material:
Table 1: 2006 equalized property values
Table 2: 2006 per-capita property values