Holding the Line on Property Taxes Remains a Priority for Joint Finance Committee
Tom Larson, NAIOP WI Lobbyist
As the legislature’s Joint Finance Committee (JFC) continues to debate the 2013-15 state budget, controlling property tax increases remains a top priority. The state budget, as introduced by Governor Walker, maintains the current property tax freeze which controls property tax increases by freezing local property tax levies, and allowing those levies to increase only by the value of any new construction. Also, local governments may exceed these levy limits if the taxpayers in the community authorize spending increases through a referendum.
Some legislators, however, are looking to ease the levy limit restrictions to allow spending increases by local governments, k-12 school districts and/or technical colleges. Because an increase in property taxes could be detrimental to the recovery of the Wisconsin’s real estate market and the efforts to attract more jobs to the state, NAIOP-WI has been advocating for a continuation of the property tax freeze and recommending that any increase in funding for schools or local government come from additional revenue sources.
To date, our efforts have been successful. The JFC recently finished the sections of the state budget relating to local governments and technical colleges and they made no changes to the current property tax freeze. Funding for k-12 schools will be debated in the upcoming weeks and will likely generate further discussions on the property tax freeze. However, new revenue projections by the legislative fiscal bureau resulted in an additional $500 million for the state, which could be used to provide additional funding for schools if desired.
On a positive note, the JFC did make one very significant change to the property tax freeze, which will likely generate some backlash from local governments. To prevent local governments from shifting services from the property tax to separate fees in an effort to avoid the property tax freeze, the committee expanded the scope of the freeze to subject all municipal fees tolocal levy limits. In other words, any revenue generated from fees will also be subject to the local levy limits. The practice of shifting services from the property tax to separate fees has been growing in popularity since the freeze was enacted.
NAIOP-WI will continue to monitor the state budget process closely to ensure that the property tax freeze remains in place.
NAIOP-WI Negotiates Favorable Interpretation of Prevailing Wage Law
In 2011, lawmakers made sweeping changes to Wisconsin’s prevailing wage law to limit the law’s application to public works projects and publicly funded private development. One of those changes exempted infrastructure related to single-family residential development that was installed by the developer and then dedicated to the local municipality. This exemption, known as “the turn-key exemption”, significantly reduces the costs of related infrastructure by as much as twenty percent.
However, NAIOP-WI and several other economic development organizations learned late last fall that the Department of Workforce Development (DWD) did not recognize the turn-key exemption in cases where local municipalities financed the infrastructure. According to the DWD, if a municipality was financing the infrastructure, the developer did not own the infrastructure and thus the developer could not dedicate it to the municipality. Because many infrastructure projects for residential development require some form of municipal financing due to unavailable private financing, DWD’s interpretation could have impacted numerous developments.
After meeting several times with DWD staff, legislators and members of the Governor Walker’s administration, NAIOP-WI was able to get DWD to reverse their interpretation. As a result, municipal financing alone will no longer nullify the turn-key exemption from the prevailing wage law. Infrastructure for a residential development project that meets the statutory requirements for the turn-key exemption will not be subject to the prevailing wage law.