Growth in Property Taxes Slows, Schools Remain the Biggest User

propertytaxAs the political campaigns heat up, school leaders can be sure that when candidates and incumbents talk about placing a priority on holding the line on property taxes, schools are likely to be affected.

A recent Wisconsin Taxpayers Alliance (WISTAX) analysis found that from 2000 through 2011, statewide property taxes grew by an average rate of 4.6 percent per year. Since then, annual growth has averaged 0.3 percent.

The largest recent increases (1.4 percent) occurred last year and two years ago. Last year, net levies fell by 2.3 percent as the state bought down technical college levies by providing a more than $400 million increase in state aid.

The WISTAX analysis of the taxes levied in 2015 (and payable in 2016) found that gross property tax levies totaled $10.62 billion statewide, a 2.3 percent increase over last year’s gross levy of $10.38 billion. This year’s net levy, after subtracting the state school levy credit, was $9.77 billion, an increase of 1.4 percent over the prior year. (The difference in the percentage increase in gross and net levies reflects that as part of the 2015-17 state budget, lawmakers pumped an additional $105.6 million into the school levy credit, which lowers net property tax bills.)

While the increase in the school levy tax credit played a role in reducing 2015-16 net tax levies, according to WISTAX, “the principal reason for the slowing growth in property taxes is state-imposed limits on how fast local revenues can increase.” For schools, this means revenue limits, which districts have been under since 1993-94.

Statewide, gross levies for public schools in 2015-16 were $4.85 billion, an increase of 2.0 percent over the 2014-15 gross levy of $4.76 billion, despite the lack of a per pupil adjustment in revenue limits. Some of the reasons for the increase were the passage of a school referendums, the effect of various revenue limit exemptions, and changes in the way private school voucher programs are funded that allow school districts to make up for lost state aid diverted to fund vouchers.

Still, at 2.0 percent, the increase for schools was smaller than the increase for all other local units of government except counties, whose levies also increased by 2.0 percent statewide. (Municipal levies rose by 2.2 percent statewide, while tech college levies increased by 2.4 percent.)

At $10.62 billion in gross terms or $9.77 billion in net terms, the property tax is easily Wisconsin’s single largest tax. (By contrast, state income tax collections for 2015-16 are estimated at $7.81 billion, while state sales tax collections trail at an estimated $5.05 billion, according to WISTAX.)

Public schools are by far and away the biggest consumer of property taxes. Altogether, K-12 school district levies accounted for the single largest share (45.7 percent) of the statewide gross levy. By contrast, towns, villages and cities combined accounted for about a quarter of the total (25.1 percent), while counties represented about a fifth (19.6 percent).