Because property taxes represent a sharing of costs across all properties, if we spend more, then our taxes HAVE to increase.
The only question is by how much. For those who argue that the number of new home built spreads the cost, I say, "Do the math." Even an increase of 500 homes at an average value of $200,000 each would have a minimal effect (about 3%) on the equalized value (about $3.0B last year).
No increase in spending ("the Levy") + "Equalized Value" (total value of all property) up17.8% + your home assessed value up 17.8% (the average for Sun Prairie) equals no change in property tax. Those homes that were assessed at a higher rate than average, however, will pay more as they now represent greater share in the big picture.
Similarly, taxes CAN decrease in this scenario if your home assessment is less than the average for the municipality (17.4%). But there must be NO increase in spending ("the Levy") -- and how realistic is that? As Kevin Bacon's character so eloquently summarizes things in "A Few Good Men," "These are the facts, and they are undisputed."
Now consider a more realistic scenario -- a 10% increase in levy + "Equalized Value" up17.8% + your home assessed value up 17.8% equals a 10% increase in property taxes. Since more is being spent, then everyone owes more.
The only silver lining in this picture is that if your assessment increased less than the municipal average, then again you pay a lesser share of the whole tax, including the increase. Note that if assessment increase equals equalized value increase, then the property tax increase is equal to the percent increase in spending.
Note also that the mill rate does decrease in this picture. The mill rate in this scenario decreases simply because the spending (up 10%) is increasing LESS than the equalized value, which increased 17.8%.
The ONLY scenario in which taxes decrease is if there is no increase in spending (doubtful) AND the percent increase of your new assessment is less than that of the city average. The mill rate can easily drop as long as any increase in spending is less than the average increase of assessed value.
Now, let's get back to the question of what does this all mean in terms of property taxes. It's nice to be able to say, "We won't know that until the fall after budgets have been finalized and after the "revenue limit" formulas are finalized for the school district. By that time, of course, it's all over but for the shouting.
If one looks at past history, however, a pretty decent estimate of things to come can be shown. If we look at the final Sun Prairie mill rate over the past 4 years, the average mill rate is $22.46 per $1,000 of assessed value, with a range of $22.13 to $22.95.
For the school district alone, the 5-year average mill rate is $10.39 with a range of $9.80 to $10.97. That's pretty predictable.
The total city mill rate can be broken down to 5 key components, in order of decreasing percentage composition: the school district (46.4%), the city (38.3%), Dane Co (12.5%), MATC (6.2% ), and the state (0.9%). There is also the recycling surcharge ($40) and subtractions due to the lottery credit (about $92) and the state school credit (5.3% reduction to the mill rate).
Note that the city and the school district make up about 85% of the total mill rate. Looking at the past 4-5 years, these percentages have been remarkably consistent. We can use this consistency to make some projections.
Let's start with what we do know at this point, which is that for the school district, salaries (about $34.5M) are up about 9% over last year. While benefits are undetermined at this point, they too have been remarkably consistent at about 42% of salaries. We can then project a total of salaries + benefits.
This figure in turn has been a great predictor (71%) of total district expenditures, which in turn is a great predictor (48%) of total district portion of the district tax levy Estimating the overall increase in the equalized value as up %15 over last year (since the city average is 17.8%), we can project the school district mill rate at $10.13, which is slightly below the average. Note that the school board has actually stated its intent to keep the mill rate the same as last year, or $10.98!
One final projection based on past history is that the school district portion of the mill rate averages 45% of the total mill rate. That would bring the total city mill rate projection to be $22.52 per $1000 of assessed value. The average home last year was valued at about $200,000 and with an average increase in assessment of 17.8% would now be $235,600. The taxes for this home would be $5300 vs. $4500 last year.
If you want to learn more about how property taxes work, a great explanation is provided in the document, entitled "Making Sense of Assessments," published by the Wisconsin Taxpayers Alliance.
Rick Mealy
1758 Frawley Drive
Sun Prairie
