Wisconsin property taxpayers should see one of the smallest increases in years on their December bills, with levies for school districts barely rising, technical college levies declining for only the second time in at least two decades, and a state tax credit rising sharply. Yet even the small uptick in school district levies is surprising given earlier projections that increased state aid and federal pandemic relief would cause taxes to fall.
Property tax bills being mailed out this month for 2022 show an increase in gross property taxes for Wisconsin’s K-12 school districts of just 0.3%, from $5.38 to $5.40 billion. This is the smallest percentage increase in school district levies since a 0.1% increase in 2016 (see Figure 1).
This limited growth in school levies in new state Department of Revenue data runs counter to a preliminary projection made by the Legislative Fiscal Bureau (LFB) in June that school district taxes would fall based on the version of the state budget at the time. Some of the factors that may account for this difference include difficult-to-predict voter-approved school referenda as well as changes to the final state budget.
Each December, the Wisconsin Policy Forum examines preliminary state data on property tax levies from school districts, counties, technical colleges, and special districts. (Figures for municipalities are not available until early next year.) The data give a crucial early look at collections from Wisconsin’s largest single tax, which serves as a key source of funding for local services such as education, public safety, and local roads. After relatively large increases on December 2019 and 2020 property tax bills, a combination of factors point to a lower increase in levies this year.
Property tax levies for counties will rise by 2.3% statewide, similar to the increase from last year. Levies for Wisconsin’s 16 technical colleges will fall by 3.4% – just their second decline of the 21st century – due to additional state aid dollars.
Property tax levies for Wisconsin’s more than 500 special districts will grow by 2.5% to $122.7 million in 2021, with most of that total (86.4%) coming from the Milwaukee Metropolitan Sewerage District (MMSD). From 2020 to 2021, MMSD’s levy grew by 3.0%, while levies for all other special districts combined fell by 0.5%.
Notably, this analysis looks at gross property tax levies before state credits are used to lower the net bills for property taxpayers. While two of the state credits essentially will stay the same, the state lottery credit is budgeted to rise by $85 million this year, which should help to hold overall property taxes for home and business owners to one of the smallest increases in recent years.
School Districts
For the current school year, Wisconsin’s K-12 districts statewide will levy only an additional $18.6 million compared to last year, for a total of just under $5.40 billion. Out of 421 districts, 212 will increase their levies, while 200 will decrease them and nine will keep levies the same (see Figure 2).
A number of countervailing factors account for this year’s K-12 levies staying roughly the same. First, the 2021-23 budget approved by lawmakers and Gov. Tony Evers over the summer did not increase the per pupil revenue limits for districts, which means this year schools generally cannot increase their combined per pupil revenues from property taxes and state general school aids.
The budget also increased general school aids, which on its own should have caused statewide K-12 property taxes to decline (see Figure 3). As the June LFB memo notes, the budget essentially increased general aid this year by $192.8 million by enlarging the overall aid amount and dropping a previous automatic reduction in aid payments that had been made to fund certain charter schools. In addition, an influx of state aid in other areas such as special education and federal pandemic aid may have relieved some pressure on districts to raise property taxes, though the federal funds are one-time revenues that can only be used for certain needs.
Another issue to watch for K-12 levies is the historic enrollment decline from the pandemic. State rules have helped to shield districts on a one-time basis from the effects of this decline on their revenue limits and tax levies, but continued lower enrollments will serve as a larger drag on their revenues as time goes on.
Yet despite these factors putting downward pressure on property taxes, K-12 levies still rose slightly. The main reason is likely voters approving referenda to allow districts to increase their property taxes beyond what revenue limits allow (for more, see our research from last year).
In the 115 school districts that passed a referendum since January 2020, property taxes for the 2021-22 school year will increase by about 1.9%. In the 306 districts that have not passed a referendum since then, however, levies will decrease by about 0.5%.
Another reason for the tax increase could be the 6.6% rise in voucher school enrollment, from 45,879 in 2020-21 to 48,919 in 2021-22. Public school districts that lose state aid because of students leaving for voucher schools can increase property taxes to help cover some of that decreased funding. Also, K-12 districts in Wisconsin can increase property taxes outside of the revenue limits to fund community service programs outside of schools and school hours and may have done so.
In the state’s largest district, the levy for the Milwaukee Public Schools will decline by $2.3 million on December bills, a decrease of about 0.7% that follows two years of decreases. This drop comes despite a referendum passed by voters in 2020 that allowed the district to permanently levy $57 million beyond state-imposed revenue limits last year and $20 million more this year for a total of $77 million so far. The decrease largely stems from an increase of $37.3 million, or 6.6%, in general school aids that more than covered the impact of the referendum.
