Property tax bills in Wisconsin to carry smallest increase in five years
Property tax bills being mailed out this month for 2022 show an increase in gross property taxes for Wisconsin’s K-12 school districts of just 0.3 percent, from $5.38 to $5.40 billion. This is the smallest percentage increase in school district levies since a 0.1 percent increase in 2016.
This limited growth in school levies in new state Department of Revenue data runs counter to a preliminary projection made by the Legislative Fiscal Bureau (LFB) in June that school district taxes would fall based on the version of the state budget at the time. Some of the factors that may account for this difference include difficult-to-predict voter-approved school referenda as well as changes to the final state budget.
Each December, the Wisconsin Policy Forum examines preliminary state data on property tax levies from school districts, counties, technical colleges, and special districts. (Figures for municipalities are not available until early next year.) The data give a crucial early look at collections from Wisconsin’s largest single tax, which serves as a key source of funding for local services such as education, public safety, and local roads. After relatively large increases on December 2019 and 2020 property tax bills, a combination of factors point to a lower increase in levies this year.
Property tax levies for counties will rise by 2.3 percent statewide, similar to the increase from last year. Levies for Wisconsin’s 16 technical colleges will fall by 3.4 percent – just their second decline of the 21st century – due to additional state aid dollars.
Notably, this analysis looks at gross property tax levies before state credits are used to lower the net bills for property taxpayers. While two of the state credits essentially will stay the same, the state lottery credit is budgeted to rise by $85 million this year, which should help to hold overall property taxes for home and business owners to one of the smallest increases in recent years.
For the current school year, Wisconsin’s K-12 districts statewide will levy only an additional $18.6 million compared to last year, for a total of just under $5.40 billion. Out of 421 districts, 212 will increase their levies, while 200 will decrease them and nine will keep levies the same.
A number of countervailing factors account for this year’s K-12 levies staying roughly the same. First, the 2021-23 budget approved by lawmakers and Gov. Tony Evers over the summer did not increase the per pupil revenue limits for districts, which means this year schools generally cannot increase their combined per pupil revenues from property taxes and state general school aids.
The budget also increased general school aids, which on its own should have caused statewide K-12 property taxes to decline. As the June LFB memo notes, the budget essentially increased general aid this year by $192.8 million by enlarging the overall aid amount and dropping a previous automatic reduction in aid payments that had been made to fund certain charter schools. In addition, an influx of state aid in other areas such as special education and federal pandemic aid may have relieved some pressure on districts to raise property taxes, though the federal funds are one-time revenues that can only be used for certain needs.
Another issue to watch for K-12 levies is the historic enrollment decline from the pandemic. State rules have helped to shield districts on a one-time basis from the effects of this decline on their revenue limits and tax levies, but continued lower enrollments will serve as a larger drag on their revenues as time goes on.
Yet despite these factors putting downward pressure on property taxes, K-12 levies still rose slightly. The main reason is likely voters approving referenda to allow districts to increase their property taxes beyond what revenue limits allow.
In the 115 school districts that passed a referendum since January 2020, property taxes for the 2021-22 school year will increase by about 1.9 percent. In the 306 districts that have not passed a referendum since then, however, levies will decrease by about 0.5 percent. Another reason for the tax increase could be the 6.6 percent rise in voucher school enrollment, from 45,879 in 2020-21 to 48,919 in 2021-22. Public school districts that lose state aid because of students leaving for voucher schools can increase property taxes to help cover some of that decreased funding. Also, K-12 districts in Wisconsin can increase property taxes outside of the revenue limits to fund community service programs outside of schools and school hours and may have done so.
