Voters in 23 Wisconsin municipalities overwhelmingly backed nonbinding referendums on Tuesday to close the so-called “dark store loophole,” which its detractors say unfairly shifts the property tax burden from large retailers to homeowners.
But it remained unclear Friday whether those results or the election of a new governor who supports closing the loophole will result in legislative action.
Even with bipartisan support last year, two bills to address the dark store issue failed to pass the Republican-controlled Legislature amid opposition from state business lobby Wisconsin Manufacturers & Commerce, and Republicans will continue to have healthy majorities when the new legislative session begins in January.
Assembly Speaker Robin Vos and Senate Majority Leader Scott Fitzgerald did not respond to requests for comment, but a spokeswoman for one of the primary backers of the bills, Sen. Roger Roth, R-Appleton, said the bills are moving through a legislative study committee and then will go to researchers at the nonpartisan Legislative Council for review before possibly coming before the full Legislature next year.
“He’s working very hard to have those move forward,” said Angela Roidt.
The dark store loophole refers to efforts by big-box and other large retailers to reduce their property tax bills by reducing the values municipal property assessors set for their stores. In short, the lower the value of a property, the less the property owner pays.
Retailers argue that the value of their properties should be based on the value of comparable properties, even if they’re empty — or “dark” — while assessors often consider occupied properties as more valuable than vacant ones, making the latter poor comparables for assigning value.
Retailers also got a boost in 2008 with a state Supreme Court decision, Walgreens vs. city of Madison, that found municipalities shouldn’t be basing property values on certain lease payments for retailers that rent their buildings.
Dark store referendums appeared on the Tuesday ballot in places as far south as Kenosha County and as far north as Washburn County, and were often worded in a way to appeal to homeowners.
In Dane County, for example, the question was: “Should the state legislature protect residential property taxpayers by preventing commercial and manufacturing property owners from using tax loopholes to shift the tax burden to homeowners?”
In a statement Wednesday from the League of Wisconsin Municipalities, the Wisconsin Counties Association and the Wisconsin Towns Association, the groups said the referendums had passed with 79 percent of the vote, on average. Dane County’s version passed with 92 percent.
Cory Fish, Wisconsin Manufacturers & Commerce director of tax, transportation and legal affairs, said “all the advisory referenda proved is that municipalities and counties have a talent for writing biased and factually inaccurate questions for the ballot.”
He called the loophole a “myth” and claimed the “the tax shift is from homeowners to businesses, and these proposals would simply legalize the unlawful actions of overly aggressive assessors who are looking to increase taxes on businesses of all sizes in their communities.”
Fish pointed to data from the state Department of Revenue showing that, as a percentage of total property tax assessments in the state, there’s been a shift from residential property owners to commercial property owners and manufacturers over the last 10 years, with the former seeing its share dropping from 74 percent to 72 percent, and the latter increasing from 21 percent to 23 percent.
The League of Wisconsin Municipalities, though, argues that a look further back shows that in the early 1970s, the tax burden was about evenly split between residential and business properties, whereas that split today is about 67 percent and 33 percent.
It and the counties and towns associations also say homeowners bear a much larger portion of the overall property tax burden “than in most other states.”
“Homeowners in Minnesota, for example, pay only 50 percent of the property tax levy,” according to their Thursday statement.
Fish said that has more to do with other factors, including a greater number of commercial properties in Minnesota, and a Wisconsin law that keeps agricultural property from being taxed on its market value.
In general, property taxes paid by Wisconsin homeowners have been stable or declining since 2011, according to Jason Stein, research director for the nonpartisan Wisconsin Policy Forum, which studies tax policy. That was when Republican Gov. Scott Walker took office and Republicans gained control of the Legislature.