Like Wisconsin overall, Jefferson County over the past decade has faced a slowdown in development rates and declining school enrollment. Local governments and school districts in Jefferson County have also struggled to keep up with inflation and the growing costs of providing services under state limits on their revenues. Examining the financial impact of increased development activity can inform not only these communities’ decisions but also our understanding of the state as a whole.

For more than a decade, lagging rates of new construction and population growth have impacted the budgets and public services of local governments and school districts in Jefferson County, according to a comprehensive review by the Wisconsin Policy Forum.

Development plays a key role in local government finance in Wisconsin, and the Forum’s review shows how a lack of construction and new residents since the Great Recession has constrained the finances of local governments in Jefferson County. Though the review focuses on how state laws, slow development and population growth have limited school and government revenues flowing into Jefferson County and its schools and municipalities, the reality there is common statewide. The same laws and conditions apply in many other Wisconsin communities.

With its mix of urban and rural areas, Jefferson County serves as an effective stand-in for communities that have had to tighten their belts under Wisconsin’s system of local government finances. Ultimately, this guide is meant to inform the work of local officials across the state, not just in Jefferson County.

In this brief, we use data from the Wisconsin Departments of Revenue and Public Instruction, as well as previous Forum research, to examine how development rates affect a range of financial metrics for local governments. We focus in particular on the impact of state caps on local property tax levies and on school district revenues and how the interplay between those limits, rates of new construction and population growth, and inflation has made it difficult to fund local services.

Development in Jefferson County and Wisconsin

Nestled between Milwaukee and Madison and bisected by Interstate 94, Jefferson County in theory has strong opportunities for development. In practice, that has not materialized since the Great Recession, though there have been bright spots such as the city of Lake Mills. Jefferson County municipalities have seen low rates of residential and commercial development for more than a decade, consistently trailing the state average. In some years, growth in the county has been less than half the state’s rate of new development.

We can show that through net new construction, a measure of the annual percentage increase in property values in an area due to structures being built. The value of new development in a community each year, minus the value of any demolished property, represents net new construction. Any type of new construction, whether residential, commercial, or industrial, counts towards the community’s rate of new construction. Taking that annual amount as a percentage of the total equalized property value in a county or community yields its yearly rate of net new construction.

Prior to the Great Recession, Jefferson’s County’s rate of net new construction was more than double its current rate, and it closely tracked the statewide average as well as the Consumer Price Index (see Figure 1). In 2005, Jefferson County’s net new construction rate was 3.1%, Wisconsin’s was 2.8%, and inflation was 3.4%. In 2025, Jefferson’s rate was 0.7%, the state’s was nearly 1.7%, and inflation was 2.6%. Since 2011, Jefferson County’s rate of net new construction has frequently trailed both the statewide average and inflation.

As new construction slowed, population growth in the county also declined (see Figure 2). Between 1990 and 2000, Jefferson County’s population grew 11.8%. The population rose a bit slower between 2000 and 2010, but still climbed 10.4%. Only 2.9% more residents were added to the county between 2010 and 2020 and only 0.82% more since 2020. The Wisconsin Department of Administration projects a slight decline by 2030.

As of 2025, Jefferson County’s population was 86,855. The three largest cities entirely in the county are Fort Atkinson (12,455), Jefferson (7,806), and Lake Mills (6,835). Johnson Creek (3,702) is the largest village, while the largest towns are Ixonia (5,092) and Koshkonong (3,805).

The lagging rate of development in Jefferson County has a direct impact on local budgets. The vast majority of local tax revenues for the county and its municipalities and technical college districts come from the property tax, which is either the largest or second-largest source of revenue for each. For all these local governments, annual increases in the property tax for operations are essentially limited to the percentage change in property values due to net new construction. State law also allows for raising property taxes to cover debt payments or in response to a referendum approved by voters.

When state lawmakers first approved these levy limits in 2005, the higher rate of new construction in Jefferson County and the state as a whole made these limits more manageable. Between 2006 and 2010, the original limits also included a floor of between 2% and 3.86% to account for inflationary pressures on operating costs. But this floor was removed in 2011, and the slowdown in development since the Great Recession has made it much more difficult for local governments to stay within the limits. A different but similarly tight revenue cap is also impacting school district finances, as we will discuss.

We can also compare Jefferson County’s rate of net new construction since 2000 to the rates of other counties selected by the Forum and a working group of local leaders. As Figure 3 shows, a few counties such as St. Croix have had very rapid rates of development compared to Jefferson County, while some other counties have had modestly more. Since 2015, net new construction in St. Croix County has ranged between 1.4% and 2.8%. In La Crosse County, that rate varied from 1.3% to 1.9%. Jefferson County trailed these two counties in most years, with new construction rates between 0.7% and 1.8%.

