Property tax bills: How much you're paying and why

The biggest factor, usually, is whether a taxpayer's school district passed a spending referendum in the last few years. This year, there were a lot. 

Other factors include a healthy state lottery credit between $200 and $300, increased school aids in the state budget, and state-imposed limits on tax collections by local government.

Because local voters have to approve a school referendum, a rise in school taxes simply reflects what a majority of voters in a district want to do, said Jason Stein, research director for the nonpartisan Wisconsin Policy Forum.

Revenue from lottery sales is used to offset property taxes on an owner's main home, and this year's lottery credits neared last year's, which was the highest amount ever certified for distribution in the lottery's 33-year history, Dane County treasurer Adam Gallagher said.

This year also brought an unusual factor: The mid-year dissolution of the town of Madison.

The town was split mid-fall, with most property going to the city of Madison and the rest to Fitchburg. Officials expected that property taxes would rise for properties shifting from the town to one of the cities.

Spending driving taxes

For Madison residents in the Madison School District, the total tax bill for the average assessed home is going up about $262, or 3.64%, to $7,468. Last year's increase of $124 was a 1.76% hike. In 2020, the bill rose 4.3%, or $293.

Those sums reflect tax bills after the school tax credit is applied but before deducting the state lottery credit and another credit. This year the lottery credit declined 8.2% for the average Madison home, which is valued at $376,900, but was still relatively high at $278.

The city's $40 vehicle registration fee, also known as a wheel tax, does not appear on property tax bills.

The city, school district, Dane County and Madison Area Technical College all increased property taxes for Madisonians who own an average-value Madison home this year. Of the four, the city's increase on the average home is the largest, $113, for a total of $2,901; followed by the Madison School District, $76, to $3,931; the county, $71, to $974; and MATC, $12 to $284.

Madison's budget increases spending 6.1% this year, to $382.3 million.

About half of the increase is related to one-time spending, including a $1,000 payment to employees funded from surpluses in the city's life and wage insurance programs, and homeless shelter operating costs supported by one-time federal American Rescue Plan Act funds, finance director David Schmiedicke said.

"The budget also reflects inflation impacts, including fuel costs and competitive employee wages and benefits," Schmiedicke said, adding that debt payments for city infrastructure and capital projects are rising by $5.5 million, or 10%. That accounts for about a quarter of the overall spending increase. 

City tax collections are going up by 5.6% this year, to $273.7 million. That compares to a 1.2% hike last year.

As usual, individual bills will vary, driven by changes in property values and local factors such as referendums or growth in the tax base, officials stressed. Some municipalities also add charges, such as for trash collection or recycling, improvements to streets or sidewalks, or unpaid bills.

Growth allows more collections

For years, Madison's continuing growth has enabled the city to modestly increase property taxes while remaining under state levy limits.

And growth helped a lot this year.

In Madison, across-the-board, real estate values rose 10.9%, according to the city Assessor's Office. The value of residential properties, which includes single-family homes and apartment buildings with up to three units, increased by 11.4%, and the value of commercial properties, including offices, hotels and big apartment buildings, rose 12.9%. The percentage increases are almost double the previous year's.

The overall increase this year is slightly less than that of commercial and residential components because of how data is aggregated, assessor Michelle Drea said.

The city's $784.2 million in new construction was well above the $509 million last year and broke the record of $750 million set in 2018.

The state limits how much municipalities can increase a tax levy, but that's tied to net growth, which is the value of new buildings, additions and remodeling minus the value of what gets torn down. So high growth means more money for Madison.

Madison's levy increase of $14.6 million includes $3.8 million related to new construction, $1.4 million more than last year, Schmiedicke said. Also, the levy limit increase of $2.1 million reflects adding parcels from the town of Madison.

Voters back schools 

A major factor affecting tax bills is referendums, especially in school districts.

Statewide, voters in November approved 82 of 104 referendums to authorize a school district, city, town or village or county to exceed state limits on taxation, according to a Wisconsin Policy Forum analysis of unofficial results.

Those successful referendums authorized at least $11.4 million more in municipal and county property taxes, up to $299.6 million for school district operations, and up to $1.4 billion in new debt for school district buildings and projects.

Dane County had two municipal spending referendums: Middleton voters approved $770,000 for additional police, parks and communications staffing; and Village of Shorewood Hills voters approved a referendum to exceed levy limits by up to $400,000 annually, to fund a police officer, administrative staff member, competitive wages for all staff and technology needs.

Voters in the Middleton-Cross Plains School District also passed a referendum to exceed state revenue limits for four years.

Statewide, property taxpayers will pay $78.7 million more toward K-12 schools on bills mailed this month, a 1.5% increase to $5.48 billion, the policy forum said.

The increase, despite measures approved by Gov. Tony Evers and the Legislature to lower K-12 property taxes, is likely the result of hundreds of referendums in recent years as voters choose to raise their own taxes, the policy forum says.

In November alone, eight Dane County school districts approved referendums for operations spending (salaries, utility bills, etc.) or capital projects. 

The Madison School District is raising its levy about 1.6%, or just under $6 million, the policy forum said.

While not the sole cause, the Madison schools in 2020 passed an operating referendum to exceed state-mandated revenue limits, with increases that ramp up over several years and add up to $33 million more in permanent spending. Madison School District voters also approved a $317 million debt referendum that year.

"There can be a multi-year effect of these things," Stein said.

A fair comparison

It's tempting to compare tax bills from one municipality to another. But not all communities assess properties at 100% of fair market value, and that skews comparisons. 

However, data that the city and Dane County treasurers provide to the Wisconsin State Journal shows how close each community's assessment is to fair market value. Knowing that information makes it possible to compare tax rates and bills on a typical home.

In Madison, for example, the total tax bill for a $300,000 home in the Madison School District assessed at 100% of its fair market value was $5,693, fifth highest in the county.

The highest in the county on a home of that value was $6,232, for a village of Belleville home in the Belleville School District. That's followed by $6,171 for a Fitchburg home in the Verona School District and $5,935 for a Madison home in the Monona Grove School District. The Bellville and Verona school districts passed referendums in November.

The lowest total tax bill for a $300,000 home was $3,030, in the town of Christiana in the Stoughton School District.

Tax bills began arriving in mailboxes in mid-December. The deadline for owners to pay at least the first installment of their property taxes is Jan. 31.

The initial deadline is the same in Madison, but the city has switched from the option of paying two installments to four, with the second installment due March 31, the third May 31 and the final payment due July 31. That's the same final due date as other municipalities in the county.

[Editor's note: This story has been changed to reflect a correction. Voters in the Village of Shorewood Hills approved a referendum authorizing the village to exceed levy limits by up to $400,000 annually. The article only listed Middleton as a Dane County municipality that had passed a spending referendum this year.]