A number of large districts will see their levies decline by more than 5%, including New Berlin (-5.1%), Sheboygan (-5.3%), Muskego-Norway (-5.6%), West Allis (-6.1%), Kenosha (-6.2%), Menomonee Falls (-6.4%), and Fond du Lac (-6.9%).
Meanwhile, the Madison Metropolitan School District (MMSD) is increasing property taxes by $6.9 million, or just under 2.0%. Without an $8 million increase in property taxes approved by voters for this year as part of a four-year referendum, the Madison levy would have fallen. MMSD officials chose not to levy the full amount they could have this year out of concerns that the district could lose the extra funding next year under the formula.
A number of other large districts will raise levies by more than 5%, including Hudson (+5.6%), Oak Creek-Franklin (+6.4%), West Bend (+6.7%), La Crosse (+7.9%), Waunakee (+8.0%), Janesville (+10.9%), and Oshkosh (+13.5%). Six of those seven districts have passed referenda since 2016.
Counties
Counties will levy $2.38 billion in gross property taxes on December bills, up 2.3% from the $2.33 billion levied last year. As with both municipalities and technical colleges, increases in county levies used for operations are generally capped at the rate of net new construction in their boundaries. Statewide net new construction has not exceeded 1.7% since 2008 (additional increases may be due in part to levies for paying debt). Though the data on municipal property taxes is not yet available, those levies tend to track county taxes fairly closely since both types of local governments essentially share the same state limit.
Three counties will see property taxes increase by more than 10%: Burnett (+19.0%), Juneau (+18.8%), and Green Lake (+15.8%). Thirteen counties are cutting their levies, including Dodge (-0.7%), Washington (-1.3%), Door (-2.4%), and Sauk (-4.2%).
Milwaukee County’s levy will increase by $5.5 million, or 1.8%, to $310.3 million. That increase exceeds the increase in net new construction in the county because the county is able to use an exemption for emergency medical services to levy an additional $1.5 million for those services. Meanwhile, Dane County’s levy will rise by $8.9 million to $209.5 million (+4.4%).
Technical Colleges
Since 2000, property taxes for Wisconsin’s technical colleges have increased each year except for 2014-15, when lawmakers and Gov. Scott Walker used state aid to buy down levies by nearly half. This year, however, tech college levies will fall by $16.5 million to $470.0 million.
The drop largely reflects an increase of $29 million in state aid this year approved by lawmakers and Evers that technical colleges must use to reduce property taxes. The effect of this state budget provision is similar to the combined impact of K-12 revenue limits and state aid described above.
Three of the state’s 16 districts will boost tax revenues modestly: Southwest Wisconsin (+1.9%), Blackhawk (+0.6%), and Northeast Wisconsin (+0.01%). Nicolet, located in Rhinelander, will lower property taxes by 29.0% to just $3.8 million.
Madison Area Technical College’s levy will drop by 2.7%, from $82.2 million in 2020-21 to $80.0 million in 2021-22. The levy for Milwaukee Area Tech College will decline by 4.7%, from $95.6 million last year to $91.2 million this year.
Conclusion
Property taxpayers across Wisconsin will see much smaller increases on their bills this December than in the prior two years, especially when it comes to K-12 school districts. This result may have been influenced by a number of factors, including an increase in state school aid coupled with no change in the state’s per pupil revenue limits, as well as declining enrollment and the continued availability of federal pandemic relief dollars for immediate needs in school district budgets.
While many taxpayers will welcome this news, school officials have been much less enthusiastic. They argue that keeping revenue limits and property taxes flat for two straight years will make it more difficult for them to keep up with growing costs and fund critical programs once one-time federal relief funds run out. Voters in many districts have essentially agreed by approving school referenda and boosting property taxes higher than they otherwise would have been.
Looking ahead, the state budget is likely to hold down K-12 property taxes again in 2022-23 through additional substantial increases in state aid to schools, no change to revenue limits, and no new allowances for districts with falling enrollment. The continued use of federal pandemic relief dollars plus additional funds available through the recently approved federal infrastructure legislation may also relieve pressure on other local property taxes. However, rising residential construction in calendar year 2021 may allow municipalities, counties, and technical colleges to increase their property tax levies by greater amounts a year from now without exceeding state limits.
Whatever happens with property taxes going forward, they will remain closely watched given that they are the biggest single element of the state’s tax burden and the primary source of revenue used to educate students and meet critical local government spending needs.