Figure 4 shows the fiscal impact of this slower growth. If Jefferson County’s annual rate of new construction since 2017 had been 2% – approximately the rate of St. Croix County — its tax levy could be $1.9 million larger without any additional impact to current property owners. Over the past eight years, the higher rate of new construction would have allowed the county to levy a cumulative total of $8.4 million more without raising the tax rate over what it otherwise would have been. To achieve that rate of new construction going forward would require more than $240 million in property development annually. While this is a very difficult task today, between 2000 and the housing crash in 2008, the county saw rates of net new construction of between 2.4% and 3.3%.

It’s important for communities to note that, for the same size development, the percentage increase in the property tax levy will vary based on each community’s existing property value and current levy for operations. For a county with greater property value, an identically valued development would raise the levy by a smaller percentage than in a county with lower property value. Similarly, if a county has a greater operating levy, the same percentage change in net new construction will result in a larger dollar increase in the allowable levy. In the next section, we will give an example of how much a specific development would add to Jefferson County’s property tax levy as well as its sales tax and some other local revenues.

To be sure, this more rapid development would have brought some additional costs. This growth also would not have eliminated on its own the budget challenges faced by many local governments in Jefferson County and the rest of Wisconsin due to levy limits and lagging state aid over many years (for more on those challenges see this 2019 Forum report). Yet the benefits of sustained development would have compounded over time and at least blunted these challenges. We will show this by examining each type of local government in Jefferson County and looking at select revenues and costs for each that are associated with development.

Municipal Impacts

Impact on Property Taxes

Under Wisconsin law, net new construction affects the potential growth of tax levies for cities, villages, and towns in the same way as it does for counties. Figure 5 shows how the rate of net new construction in most Jefferson County communities lags the state average. In part because of these low rates of new construction, property tax revenues for local operations have trailed the rate of inflation, and local budgets have been squeezed as the costs of basic services like fire and police protection and street maintenance have risen.

As Figure 5 shows, Lake Mills typically has had the highest rates of net new construction in Jefferson County over the past 10 years, with rates peaking in 2024 at 3.5% and topping 2% in a number of other years. New construction in Whitewater also exceeded 2% frequently, though growth slowed in the two most recent years. The cities of Jefferson and Fort Atkinson typically grow more slowly, with rates of new construction often below 1%. Neither community has had growth over 2% in any year since 2015. All these communities except Jefferson experienced a lower than typical year for net new construction in 2025.

Higher rates of new development would have allowed local officials to choose to increase the property tax by a larger percentage. It also would have increased property values in the municipality, so its tax levy would have been spread over more property and not been added to the burden of existing property owners.

As Figure 6 shows, if the city of Jefferson had seen an annual rate of net new construction of 2% since 2017, it could have levied an additional $430,000 in December 2025 without added taxes on existing property owners. At the higher rate of growth, the city could have levied an additional $2.2 million cumulatively over the past eight years.

The chart illustrates the impact of the city’s successful 2023 referendum to exceed levy limits by $500,000. However, a consistent 2% rate of new construction would have brought the city’s tax levy to within $80,000 of its current level without a referendum. To achieve a rate of 2% net new construction, the community would need to add about $18 million in property value, or about 50 single family houses per year.

The same exercise looks different for Lake Mills, a more rapidly growing community that sits closer to Madison along Interstate 94. Figure 7 shows how Lake Mills has already achieved roughly 2% net new construction each year, boosting its tax levy. Lake Mills would need to raise its typical net new construction rate to beyond 2% to exceed its current rate of growth.

We reviewed a development that was proposed for Lake Mills but ultimately never considered by local officials because the city did not approve the developer’s request for an amendment to the city’s comprehensive plan for future land use. This example demonstrates the new revenue associated with residential development, and how it impacts communities differently based on their existing property values and other factors. We will look at the effect of a hypothetical development like that one first in Jefferson and then Lake Mills.

This proposed development would have consisted of 121 single-family homes valued at an average of $416,000, with the total development valued at $50.3 million. The development would be spaced over four years, so each year about 30 homes would have been constructed, adding $12.6 million in property value.

With total equalized property value in Jefferson of $938.5 million, that $12.6 million yields a rate of net new construction of 1.33%. This rate, applied to the city’s base operating levy of $4.3 million, means this development phase would add just under $57,000 in levy authority. This could then be added to the city’s $5.3 million total levy in the first year, which by itself would be nearly three-quarters of the $79,925 levy increase in Jefferson’s 2026 budget. By the end of the four-year period, the development would allow the city to levy up to $227,800 more, bringing the levy up to $5.5 million, assuming no other development in the community or the use of other levy limit exemptions. After that, the city could not raise taxes for operations without more development or a referendum regardless of the appreciation of existing property values.

