Wisconsin municipalities know all too well what it means to do more with less, and they have for about the last decade.
It all has to do with property tax levy limits. A levy is the amount a community can raise through property taxes to accommodate the rising costs of resources. A levy limit is the maximum the levy can be in any given year, and it is based on the previous year’s limit with allowable increases.
Such limits have been in place since 2005, said Martin Shanks, village of Poynette clerk/treasurer/administrator.
According to the League of Wisconsin Municipalities, under the 2017-19 state biennial budget, a municipality can increase its levy percentage from the prior year if the community has undergone expansion – net new construction.
“It’s the amount of new value that’s added into the community that year divided by the total equalized value of the community,” Shanks said.
Had it not been for community expansion, the city of Lodi and village of Poynette wouldn’t have been able to lower property taxes while increasing the levy limit to accommodate community needs, though the levy increases only partially cover the costs.
For Poynette, some needs involve two major infrastructure projects. For Lodi, it’s building a new primary school. And those are only major projects. They’ve also had to account for rising costs in hiring community personnel, in technologies to remain updated and so on.
“It’s a balancing act,” said Julie Ostrander, city of Lodi director of administration. “(The law) doesn’t tell you where you can spend your money… just how much you can raise (the levy limit).”
Even so, residents saw their property taxes fall for the 2018 fiscal year because there was more of a tax base – more people – to pick up the tax burden, according to Ostrander.
So what about the communities who haven’t had any net new construction?
The law currently states that if no new construction has occurred, the allowable levy limit increase is 0 percent.
However, Ostrander said the outcome isn’t entirely “bleak” for municipalities having issues with growth. If a community wishes to increase the levy limit for a particular project but hasn’t grown, it can be done via referendum.
According to the League of Wisconsin Municipalities, a municipality may hold a referendum, or a direct vote from the entire electorate on a proposal, to exceed the levy limit. The governing body must adopt a resolution stating exactly how much the levy will increase and why. Citizens vote on that proposal and approve it before any action can be taken.
Both Shanks and Ostrander said that can be tricky if citizens don’t want higher taxes.
“(People) are also trying to make ends meet, and they expect government to do the same,” Ostrander said.
Both administrators also said the imposition of levy limits wasn’t meant to harm communities with stagnant growth, rather incentivize them to spend money more efficiently.
They said the long term however, stagnant communities may not be able to provide citizens with the services they use every day in exchange for lower taxes.