School referenda results weren’t the only big story on Nov. 6

The widespread success of school district referendums wasn’t the only referendum story to come out of the Nov. 6 election.  Voters in a record number of municipalities also approved referenda to exceed state-imposed levy limits that restrict how much property tax revenue municipalities and counties can raise without voter approval.  Voters also approved advisory referenda aimed at quelling a burgeoning dispute between “big box” retailers and big pharmacy chains and local property assessors in every jurisdiction where such a question was on the ballot.

Levy Limit Referenda: On Nov. 6, a majority of voters in a record 11 municipalities voted in support of allowing their city, village, town, or county to exceed levy limits.  Voters in three other jurisdictions rejected exceeding levy limits.  This translates to a passage rate of nearly 79 percent.

Prior to Nov. 6, voters had approved allowing cities, villages, towns or counties to exceed levy limits on only 19 occasions since levy limits were first implemented in 2005.

Levy limit referendums were passed in the cities of Kenosha, Greenfield (to hire police and fire personnel), DePere (for an aquatic center), and New Holstein, as well as in the villages of Monticello, Random Lake (for fire department), and Richfield (for streets).

Last week was the fourth time voters in the City of DePere have approved a levy limit referendum. They also did so in 2006, 2007 and 2008.

Source: Wisconsin League of Municipalities

“Dark Store” Advisory Referenda: In addition, 23 jurisdictions (17 counties and 6 cities and villages) conducted “dark store” advisory referendums* on Nov. 6.  The results of advisory referenda are non-binding but instructive.

A majority of voters in each of those 23 jurisdictions voted in support of passing legislation closing the “dark store” and Walgreens property tax loopholes that are said to be shifting property taxes from big retailers onto homeowners and small businesses.  Interestingly, voters in both rural counties like Barron and urban counties like Brown and in red counties like Washington and blue counties like Dane agreed the dark store loopholes should be closed.

Of the 1,020,812 voters who voted on a dark store advisory referendum on Nov. 6, a total of  802,870 (79%) voted in support of closing the “dark store” loophole.

Source: Wisconsin League of Municipalities

*The term “dark store” refers to a strategy “big box” retail chains have successfully employed to challenge a number of local assessments. Under this strategy, these big retailers essentially argue that their fully operational stores should be assessed similarly to vacant (or “dark”) stores. (See previous post.)  Basically, large retailers argue that vacant or “dark” stores are the appropriate comparable properties against which their fully operational store properties should be evaluated, which has led to this being nicknamed the “dark store” loophole. (In addition, some big retailers include restrictive covenants in the deeds to these store properties that prevent these properties from being sold to competitors when the stores are closed, reducing their market value.)

In similar fashion, big pharmacy chains have argued that extraordinary financing arrangements, such as complex lease-backs, should not be included when valuing property subject to those arrangements.

These strategies, when successful, result in shifting property taxes from these large chain stores onto homeowners and small businesses.  This tax shifting, in turn, could arguably make it harder for school districts to pass referenda.

A special study committee looking into these assessment disputes–the Legislative Council Study Committee on Property Tax Assessment Practices, chaired by Sen. Luther Olsen  (R-Ripon), has thus far been unable to reach a compromise on these so-called “dark store” and so-called “Walgreen’s” issues.

Editor’s Note: The WASB supported a pair of companion bills aimed at curbing these two property tax avoidance strategies last session. (See previous post.)