We can also consider the impact of this same development and base value in Lake Mills. There, the development would have produced new allowable levy growth of approximately $39,000 per year, totaling $155,000 after four years. Lake Mills has an equalized value of $995.9 million, so the homes would result in net new construction of only 1.26%. In addition, the community’s base levy sits at $3.1 million – more than one-quarter less than Jefferson’s base levy. So, applying a lower net new construction factor on a lower base tax levy results in lower allowable levy growth, but still represents a meaningful increase.

Our example involves new single-family homes, but the potential effect on a local property tax levy would be the same with a new apartment building, shopping center, or small industrial factory valued at $50.3 million. As we will see, however, the effects of the development on schools could be somewhat different depending on whether the type of project was more likely to bring additional families and children.

Boosting growth to 2% annually would be difficult but possible for at least some communities. However, it’s unlikely that every community in the county could be grow at that rate consistently. As Figure 8 shows, only 27% of cities and villages statewide saw that rate of net new construction last year. Local policies do impact these rates of growth, but economic and demographic factors partly or entirely beyond the control of local leaders also drive development. These factors include birthrates and migration patterns, the presence of highways, national economic trends, the capacity of local and regional builders, and the mix of local businesses, industries, and natural resources.

Other Municipal Revenue

To some degree, all or nearly all municipal revenues have a potential to rise as a result of new construction, but impact fees represent one of the clearest examples. These fees to fund capital investments in fire, EMS, and parks infrastructure are imposed by some communities in the region, including Jefferson, Fort Atkinson, Madison, and DeForest. Impact fees charge developments for the increased infrastructure needs created by new residents. On the one hand, they raise the already high cost of new housing and commercial spaces, but on the other, they offset some capital costs associated with those developments, such as a new fire station, that would otherwise be paid by all taxpayers.

The city of Jefferson, for example, charges an impact fee to all developments and uses the proceeds to fund capital investments in parks. These fees vary based on the type of development and, for housing, the number of units. The fee for each single-family home is $1,000, while the fee for each unit in a multi-family housing project is $600. So, the hypothetical 121-home development in Jefferson discussed above would generate $121,000 in parks fees over four years.

Under state law, municipalities can also recover capital costs from projects such as new streets, curbs and gutters, and sidewalks by levying special assessments to adjacent parcels. The tradeoffs of special assessments related to new development are similar to those of impact fees. Not all communities employ special assessments, but Lake Mills charges developers for all infrastructure costs associated with development. The city of Jefferson does not use special assessments, so these costs would need to come from other sources.

Typically, the capital costs of extending municipal utility services such as water and sewer are paid for through fees charged as part of the development. Notably, any impact, water, or sewer fees covering new infrastructure do not represent additional revenue for local governments to carry out their current operations.

Developers in Jefferson pay a fee for extending sewer and water fees based on the size of the new water meter attachment. Assuming new housing units opt for a one-inch water connection — the most frequent type of connection for single-family houses in Jefferson – our hypothetical development would raise $332,750 in revenue for sewer and water line extensions.

Sewage treatment can be a limiting factor in development, as treatment plants have a fixed capacity, and adding units may require an expansion. However, most communities in Wisconsin have seen a major decrease in water usage over the past generation, especially in communities that experienced a decline in industrial activity. Many treatment plants were built at a time when communities needed more water treatment, and some may still have excess capacity. For that reason, the impact on wastewater treatment facilities depends on both the size of the development and the excess capacity of the existing assets.

Once water and sewer service are extended, new residents also pay additional fees for the ongoing service and any central infrastructure improvements. One potential benefit of additional development is the ability to spread the cost of centralized assets, like upgraded wastewater treatment facilities, across more customers. This is more likely to be possible at a time when communities are seeing falling water sales. Fee revenue from garbage collection and forestry services will also rise as they are extended to new developments, but those expansions may not employ unused capacity or increase economies of scale.

Attracting new residents is likely to increase motor vehicle registration fees for local governments that impose that type of fee. While not imposed in the city of Jefferson, this fee is levied by both Waterloo ($15 per vehicle) and Fort Atkinson ($20). In Jefferson County, there is about one motor vehicle registered per resident, so every new person could generate about $15 in revenue in Waterloo and $20 in Fort Atkinson.

Hotel developments might also increase room taxes in Jefferson, Fort Atkinson, Watertown, and Johnson Creek – the Jefferson County municipalities that impose a tax on overnight lodging. To do so, however, the hotels would also have to attract new customers rather than just divvying up the existing customer base.

New construction also brings fee revenues from building permits. However, we are not including these revenues here since they are meant to offset the associated costs for the municipality of reviewing building plans and conducting inspections.

State Aid

Development can also affect state aid to communities. In the past, the formula for the main component of state shared revenue aid included a community’s population, but that formula was repealed. Another shared revenue component known as supplemental county and municipal aid for smaller communities included the community’s population as of 2022, but construction and population changes have no impact on future aid.

