Public Policy Forum Blog

Property tax collections rise in region but rate declines

Seven years removed from the worst economic downturn since the Great Depression, southeast Wisconsin appears to have returned to a state of "normalcy" with regard to property values and property tax collections, marked by modest increases in both.

That's the key takeaway from the Forum’s annual report on property taxes and values in southeast Wisconsin, which we released this morning. The report examines property tax trends by county and municipality, and also measures trends in property values to explain how they impact the capacity of local governments and school districts to raise revenues. 

We find that aggregate property taxes collected in the southeast Wisconsin region grew by 1.8% ($69 million) from 2015 to 2016, with each of the seven counties in the region seeing an increase in collections. However, reflecting rising property values, the region's aggregate gross property tax rate decreased from $22.63 per $1,000 of equalized value in 2015 to $22.60 in 2016. This is the second consecutive year the region's tax rate has declined after consecutive increases from 2008 through 2014.

We point out that the growth in property tax collections in 2016 essentially was commensurate with the 2% growth in values experienced in 2015. That means that local governments and school districts collectively captured the increased property tax payments created by the growth in value, but did not seek increases above that amount.

The report also finds that in 2016, property values in the region showed even better growth, increasing by 3.2%. Because 2016 values impact 2017 property tax rates, that may signal further rate decreases resulting from next year's budgets.  

Other key findings from the 2016 analysis of property values and taxes in southeast Wisconsin:

  • For the third consecutive year, every county in the region experienced an increase in property values, led by Kenosha County at 5.6%. Property value growth for the State of Wisconsin as a whole was 3.0%, making this the first year since 2006 that the region's growth exceeded that of the state.
  • The City of Milwaukee experienced a robust 4.1% increase in equalized property values, its highest annual growth since 2007. This is only the second year since the onset of the recession that Milwaukee experienced year-to-year growth in equalized property values.
  • Commercial property values continue to drive the region's overall growth, increasing by 4.7% and outpacing the 3.8% growth in commercial value experienced by the state as a whole. This year's growth rate is the highest since 2007.
  • Every county in the region saw an increase in its aggregate gross tax levy in 2016, with Racine County experiencing the largest (4.7%) and Milwaukee County the smallest (0.9%).
  • The hypothetical average tax bill in the region increased by $53 (1.2%) to $4,351 in 2016. Still, because the average residential property value remains well below its pre-recession peak, the region’s hypothetical gross property tax bill for residents is $89 lower than the $4,440 we calculated in 2008. 

So what does all this mean for state and local governments, school districts, technical colleges, and sewerage districts in the region, each of which depends on revenue growth to sustain current service levels?

The good news is that growing property values afford them the opportunity to increase tax levy collections at a modest clip without having to raise rates. The bad news is that their ability to do so can be impacted by state-imposed property tax limits, and that political considerations often discourage them from raising any additional property tax dollars even when growing values suggest it would be appropriate to do so.

The full report – sponsored by Baird – can be downloaded here and our media release here.  

Author: 
Rob Henken