Property Taxes Play Key Role in Funding Local Government
Participants in Civitas program get quick course on who pays and where the money goes

Civitas
2/8/2006

MADISON – If you think property taxes are too high now, a flashback to the early 1900s might change your mind.

Participants at the first session of the Civitas public affairs program heard panelists talk about how modern tax policy has evolved from the days when personal items including living room furniture, jewelry and livestock were part of the tax equation. Some 80 attendees joined former elected officials and policy analysts in a discussion of property taxes, local government spending and whether current property tax levels are becoming unaffordable.

“Your property taxes are lower today than they were 30 to 40 years ago,’’ as a percentage of personal income, said Todd Berry, president of the Wisconsin Taxpayers Alliance. Still, research shows that property taxes remain one of the most vilified and least understood forms of taxation, Berry told participants in the program held Wednesday at the Madison Club.

Comparing the property tax burden of Wisconsin residents with those of other states is difficult, because more services are provided and funded at the local level in Wisconsin than in other states. Based on the numbers alone, Wisconsin ranks ninth nationwide in terms of the total property tax burden, according to the latest estimates from the Taxpayers Alliance.

Where does the money come from? Residential property owners cover about 69 percent of the property tax burden while commercial property owners account for about 18 percent, manufacturers just over 3 percent, agriculture about 2 percent and other property about 5 percent. In recent history, the residential share of the property tax burden has increased; it accounted for about 57 percent of equalized property values in 1980.

Yet Berry and other panelists pointed out, property taxes pay for important local services that residents value. In Wisconsin, about 43 percent of local property tax dollars flow to fund K-12 education; 24 percent of the money goes to pay for municipal operations (cities, towns and villages); 20 percent funds county governments; 7.5 percent funds technical colleges; and the remaining amount funds other public improvements such as tax incremental finance districts.

“In just about any poll, the property tax shows up as the least popular tax,’’ Berry said. “But I suspect that if property taxes were paid for through withholding (as income taxes are), you wouldn’t hear about them as much.’’

Despite complaints about property taxes, over the past 10 years, most school districts and many local government entities have held budget increases in the 3 to 4 percent range, Berry said.

James Wood, president of Wood Communications Group and a sponsor of the program, said the issue for many families has become one of affordability, as costs for health care, energy and other necessities have outpaced income growth. When combined with property taxes, stress on family budgets has increased.

“In a Madison area study last year, our research showed 73 percent of residents agreed with the statement, ‘I love this city, but don’t know how much longer people like me can afford the property taxes,’’ Wood said. “The Civitas program aims to equip participants with a better understanding of public finance and other issues to achieve workable solutions.’’

Also contributing to Wednesday’s discussion were former elected officials including Madison Mayor Paul Soglin, Dane County Executive Jonathan Barry and Sun Prairie Mayor JoAnn Orfan. Edward Huck, executive director of the Wisconsin Alliance of Cities, and Charles Hicklin, Dane County Controller also served as panelists.

Wednesday’s session was the first in a series of 10 monthly Civitas forums that aim to build community leadership capacity and enhance civic involvement. Topics for future sessions include the local budget process, public school funding, public safety, social services and transportation. The next session is set for Feb. 28 and will cover fees and other public revenues.

Civitas is a joint effort of the Greater Madison Chamber of Commerce and Wood Communications Group. Sponsors include CUNA Mutual Group, Madison Gas and Electric Co., Kraft Foods/Oscar Mayer, M&I Bank, The Blettner Group, First Weber Group, American Transmission Co., American Family Insurance and T. Wall Properties.

For more information, visit www.civitaswi.org.

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