Blog

10/5/18

Average New Construction by County

By Kevin Dospoy

Counties rely on property tax collections as a main source of revenue. However, since 2006, the state legislature has limited counties’ property tax increases to the amount of new construction or development. From 2006 through 2011, the state provided a minimum allowable levy increase, or floor, which permitted a county to increase its levy by between 2.0% and 3.86% depending on the year. Small increases helped counties account for rising fixed costs, such as employee health care and maintenance of existing programs and facilities. After 2011, the levy limit minimum was removed, which in general had the effect of tying any increase in a county‚Äôs property tax levy to the rate of new construction.

As explored in our recent publications (Wisconsin Taxpayer, Issue 3 and Issue 4, Focus 17), levy limits may affect the revenues and spending priorities of municipalities and counties. Smaller, low-growth communities may become stuck in a cyclical pattern in which lack of development may lead to a lack of new revenue to spend on programs aimed at attracting further development. Areas with higher growth have the potential to raise tax levies and then use those funds to seek to foster even more development.

The map below shows annual new construction rates for each county according to a customizable date range. The average rate over time gives some insight into the impact of the recession on new construction rates in each county. Together with the state levy cap and the elimination of the minimum increase under the limit, development rates can have a direct impact on the ability of local governments to increase revenue to fund public services.