This report focuses on annual changes in property values, total property tax levies, and property tax rates in the seven-county southeast Wisconsin region.
Municipal tax rates are based on the total value of all taxable property in each municipality, also known as the tax base. Because local assessors are responsible for determining the property values for their jurisdictions, total assessed value across municipalities and counties is not a uniform measure. To bring all values to a uniform level comparable across jurisdictions, the state equalizes assessed values by using tools such as market sales analysis, random appraisals, and local assessors’ reports. Equalized values, calculated yearly, are meant to reflect fair market value (the most probable selling price).
Our analysis utilizes equalized values determined by the Wisconsin Department of Revenue (DOR) as of January 1, 2018. Total property value has two categories: real estate and personal property. Real estate makes up the overwhelming majority of the tax base and has eight classifications: residential, commercial, manufacturing, agricultural, undeveloped, agricultural forest, forest, and other. The three classifications analyzed in this report are residential, commercial, and manufacturing.
Changes in property value are classified in three ways. “Economic change” refers to changes in value as a direct result of real estate market changes. The other classifications include changes “due to new construction” and “other” changes. The “other” category includes technical corrections that were made to the value of the property, demolition or destruction of property, and changes in the exempt status or classification of property. New construction drives total value growth, as previously undeveloped parcels are used more intensively, generating a higher land utility and a higher value.
This report also uses data from the Wisconsin Department of Revenue on 2017-18 municipal property tax levies and tax rates in the seven counties of southeast Wisconsin. The data are not fully audited and thus are considered preliminary.
The tax levy is the amount of money that each taxing jurisdiction (county, municipality, school district, technical college district, tax increment finance district, special district and the state) expects to receive from property taxes. To calculate a tax rate (also known as a mill rate), each government divides the levy by the total property value (tax base) in its jurisdiction and multiplies the result by 1,000. This calculation allows property tax payments to be distributed evenly among taxpayers according to individual property values.
Budgets for taxing jurisdictions for 2018 – including property tax levies – were adopted late in 2017, and 2017 property values therefore were used to determine 2018 rates. Consequently, we look at 2017 property values when we are analyzing the 2018 levies.
Because each property taxpayer lives within several taxing jurisdictions, we add the various tax rates together to arrive at the aggregate gross tax rate. It is important to note that in this report, when the gross tax rate or levy for a particular county is referenced, it does not refer to the rate or levy attributable to county government in that county, but to the aggregate total of all taxing jurisdictions in the county (including the county government).
Also, the net tax rate that determines each taxpayer’s tax bill differs from the gross rate in that the net rate results from subtracting the state tax credit from the gross tax rate. Taxpayers can determine their individual payment by dividing their property value by 1,000 and multiplying the resulting number by the net tax rate. The report presents a hypothetical regional and county aggregated gross tax rate calculated by summing each municipality’s gross tax rate into a rate for southeast Wisconsin, or for a county, as a whole.
Finally, while it is important to note that the property tax is the most prominent revenue-raising tool available to local governments and school districts, it is not the only tool. Local governments also make use of a variety of fees on items ranging from garbage pick-up to snow removal to vehicle registrations, and most school districts employ student fees for various activities. Also, some counties in the region have implemented a 0.5% county sales tax, while others have not. This report does not address trends in local government and school district fee collections or county sales tax collections. Consequently, it should not be used to evaluate overall local government revenue trends.