When it comes to state politics, few topics are as unsexy as the property tax levy, but there are also few topics as important. In Wisconsin, as in many states, communities have historically relied on the property tax — a tax on the value of the property — to fund most local expenditures, including road maintenance, school operations, construction and municipal works. But Gov. Scott Walker and the Republican state Legislature have largely prohibited local municipalities from increasing their property tax rates as a revenue source.
Under Walker’s leadership, municipalities are only allowed to raise property taxes by the “percentage increase in equalized value from net new construction.” This means the property tax rate effectively can never increase because the funds from the new construction simply cover the cost of providing the existing services to the new development.
Walker’s take on property tax: Hope you are happy with your current level of services because they won’t ever increase.
Even though most students are not homeowners, this limit on the property tax hurts all of us. Madison is at an extreme disadvantage because we cannot do the big projects that would make our city a truly special place, like Chicago. Big projects like providing bus rapid transit to connect our neighboring communities or constructing light rail trains are simply not possible without additional flexibilities to control our revenue streams. The university has a strong competitive advantage because we are placed in the heart of a vibrant and energetic city, but it is an advantage that could be lost quickly if we are unable to continue to innovate and invest in our community.
In the list of things Walker has done that students disdain, property tax restrictions are admittedly pretty low. It’s hard to get worked up over tax details when the Republican leadership proposes massive cuts to our university or stifles academic freedom for our faculty. But with frozen property tax levies combined with no new state aid, municipalities face a funding cut every single year. It’s a slower crisis that builds over time and students — many of whom will become homeowners within the next five years — must come to terms with.
Without the flexibility to respond to changing circumstances or invest in local goods, Madison, along with other communities, will stagnate. In particular, the shackles the state government has placed on our school systems will further devastate them. In addition to blanket restrictions to property tax increases, the proposed Walker budget allows for $0 per pupil increases in a school’s revenue limit — the maximum amount of revenue a school is allowed. Walker then has the audacity to give lip service to helping schools with additional aid, but because the revenue limit is defined as aid plus property taxes, any corresponding aid just reduces property taxes and doesn’t result in any additional benefit for the school.
There are some loopholes, though. Under the current law, fees for a service are allowed to be instituted and are one of the few tools municipalities have left to generate needed funds. Last fall, Madison’s Common Council passed a proposal to adopt a fee to evade the onerous state restrictions on revenue generation. In this case, the city used a fee to fight back against emerald ash borer infestations and to manage the city’s forestry needs. It’s a shame cities need to work so hard to bend around state law just to provide needed and wanted services in a community.
Walker’s property tax relief bill was touted as a major coup for taxpayers, but it only saved each homeowner about $13 on average last December. Great, Walker vastly restricted communities across the state so each homeowner could buy a case of Miller Lite. Sounds like a fantastic economic strategy.
Adam Johnson ([email protected]) is a Master’s candidate at the La Follette School of Public Affairs.
