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.
I live in the Town of Barton.
My 2017 my tax bill was based on a mill rate of $8.16 on a house Fair Market Value of $268,400. Net school tax was $1768.16. Gross school tax was $2187.74 (+$419.58 State levy tax credit).
On my 2018 tax bill my mill rate decreased to $7.97 on a house FMV of $285,000 (based on home sales in Town of Barton which adjusts the average assessment ratio, as we have not been reassessed for several years), was an increase of $16,600 in estimated FMV. Net school tax was $1847.68. Gross school tax was $2271.78 (+$424.10 State levy tax credit).
That works out to $84.04 increase in school tax based on a @2.5% “decrease” in the mill rate.
I know there are “winners & losers” – some will pay more, some will pay less, and some will pay the same. The real “winners” are in the Town of West Bend – I will try to do a separate comment on that – looking at home sales versus the assessments that establish Fair Market Value. City of West Bend residents should be concerned, with the frequency of reassessments they endure – no lag time for FMVs to catch up.
But I wondered if the spin about the increased levy burden was true, as far as the implication that it is being absorbed by new development, and not getting a ride on increased Fair Market Values of existing properties.
Well, in the City of West Bend, at least, net new construction was 1.2%.
You might be interested in this link: https://www.revenue.wi.gov/SLFReportsassessor/2019socwatf.pdf
WI Department of Revenue – 2019 Statement of Changes In Equalized Values by Class & Item
Two key things to look at: Amount of Economic Change (changes due to market changes – that is existing properties increasing in value) & Amount of New Construction (Land value changes due to higher land utility or improvement value due construction of new buildings).
The WBSD encompasses many different taxing jurisdictions – as of the moment I have not found information specific to the WBSD.
But, one can find the following: City of West Bend: 5% Economic Change; 2% New Construction; = 7% change. Village of Jackson: 5% Economic Change; 2% New Construction;= 7% change. Townships tend to run a less: Town of Barton is 2% & 1%; = 3% change.
There are also totals for Washington County (4%/2%); Washington County Cities (5%/2%); Washington County Villages (4%/2%); Washington County Townships (3%/1%).
I am going to speculate that about 70% of the tax levy increase will come from existing properties that have increased in market value.
I hope this topic will be covered again, when the tax bills are posted online early December. Then we can revisit the “flat mill rate” topic. In the meantime, based on the article, a lot of people may be assuming that their tax is not going to increase.
Good find. Your ratio is probably close to correct based on the data. I’d like to see it broken down for just the school district. But the root of the issue remains the same… we’re getting a pretty big tax increase anyway you spin it.
I have yet to find that level of information specific to school districts.
What I did find was summary values as issued by WI DOR for all taxing jurisdictions within school districts. West Bend is on page 396 – based on 9 different taxing bodies.
Mark, I live in Northern Arizona and your tax bill, based your $268,000 house would be around $600-700. And that’s for everything. It does matter a little bit where you live but you sir, are being hugely over taxed.
I live in the city of west bend and my taxes also increased significantly. However, I realize that tax increases are necessary to maintain REAL spending to keep up with inflation(7% over 5 years is below inflation). It’s a shame that we are so eager to underinvest in our future(education). While I sympathize with those on a fixed budget, we fail to consider younger generations saddled with legacy debts from mismanagement from older generations(defined benefit plans, social security, and aging infrastructure). The least we can do is provide them with a decent education.
That’s done by private and religious schools. Remarkably, they cost FAR less per pupil. As to ‘legacy debt’: pay it off and stop bonding now.
That, my friend, is REAL “realism.”
If you want to talk about generational legacy debts, nothing holds a candle to today’s generation.
In WI in November 2018, $1.2 Billion in debt was approved for school building referendums. Keep in mind that this is in an era of flat enrollments statewide. $1.2 Billion + interest, payable over the next 20-30 years. And that $1.2 Billion + interest is an investment in infrastructure that will also be aged when the debt is paid off. None of that future $1.2 Billion + interest tax load will ever go to educate students – not a dime of that $1.2 Billion + interest will ever go to teacher salaries, retirement benefits, school supplies/books, etc., anything that actually educates a student. Note that was one election – $1.2 Billion + interest funding load on future school budgets.
I know that school districts have been impacted negatively by legacy obligations for retirees due to funding early retirement health insurance. In some districts retirees also get paid long term care insurance policies. But I think Act 10 has given school districts the ability to ensure that at some future time those are not a significant budget driver. In WI, the retirement system is set up so that it is not entirely dependent on current employee contributions, and is tied to investment performance and is self-sustaining assuming a minimum average annual 5% market return.
Agreed, that higher revenues per pupil do not equal higher test scores (see MPS). Perhaps we should change our education model to online education to reduce operational & infrastructure costs? There are solutions, but with anything there are always pros & cons. The first step is honest and open dialogue.
>The first step is honest and open dialogue.
Lets us all know when School Boards and Teachers Union want to start doing that. We can even forgive all the “ACT 10 SKY IS FALLING” hyperbole that never occurred… if they actually want to have OPEN and HONEST talks.