Other types of state aid are based on service costs, and in these cases new construction matters. For example, the state provides general transportation aids on either a flat per mile or share of costs basis, where a portion of total road-related costs are covered by state funds.

So, when a development adds roads to a community or simply yields more property tax revenue to spend on other road projects and qualifying expenses, some of those expenditures under the formula will eventually be covered by new state aid that will enable further spending. Because total state aid amounts are limited, growing costs in one community pull aid from other communities, and do not increase total state aid. That means growing communities may pull in more general transportation aid. A 2021 Forum report noted that “slow-growth communities may be unable to increase road spending and as a result may face some erosion in their payments under this important state program.”

Under current spending ratios, the city of Jefferson could plausibly spend one-fifth of the added property tax revenue from our hypothetical development on road-related costs, or roughly $46,000. In the most recent year, costs for counties and most cities and villages are reimbursed at a rate of 16.04% of spending. Over a period of years, that additional spending would be fully factored into the state transportation aid formula and eventually would bring in about $7,000 more a year.

If part of this additional aid is spent on roads, the process repeats. Though the aid is modest and might be seen as negligible, it is worth noting that development brings cities additional revenue from various local and state sources that can be used to make the community more attractive to new residents and businesses. This dynamic has the potential at least to create a positive cycle for communities with more development activity and a negative one for those with less.

Technical College Impacts

This brief mainly focuses on municipalities, county government, and school districts in Jefferson County. However, state law also uses net new construction to limit growth in the operating property tax levy and a related form of state aid for technical college districts.

As a result, the slow pace of new construction in the county also slows growth in revenues for the Madison Area Technical College District and the Waukesha Area Technical College District, which both serve Jefferson County. The effect is more modest, however, since the territory of each of these districts extends beyond Jefferson County.

As the Forum noted in a 2020 report, enrollment at technical colleges is lower than its peak in 2011. So, population growth associated with residential development could help make up for that loss, and additional students could potentially be absorbed with existing tech college resources.

Impacts on Municipal Costs

Developments also bring new costs to provide services such as increased emergency medical and fire calls, additional police patrolling, and increased street maintenance and plowing costs. The magnitude of the increased costs associated with a development depends heavily on its scale and location. A small neighborhood development of 20 single family homes or a small apartment building likely would have limited impact on expenditures such as road maintenance and park needs. An apartment in a city’s downtown also is more easily absorbed by existing services than a subdivision of homes on the city’s outskirts.

The proposed residential development in Lake Mills, however, would not have led to new capital costs for the city for infrastructure such as lights, streets, curbs and gutters. City officials said developers in their community are responsible for the installation of infrastructure, and it is dedicated to the city after completion. The city of Jefferson, however, does not have policies such as the use of special assessments, so other funds would have to cover the improvements.

An increase in a community’s population also will lead to more emergency medical service (EMS) calls, however. Using estimates from our recent research on communities in the larger region served by the city of Sun Prairie such as the village of Marshall and town of Bristol, we can provide a rough per capita estimate of how many EMS calls would be added as population increases. In these communities, EMS staff receive between four and 10 calls per 100 residents per year. The hypothetical development in Jefferson, discussed above, would be expected to bring in more than 200 new residents, which would drive call volume up by roughly eight to 20 calls per year.

Still relying on the Sun Prairie example, each call for EMS services costs approximately $1,200, so 20 additional calls could total about $25,000 in new costs per year. In Sun Prairie, about half of ambulance costs are paid using fees charged to patients and their insurers, so this level of fees could drop the costs to about $12,500 per year.

For fire protection, again using Sun Prairie and surrounding communities as an example, adding 200 people per year would likely result in between three and seven additional fire calls per year. Assuming a rate of $1,500 per call (the average cost for Sun Prairie’s fire calls), this could result in between $4,500 and $10,500 per year in additional costs. However, these fire and EMS costs might be absorbed in whole or in part by existing fire and EMS budgets and staffing depending on whether the city’s crews had enough capacity.

For their police forces, the city of Jefferson spent $236 per resident in 2023 and Lake Mills spent $211 per capita, according to figures from the Forum’s Municipal DataTool. That would yield costs of just over $47,000 in Jefferson and $42,000 in Lake Mills to serve the 200-person residential development. However, those estimates are on the upper end since the cities might be able to serve the subdivision partially or even largely with existing staffing and vehicles.

There can be some difference in the number of emergency calls generated by different types of development. For example, nursing homes and assisted living centers generate EMS calls at a higher rate because of their residents’ age and are often the top source of calls in a community. Low-income residents on average have worse health outcomes and housing for them may come with additional EMS calls.

