Rising property taxes lead to sticker shock

– Oliver Wendall Holmes, Jr. (1904)

Property owners have been left wondering just what caused the hikes after opening their end-of-the-year tax bills. The sticker shock may have some people reconsidering their housing future, or if 2023 will see them making some difficult financial choices.

Over the past 10 years, the Wisconsin Legislature and governors have attempted a number of measures to ease the growth in property taxes, including capping how much they can raise tax rates each year.

But still, property taxes have continued to inch up.

Once you peel back the layers, property tax increases can be narrowed down to three main sources: schools, municipalities (including valuations) and counties. In a multi-part series, we’ll look at the effect of each of the three, beginning with schools.

According to the Wisconsin Policy Forum, property owners across the state will pay $78.7 million more this year toward K-12 schools. The 1.5% increase, from $5.40 billion last year to $5.48 billion this year, is considered modest, “given larger tax increases in past years and the current high rate of inflation,” the Policy Forum wrote in a recently-published look at property taxes.

Though state lawmakers and Gov. Tony Evers took actions that were meant to lower school property taxes, it has been the “hundreds of school referenda that have passed in the last handful of years” that are seen as a “likely cause.”

Last year there were 247 referendum questions on ballots across the state from school districts, including several in Burnett County, which is the highest number since 2001.

According to the Policy Forum, “This year was also notable for the amount of additional school property taxes approved by voters – up to $506.1 million in recurring and non-recurring taxes for district operations over the next several years … Additionally, in 57 successful capital referenda, voters in 2022 gave school district officials authority to issue up to nearly $2.1 billion in debt; no other year since 2000 has surpassed $1.8 billion.”

As school districts and municipalities begin to see federal pandemic aid come to an end, they are also facing costs rising from inflation. 

For instance, according to the Policy Forum, the Consumer Price Index rose 7.7% in October 2022 over that same month in 2021.

“Since the beginning of 2018, voters around the state have approved 456 referendum questions – more than one per district. That includes 246 for operating budgets and 210 for borrowing for capital projects,” the Policy Forum wrote in a recent publication.

The totals, as projected by the Policy Forum, indicate that “In all, 285 of the 421 (67.7%) K-12 districts have passed at least one referendum in the last five years, with many passing more than one.”

There are two factors that could play into property taxation levels over the course of the next two years.

The Policy Forum states, “The first is that all federal pandemic relief dollars must be spent by September 2024 … thus far, many districts have sought to use those one-time dollars to make up for learning loss, respond to the COVID-19 pandemic, and purchase new technology rather than use the federal funds to pay ongoing expenses. Still, the end of these funds could add pressure for some districts to increase taxes.”

Next week we’ll look at the tax bill and impacts in several areas of the county, as well as how they are affected by school referendums. While passed referendums of 2022 did play a part in tax differences, it looks like a bigger player was assessed values and municipalities, which will also be a focus in the second portion of the series.