City’s tax rate increase causes confusion

Lower assessed values, TIF districts complicate bottom line
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Shawano School District officials were apparently blindsided by the assessed tax rate increase for school purposes that taxpayers will see in the city of Shawano.

The city’s finance committee Thursday took one last look at its proposed 2019 budget ahead of the public hearing scheduled for Wednesday and shared numbers showing an increase of 89 cents per $1,000 of assessed value in the total tax rate when all taxing entities are included, or an additional $89 on a $100,000 home.

According to the city, the biggest increase is going to the school district, with a 4.5 percent hike in the tax rate, rising from $9.65 per $1,000 of assessed valuation to $10.08 per $1,000.

That will mean a tax bill of $1,008 for school purposes, an increase of about 42 cents per $1,000 of assessed valuation.

School district business manager Louise Fischer said she only learned of the city’s assessed tax rate when she was called for a comment on Friday.

Fischer said she would not comment on the city’s assessed tax rate.

“Everything the district does concerning the levy is based on equalized value,” she said. “We are not given the assessed valuations of the municipalities.”

Fischer noted that the school district adopted a budget in October that called for a drop in the tax rate of 2 cents per $1,000 of equalized value from $9.71 per $1,000 to $9.69 per $1,000.

Municipalities, however, base their tax rates on assessed values. In addition to their own tax levies, they get an amount that needs to be collected for each of the other taxing entities and determine how that will be distributed among the tax base.

Shawano County, for example, adopted a budget last month that projected a tax rate for 2019 of $5.08 per $1,000 of equalized value, a drop of 11 cents from this year’s rate of $5.19 per $1,000.

The county’s assessed tax rate in the city, however, will rise from $5.15 per $1,000 to $5.32 per $1,000, an increase of about 16 cents.

Shawano County Administrative Coordinator Brent Miller said he was not surprised by the discrepancy.

“That’s the way it works,” he said. “That happens all the time and that’s why I stress all the time that assessed is one thing and equalized is another thing.”

Miller said it’s understood that, if assessed values drop, the city has to find another way to cover the needed taxes.

“If I have to get $1 million in taxes but my assessed value has dropped, I still have to make that $1 million to cover the school, the tech colleges, the county and everything else that goes into that,” Miller said. “So I have to increase those other (tax) rates to get that $1 million. If the assessed value would go up, the tax value would go down.”

Assessed value is set by local assessors based on the fair market value of a property, usually by comparing it with the sales prices fetched for similar properties. Equalized values are set by the state based on what the state believes those properties should be worth. That means city taxpayers will pay a higher tax rate because city property values have not kept pace with with equalized values.

Miller said that for its part the county has done all it could to keep taxes low.

“We’ve done everything we can from the county’s perspective to cut (the budget) but we have nothing to do with what happens at the city level,” he said. “We’ve done everything we can to keep the (tax) rate down.”

In the city of Shawano, the county and school district have the same problem that all other taxing entities have, including the city.

According to numbers provided by the city, the assessed value of commercial and manufacturing properties this year have come in much lower than expected. That means a smaller tax base to draw from to cover a larger tax levy.

Also, about $1.2 million of the total tax levy for 2019 has to be taken off the top to go to paying back the city’s Tax Incremental Finance (TIF) districts before the assessed tax rate can even be calculated.

TIF districts are areas where municipalities invest in infrastructure, such as sewer and water, to attract development where it might not otherwise occur, or to make improvements, such as eliminating blight.

Whatever increase in tax revenue that results from development in those districts goes to paying back the debt the municipality incurred from making improvements to the district.

The districts have to be approved by a panel that includes all taxing entities, including the school district and the county.

The amount going to the TIF districts in 2019 is increasing by $330,595, which means an additional $125,048 for the city, $129,219 for the school district, $66,002 for the county and $10,326 for Northeastern Wisconsin Technical College.

The total tax levy needed to cover operational expenses and TIF district costs for all taxing entities in 2019 will be $12.5 million, up from $12 million this year.

The city’s tax levy is rising from $5 million to $5.2 million, the school district’s from $4.9 million to $5.1 million, the county’s from $2.6 million to $2.7 million and the technical college’s from $425,583 to $435,909.

THE NEXT STEP

WHAT: Public hearing on the city of Shawano’s 2019 budget

WHEN: 6 p.m. Wednesday

WHERE: City Hall, 127 S. Sawyer St., Shawano