However, communities still need a certain amount of housing for the elderly and low-income residents. In addition, the services in nursing homes or assisted living facilities for the elderly and supportive housing for individuals with other challenges may actually lead to fewer EMS calls for their residents compared to other housing arrangements for the same individuals such as the elderly living alone or low-income individuals having no housing at all. Communities can also limit fire and EMS calls using steps such as helping residents manage chronic health conditions through community paramedicine or charging for frequent visits to nursing homes to lift fallen residents. These various possibilities are something that municipal leaders can discuss as they consider their community’s needs.

Notably, the housing actually being proposed and built in Jefferson County and other parts of the state tends to be larger and more costly than existing housing. The homes in the Lake Mills proposal would have averaged $416,000 in value, well above the 2024 median value of $303,000 for owner-occupied units in Jefferson County, according to estimates from the U.S. Census Bureau.

The Forum also reviewed the past decade of awards of state and federal Low-Income Housing Tax Credits, which reduce tax liability to incentivize the development of affordable housing. In eight of the 10 years, no awards were made in Jefferson County while awards between $2.5 million and $15.5 million were made in neighboring Dane County (see Figure 9). Over the decade, less than 100 units were incentivized in Jefferson County while several thousand units were supported in Dane County. In other words, the data do not suggest that low-income housing has added to service costs for local governments in Jefferson County in recent years.

Street costs for a development depend on whether it is an infill project using existing streets or something completely new. For the hypothetical development, we could use Jefferson’s and Lake Mill’s rate of public works spending for roads, which works out to between $24,000 and $35,000 per mile based on their 2026 budgets. So, assuming between 0.75 and 1.5 miles of new roads, this development would cost between $27,000 and $54,000 for street maintenance each year, depending on the design of the subdivision. However, new streets should require less spending in the near term, because they do not require resurfacing and pothole filling at the same rate as older roads.

For infrastructure and other capital costs that accompany development, one important financing mechanism is tax increment financing. TIF involves setting a base property value in a given district and then using the taxes on any increase in value to pay off qualifying capital costs within the district. TIF funds can be used to finance municipal infrastructure or provide incentives to developers.

By diverting the taxes arising from higher property values in certain districts from all local governments, TIF makes it easier for municipalities to pay for capital costs. But it also has an effect on other property taxpayers and other local governments. Municipalities have no obligation to offer such incentives, so we do not include them in our cost calculations. In the case of the potential residential development in Lake Mills, no request for TIF assistance was made. The city of Jefferson occasionally uses TIF to pay for costs associated with mixed-use developments.

As we have seen, a 121-home development could generate $155,000 more in property tax revenue in Lake Mills and $227,800 more in Jefferson. That would allow for growth in operating revenues that is hard for communities in Wisconsin to achieve in any other way. On the upper end, estimated operating costs for essential public safety and street services for the new subdivision would come to between $95,000 and $125,000, and the actual costs would likely be lower given the possibility of some additional fees or unused capacity. In other words, residential development has the potential to be helpful to community finances even with conservative estimates.

In the cities of Lake Mills and Jefferson, new operating revenue from the hypothetical development would cover service costs, especially during the first few years. However, costs to provide services for the subdivision would grow over time with inflation, while revenue from the development would not. This highlights the central tension of the state’s levy limits: new development can pay for itself, but operating costs for current services to existing properties grow less and less manageable over time.

In addition to ongoing services to developments, capital expenditures such as new water and sewer lines, streets, and TIF outlays can also carry costs. However, as we have seen with the potential Lake Mills development, these costs are not a given and may in some cases be modest or taken on by the developer.

Financial Impacts for counties

Increase in Property Taxes

Under Wisconsin law, levy limits work the same way for counties as they do for municipalities. However, because counties include far more properties and total property value than individual municipalities, any one development has a smaller percentage impact on county revenue.

Using our same hypothetical development with 121 single-family homes valued at $50.3 million, we can estimate new county revenue. Because the county’s equalized value of $12.05 billion in 2025 is much higher than any individual municipality, this added property value represents only 0.5% of net new construction. However, because the county’s operating tax levy is larger than a city’s levy, the development still results in $31,500 in new annual tax revenues. Once all units are completed after four years, the county’s total levy could rise from $35.5 million in 2025 to $35.6 million in 2029, an increase of $125,700. While modest, this increase does provide additional revenue for the county and relatively little in new costs.

Other County Taxes and Fees

Jefferson County, like nearly all counties in the state, levies a 0.5% sales tax on purchases in the county. While residential development does not contribute as much to sales tax collections as a retail development, an increase in the county’s population does lead to higher sales tax collections. Notably, online retailers collect both the state sales tax and county sales taxes, so these home purchases do add to tax collections.

Jefferson County receives approximately $100 per person in sales tax revenue, so adding 200 new residents would produce approximately $20,000 in sales tax revenue. The revenue generated by those new residents also tends to rise over time at a rate similar to that of inflation, which is not true of the property tax for operations in Wisconsin.

