I see a story in the Washington County Daily News today where the West Bend School District has returned to the cloudy language of taxes.
WEST BEND — Good news for property owners in the West Bend Joint School District: the budget is balanced and the mill rate — read: taxes — will not increase from last year.
The district’s mill rate will remain $7.97 per $1,000 of assessed value. Thus the owner of a home valued at $203,000, for example, will pay $1,617.91 in taxes to the district.
There are several factors behind the district’s decision not to raise taxes.
West Bend is a low spending district, and was awarded an extra $299 per student in state aid for the coming year. It does have declining enrollment…
This is the game that the school district and other taxing bodies like to play. They try to pretend that the mill rate is equivalent to tax burden. It is not. For several years, after a lot of public discussion, we finally got the West Bend School District to stop doing this. It looks like they have returned to their old ways.
Here’s the deal… the tax burden is the total money extracted from the taxpayers. If the district decides that they want to extract $40 million from the taxpayers through a property tax levy, they simply divide that amount into the aggregate property values to derive the tax rate – called the mill rate. It is a simple calculation. When it comes to discussing the tax burden, the mil rate and the property values are irrelevant. The tax levy is everything.
In this case, despite receiving an increase in state aid, the West Bend School District is increasing property taxes by 7.17%.
Last year, the school district levied $39,174,600. This year, they are going to levy $41,983,435. That is a 7.17% increase in taxes no matter how you slice it.
The school district is celebrating that they kept the mill rate flat, but that is only because property values in the district have increased thanks to the good economy. They are simply raising taxes at about the same pace as property values are increasing, thus keeping the rate flat.
Why does this matter?
It matters because, despite the proclamations of the school district, the tax burden is increasing for a school district with declining enrollment. For example, let’s say you are a senior on a fixed income living in a house that was valued at $200,000. Your property taxes for the school district were $1,594 last year. After a reassessment, your house is now valued at $218,000. Even though the school district is keeping the mill rate the same, now your property taxes for the school district will be $1,737.46 – a $143.46 increase. Your income didn’t increase. You don’t derive any value from the increased property value unless you sell your house. But you are paying more. Yes, your taxes went up despite the district maintaining a flat tax rate.
The mill rate in meaningless. It is simply a derived number. The levy is everything. The levy is how much money the taxing body is extracting from the taxpayers. And however they want to spin it, the West Bend School District will increase property taxes 7.17% in a single year.
Credit to the Finance Director, Andrew Sarnow, for making this point later in the story:
“Early estimates say they will not give us much more money; in fact, it probably will be a little less,” he said. “So where does the rest of the money come from if they say we can have a little more money per child? Property taxes — which is why our levy is going up about seven percent.”
But property values are growing by about the same amount. This year, the district is worth almost $5.3 billion, which is an increase from the $4.2 billion of value last year. This is growth in size; new residences or
businesses, with a very small increase from homes getting reassessed. If homes were reassessed for a higher value, then the taxation rate does not increase but more money is acquired through taxes. A homeowner’s taxes for everything, not just the school district, would also increase if this were true. But the seven percent increase came largely through growth and not reevaluation.
What I disagree with is the supposition that most of the property value increase is from growth. Some of that is true, but in 2018, the residents of West Bend saw an average property value increase of 12% after a city-wide assessment. The City of West Bend is not the entire school district, but it is the lion’s share of property value. So if my property value went up 12% and my mill rate is flat, did my taxes go up? yes, they did. And did my income necessarily rise to meet the tax burden? Nope. So the tax burden continues to eat into my disposable income and standard of living.