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10/29/2009
Yup, it’s the TAX LEVY, not the tax RATE
Every year at this time, the news media (rightly) goes crazy reporting school and municipal budgets and accordingly, information about tax levies and of course, how they will affect your checking account. I repeat the article below every year to help taxpayers stay informed about what all those “tax levy” numbers mean…
It’s the TAX LEVY, stupid….
Numbers, numbers, everywhere numbers. It’s a field day for the media and local governments when tax time comes around.
If there’s nothing else you remember about your property taxes, remember this: It’s the tax levy, friend, the tax levy. (“Stupid” is memorable, but perhaps a little too harsh and Clinton-esque.)
An individual’s tax payments, are ultimately determined by two things:
- Total tax levy required by the community
- A property’s value, relative to the rest of the property in your community. Given even these couple of numbers, the very best way to judge a community’s budget is to look at the increase in the TOTAL TAX LEVY. (well, I suppose in the history of the world, a decrease has been registered - somewhere!)
Some would say you can look at the change in the “total” budget or the “operating budget,” but budgets have lots of different categories, and it’s often difficult to compare apples to apples, one year to the next.
So, Junior, it’s the TAX LEVY, the TAX LEVY.
The fussy variable that wants to confuse property owners, local officials and especially the guys with the ink, is property values. They change. Sometimes it’s new construction, new value added to the community. Sometimes it’s just inflationary increases of existing properties. It all combines to make a big mess of tax numbers and tax season information.
Because of this business of property value, tax RATE numbers are meaningless. Absolutely meaningless. And so, in most instances, are the calculations that tell you the tax on a $100,000 home. Was it $100,000 last year too? And if not, how much did it increase? Depending on your community, your home may or may not retain the same value for a number of years at a time. Therefore…. disregard all information presented to you about tax RATES and taxes on a $100,000 (or whatever) home.
Remember. It’s the TAX LEVY. The TAX LEVY.
Now that we have that down…. one more point to consider. And it’s an important one.
At budget time, look for information about the increase in new construction in your community. This is really important and often a hard number to find in print.
Because unlike increases in value from reassessment of existing properties, new construction is real growth in a community. And if the TAX LEVY rises by less than the increase in new construction, then on average, an individual property owner’s taxes really are going down.
The Wisconsin Taxpayers Alliance does a great job explaining all these numbers. While you’re at the website, consider a subscription to Focus, their biweekly newsletter!
Jo Egelhoff, FoxPolitics.net
COMMENTS
Jo, Excellent article. One more thing I can add. I had six in-state and a bunch of out of state assessment challenges for 2009 values. The in-state ones I did myself first at the Open Book then at the Board of Review if the Open Book was unsatisfactory. One is going to court. I've been fairly successful in getting 2009 assessments reduced. Wisconsin looks at "equity" and "market value" in its assessment practices. I'm not a lawyer so I'm not practicing law here and I work only on my own properties directly. Basically identical properties are supposed to be assessed the same and the assessed value is supposed to reflect market value. What's going on in many communities is that assessors are looking at 2008 data to provide assessed values for 2009. Even in cases where 2009 data is available before the end of the assessment process I've seen cases where the assessor didn't use that data. We know that prices have dropped. But many people are seeing an increase in assessed value that isn't supported by the data. This is because 2008 data is higher than the last time properties were reassessed. So long as everyone gets the same relative assessment the tax rate will fall and the taxes will be the same if the budget requires the same amount from the tax payer. But, what if everyone's 2009 value is higher than it should be because 2009 was based on 2008 and not reflecting the drop in values since? That is where the astute property owner can make the case for the market being lower than the assessed value (as opposed to the equity argument). Very few people have the time or skill to present their assessment arguments in a documented and compelling manner. But when you do get your assessed value reduced in a rising assessed value market you can see a substantial reduction in your pro-forma tax bill. This is because your assessed value goes down and the tax rate is also going down because everyone else's assessed value has gone up. A double win.
dave allen (Thu Oct 29 07:55:05 2009)
And while there's not a LOT we can do about that levy (other than go to the meetings, voice our concern, then sit and watch the taxing body do as they darned well please), there IS one way we can actively engage in the process this year.
Real Estate has been tough. Take a look at that Fair Market Value - the somewhat arbitrary number your municipality has assigned to your property and home - and if you see that number on your tax bill then laugh, it's time to do what it takes to get it corrected.
A couple of years ago I looked at mine and saw that in the course of 10 years it had nearly DOUBLED from my original purchase price. During the course of that 10 years, there were no substantial improvements to the property, the neighborhood has degraded in many ways (thank you Council members), and the bottom fell out of the market.
I picked up the phone and asked them to give me one address of a comparable property which sold for the number on my bill.
The Fair Market Value was dropped within 3 days ... by about 30%. That makes a difference. Not right away as it took until the next year for the number to "apply", but it makes a difference.
Don't let them tax you on an arbitrary number - make it a realistic number that is actually related to the value of your property!
Jeff Riedl (Thu Oct 29 07:58:23 2009)
Jeff,
Learn the rules and fight. If you have a case you usually will get something. But too often people just suffer in silence or rant and rave in various forums.
dave allen (Thu Oct 29 09:07:01 2009)
Thank goodness I live in a penny-pinching, and not wasteful, township, where the taxes aren't too horrible--we pay the same amount on a house, outbuildings, and acreage, that we used to pay in West Allis over 10 years ago, on a 1100-sq-ft house. Towns and cities could learn something from the small townships.
emily matthews (Thu Oct 29 18:54:02 2009)
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