Additional residents bring new vehicles with them, adding to fee revenues in counties such as Dane, Milwaukee, and Iowa that impose a wheel tax. Jefferson County, however, does not have one.

All counties, do collect revenue from real estate transfer fees, with the state receiving 80% and the county the remaining 20%. The fee is $0.30 for each $100 of value for the property being sold or transferred. If all 121 single family homes in the Jefferson development were subject to the transfer fee, over the four years it would generate $150,900 in total fees, with $120,720 going to the state and $30,180 to Jefferson County. Though they are one time in nature, these fees do recur when the properties are sold again in the future.

State Aid

As we discussed with municipalities, new residents drawn into the county through home and apartment developments would not be factored into the formula for state shared revenue payments to counties. So, this key form of state aid would not rise with development.

However, counties that spend more on roads receive more General Transportation Aid from the state. As with municipalities, development tends to boost county road spending both by creating or enlarging roads and providing more tax revenues to spend on any priority, including roads. That, in turn, boosts road aid under the state formula above what it otherwise would be.

County Costs

The largest costs for counties tend to be for law enforcement and jails, road construction and maintenance, and health and human services. Health and human services and law enforcement costs can vary by the type of development. A new hotel, for example, would add less in these expenditures than a new assisted living center.

These costs are quite different from one another, however, in that counties tend to receive much more state and federal aid to support health and human services. For example, 2026 Jefferson County dedicated $1.6 million in general fund dollars to the total county health and human services budget of $43.4 million. Still, even a modest rise in general fund spending can be challenging when budgets are tight.

Law enforcement and jails, on the other hand, depend much more on county taxpayers. General revenue covers the county’s entire $20.3 million public safety budget. While development generally adds only modestly to those costs, local taxpayers do cover the majority of them.

Development adds to road costs for counties, though it tends to do so more for municipalities, since they own more of the local roads along which homes and other structures are built. Over time, development does generate increased traffic, eventually resulting in the need to expand county highway systems.

Falling enrollment and School District Impacts

Residential development has the potential to bring new students to schools, which can affect both the revenues and costs of K-12 districts. Understanding these impacts in Jefferson County requires a review of both state law and trends within the local schools.

In Wisconsin, state law limits the combined revenue per pupil that districts can receive from state general school aids and local property taxes. That makes district finances heavily dependent on enrollment, which is a challenge for schools given that K-12 enrollment has been falling across the state.

The problem is even more acute in Jefferson County. Over the past decade, enrollment in districts that have at least a portion of their territory in Jefferson County has fallen nearly twice as fast as in the state overall, flattening school district revenues. Here we look at the form of enrollment used to calculate a district’s state-imposed revenue cap, which can only be exceeded if district voters approve doing so in a referendum. Note that we measure all students in these districts — not just students in Jefferson County — as some district borders stretch beyond county lines.

Between 2015 and 2025, district enrollment in Jefferson County fell by 14.6%, compared to 7.4% statewide, as Figure 10 shows. For the county, as for the state and Upper Midwest, this decline reflects lower birthrates as well as a failure to attract enough new families with children from outside the country.

Some districts in the county have lost enrollment even more rapidly. That includes a 25.7% drop in the Palmyra-Eagle Area School District, which in 2019 voted to dissolve due to financial issues only to have a state board deny its petition. The School District of Jefferson has lost nearly one-fifth of its students since 2015, while the Fort Atkinson district has lost nearly one-sixth.

Revenues Flatten as Enrollment Dips

Under the state revenue limit formula, a loss in enrollment affects districts gradually, but the impact builds over time and varies based on their current funding levels. The revenue losses per student range from $12,552 in Waterloo to $17,267 in Fort Atkinson. That effect is compounded by the fact that the state has limited growth in the cap per student to less than the rate of inflation. Figure 11 shows that revenue per pupil for most Jefferson County districts, has risen faster than for other districts in the state. The larger increase likely reflects districts in Jefferson County turning to referenda to gain at least some growth in their revenues despite falling enrollment.

Figure 12 shows how total revenue limits for districts with territory in Jefferson County changed between 2015 and 2025 after adjusting for inflation. Despite the growth in revenue per pupil, the total revenue limits for four of the seven Jefferson County districts fell by more than the statewide drop of 7%. The declines in total revenue limits range from 7.8% in Jefferson (despite the passage of four referenda in the district during those years) to 23.2% in Palmyra-Eagle, which rejected its only referendum over the past decade. These declines again reflect a loss in enrollment for these districts as well as the state limiting growth in its caps to below inflation.

Only Johnson Creek, which passed two referenda over the past decade, and Fort Atkinson, which also passed several ballot measures, increased their inflation-adjusted revenue limits. Lake Mills has passed referenda for capital projects but not operations, and its revenues have declined, though by less than the state average.

