Effects of the Revenue Caps on Wisconsin's School Districts, 1996-97 School Year

Property Taxes in Wisconsin

For many homeowners in Wisconsin, local property taxes represent the single, largest tax paid each year. This is most likely to be true for homeowners who are retired and/or who have limited incomes. One reason for high property taxes in Wisconsin is that they represent the primary source of revenue for local governments in the state. In fact, the Legislative Fiscal Bureau reports that local governments in Wisconsin place greater reliance on property taxes than do local governments in most other states.(1)

In addition, since 1970, residential and commercial property owners have borne an increasing share of property taxes, while owners of other forms of property, particularly manufacturing, have seen a decline. For example, in 1970, residential property accounted for 50.6% of net property taxes. That figure reached 64% in 1996. In contrast, manufacturing property, which accounted for 17.7% of the net property taxes in 1970, now represents approximately 5% of the total. Among the reasons for this shift in tax burden is legislation passed in 1974 which exempted manufacturers’ machinery and equipment (M&E) from local property taxes.

Property Tax Levies by Jurisdiction

Elementary and secondary schools collected slightly more than one-half of local property taxes in 1995(96). Figure 1 shows the percent of property taxes collected by all local jurisdictions in 1995-96.(2)

The Legislative Fiscal Bureau also reports on the growth of property tax levies since 1970. On average, property taxes have grown 6.5% each year from 1970(71) to 1995(96). However, there have been variations in rate increases by jurisdiction. From 1970-1995, municipal and special district taxes have had an annual growth rate of 7.6%. During this same period, county taxes increased at a 5.5% annual rate, while average annual increases for elementary and secondary schools and technical college districts have been 6.2% and 10.7%, respectively (see Figure 2).(3)

Recent Changes in Property Tax Levies

In recent years there have been dramatic changes in property tax levies across the state. In 1995-96 there was less than a 1% increase in the property tax levy for local schools, whereas in 1996-97, average school tax levies decreased by more than 16%. Figure 3 shows the changes in levy rates for 1995-96 and 1996-97.(4)

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Posted February 4, 1998