Some taxpayers may welcome the slower growth in revenue limits due to enrollment loss since in theory the trend might limit increases in K-12 property taxes. However, the loss of enrollment also leads to less state aid to districts. For example, the state’s main form of general aid to districts also factors enrollment into its distribution formula. This form of state assistance, known as equalization aid, offsets local property taxes under the state revenue caps, and its loss reduces some of the benefits to property taxpayers from enrollment declines and flower revenue limits.

One response to this trend is to try to boost enrollment by attracting new residents through development. In the hypothetical Jefferson development detailed above, we assume a total of 71 new students attending public school once all four phases of construction are complete, based on the typical number of students per household in Lake Mills. Using that estimated increase in enrollment, we model the impact of adding students under the state’s revenue limit formula, which uses a three-year rolling average of enrollment. The estimates in Table 1 are simplified to make them easier to explain and do not include every facet of the state’s complex revenue limit and school aids formulas.

Starting with Jefferson’s 2025 revenue limit per pupil of $15,453, we estimate that the district would raise an additional $92,700 in the first year by adding six students to its membership calculation. Because membership is calculated as a three-year rolling average, the number of students added each year to the school’s membership is lower than the actual number of new students attending school in the district.

For the remaining years, we assume the current $325 per pupil annual increase in state statutes continues, allowing the revenue limit to grow each year. Table 1 shows the impact of these new students on state aid and district tax revenue over the four-year period, assuming the students join the district in equal numbers across each year and remain in the school district.

Development also affects state school aids by increasing property values and enrollment. The state’s main formula for distributing general school aids is complicated and not easily summarized or simplified. On the one hand, more enrollment from development increases state equalization aid. However, if property values rise enough to increase a district’s property value per student, then aid tends to fall.

So, a neighborhood of modest homes with children would tend to produce more state aid, which would hold down property taxes under state revenue limits. A new shopping center might increase property values and reduce state aid, which could allow the overall levy to grow under the state caps. However, the additional property value from the new shopping center would minimize the effect on tax rates and existing property owners.

The simplest impact on state payments to districts is to “per pupil aid,” a flat $742 per student payment that is outside the revenue limits. For a development with 71 new public school students, that aid program would ramp up over three years to provide an additional $53,000 annually.

Enrollment and Cost Considerations

Declining enrollment has led Jefferson County school districts to try to cut costs. The School District of Jefferson, for example, has lost hundreds of students and reduced its number of full-time equivalent teaching positions from 142.9 in the 2023 school year to 132.2 in 2025, a decrease of 7.5%, according to state Department of Public Instruction data.

But school districts have many relatively fixed costs such as debt payments, utilities, transportation, and administration, which means they cannot reduce every expense easily when they lose students and revenue. Districts can realize more substantial savings by closing schools, but such a move can be controversial and may be difficult to achieve if the district has few schools or the enrollment losses are spread evenly across its territory. For its part, the School District of Jefferson has not closed any schools in recent years.

In other words, some districts in Jefferson County have excess capacity either in terms of open seats in classrooms with teachers or empty classrooms. Officials at the School District of Jefferson say they have room in each of their five buildings for about 100 additional students. For this reason, schools in Jefferson and the county overall generally would welcome more students.

Using the hypothetical Jefferson development as an example, it seems likely the district there could accommodate the added 71 students, because it saw a drop of 375 students in revenue limit enrollment between 2015 and 2025. So, adding new students from the Jefferson development would leave the district still well below its 2015 enrollment level.

Adding that number of students to other districts may be more difficult. Johnson Creek’s enrollment has only fallen by 14 students since 2021, and it’s a much smaller district, with just under 700 students. So, adding 71 new pupils would be more than a 10% increase in total enrollment. This might result in the need for new teachers or classroom space.

Multi-Family or Single-Family?

Local leaders may wish to consider both single and multi-family developments. A 2025 housing study commissioned by Jefferson County pointed out the need for both types of developments. Vacancy rates of about 1.5% for existing multi-family housing in the county suggest the need for additional developments.

The net new construction limits do not discriminate based on the type of new structure. So a $100 million multi-family or mixed-used development would have the same impact on property tax revenue as a single-family development of the same value.

Other revenues, such as impact fees for capital investments in parks or an EMS station, would vary depending on the structure of the fees. For example, in the city of Jefferson parks impact fees are $300 per unit of multi-family development, while fees for single family developments are $500. So, a 100-unit multi-family development would bring in $30,000, $20,000 less than a similar single-family development.

Infrastructure costs and service would likely be less for multi-family developments than for single-family units serving a similar number of people, though this would heavily depend on the specific design and location of the developments. First, apartment buildings and multi-family structures can be built as infill development, which can limit infrastructure and ongoing service costs.

In addition, multi-family developments generally require fewer feet of road frontage. As a result, they would need less newly constructed roads, sidewalks, street lights, storm sewers and culverts, and ultimately less maintenance. They also tend to require fewer, though larger, sewer and water connections. As discussed earlier, the impact of these infrastructure costs on municipal finances would depend on the local government’s policy related to special assessments.

Costs related to emergency services would likely be similar to a single-family development with the same number of units, assuming a similar rate per capita of calls for ambulance, fire, and police response. Some types of development, like an apartment building focused on providing assisted living for senior residents, may generate a substantially higher rate of utilization and municipal officials may wish to consider this as one of many factors in their deliberations on such projects.

For school districts, multi-family developments would typically come with fewer students as a share of the total residents. As a result, school district revenues would tend to climb more slowly under state caps per student and the district would receive less in local property taxes and state aids. The district might also experience greater growth in property value per student, which would reduce state equalization aids to the district over what they otherwise would have been. However, this potential impact for property taxpayers would be balanced out by the fact that greater property values within the district would also keep mill rates lower than they otherwise would have been.

Considerations For Commercial and Industrial Development

There are some special considerations when considering the impact of commercial and industrial development. The impact of these developments on municipal and county revenue is nearly identical to residential development, because the property tax increases are tied to the value of the new property, regardless of its type. There is a significant difference for school districts, because industrial and commercial development will not result directly in new students or new revenue. However, these developments do ultimately lead to more students and families by providing jobs and places to shop.

Commercial or industrial developments may bring higher costs in some areas, depending on the type of activity. For example, a large retail development would likely result in the need for additional road capacity because it would generate more vehicle trips than a similarly valued residential development. An industrial plant that was heavily dependent on shipping raw materials and finished products in heavy trucks would also increase road costs by increasing damage on existing thoroughfares.

Some industries such as food processing may require upgrades to wastewater treatment plants because they use lots of water. However, the impact of those demands depends on the existing facilities in the community and whether they have unused capacity.

Conclusion

Jefferson County and its communities have experienced a slowdown in development and population growth over the past generation, and that has affected their local governments and schools. Our analysis finds:

• Since the Great Recession, the rate of net new construction in Jefferson County has lagged the state average and the rate of inflation. That has been accompanied by a slowdown in population growth and employment in the county.
• That lack of development has slowed growth in property taxes for the county, its municipalities, and its technical college districts, and has also slowed growth in county sales taxes.
• School districts face challenges from falling enrollment that has also led to lagging state revenue caps and state aid.
• Some school districts, as well as the city of Jefferson, have gone to referendum to close budget gaps. Development and population and enrollment growth might have lessened the need for such ballot measures – or at least their size.

One strategy to deal with these challenges would be to promote development of residential and commercial property in Jefferson County. Over time, new construction might bring businesses, jobs, and a variety of residents, including families with children. It might also help to limit increases in housing costs for residents as the population grows.

Jefferson County has some advantages it might employ to attract development. Most importantly, Interstate 94 runs through the county. As the Forum noted in a 2018 report, much of the development in the state in recent years has occurred along major highways. Communities such as Lake Mills in western Jefferson County could also draw some residents from nearby Madison and Dane County, which is one of the fastest-growing parts of the state and Upper Midwest region.

Under state law, an uptick in development and new residents would bring with it:

• Additional property tax revenues for municipalities, the county, and technical college districts, and more sales tax revenue for the county.
• Additional revenue limit authority and potentially in some cases state aid for local school districts.
• A variety of municipal and county fee revenues and some additional state payments to local governments, such as general transportation aid.
• Some increase in demand for public services and added cost for these same local governments and school districts. However, a significant portion of the additional demand for services can be accommodated by drawing on the current capacity of the system, particularly in the case of school districts.

Despite these potential benefits, it is important to note that development is not by itself a panacea for the financial challenges faced by local governments and schools. In recent years, the state has kept tight controls on the revenues and spending of municipalities, counties, and school districts in Wisconsin despite rapid rates of inflation. This approach has pressured local government finances and will continue to lead to local spending cuts and referenda in Jefferson County and around the state, with or without new development.

Our analysis finds that additional revenue generated by new developments likely covers the public safety and street operating costs associated with those developments, often with revenue to spare. However, over the long term, the costs of providing services grow while revenue from existing properties does not. In other words, costs eventually outpace revenues. This is not a critique of development, but rather an observation about how Wisconsin’s system of financing local government currently functions.

Ultimately, local officials and voters must decide for themselves such questions as the character of their community and the pace of development within it. In presenting this analysis, the Forum argues neither for nor against development projects, which sometimes bring controversy in Jefferson County and elsewhere in the state. This brief instead seeks to lay out the facts about the impact of new construction within the context of the laws of both economics and the state of Wisconsin. We hope our work serves the residents and elected officials of Jefferson County as they chart a course for their communities in the years to come.