Declining property values remain a major culprit

By Ed Nadolski

Editor in Chief

Property tax rates in Western Racine County increased 5.9 percent on average from 2009 to 2010, a trend that is likely to continue in 2011 due to a third straight year of declining property values.

A new report released recently by the state Department of Revenue shows that equalized property taxes were up in all 10 west-end municipalities on property tax bills mailed in December 2010 and payable this year.

And, as local municipalities are in the midst of preparing their budgets for 2012, it looks as if taxpayers are likely facing a rate increase on this year’s bills as well, even if a particular municipality is able to hold the line on expenses.

An annual report released in August by the DOR indicates property values declined for the third straight year from January 2010 to January 2011 throughout the state. The property value decline in Racine County averaged 1.2 percent.

A decline in value equates to an erosion of the tax base across which municipalities are able to spread the tax levy – which means even if a community’s tax levy remains steady, the tax rate will increase due to the property value decline.

However, whether that translates to an actual property tax increase for a particular property depends on other factors as well, such as the assessed value of your home and whether that increased or declined in relation to other local properties.

A rate comparison such as this has value in identifying trends and averages, but it does not identify the actual impact on individual taxpayers.

The DOR comparison uses equalized tax rates, which compensate for differences in communities’ assessment levels based on fair market value. Actual tax rates are set using assessed values, which are unique to each municipality and established by the community’s assessor.

The decline in property values is in a large part a result of the weak economy the past three years and is a far cry from the expanding tax bases of earlier last decade when relatively vigorous commercial and residential construction helped keep tax rates in check.

According to state officials, generally, it is the relationship between tax levy increases (approved by municipalities, counties and school districts) and the amount of new construction that dictates whether property tax bills will rise or fall.

The increase in property tax rates from 2009 to 2010 in Western Racine County ranged from a high of 7.1 percent in the Village of Union Grove to a low of 3.9 percent in the Town of Dover.

See the graph accompanying this story for a full breakdown of local communities.

The City of Burlington was near the top with a 6.6 percent increase. However, the city is in a better position than most other county communities to offset an increase in the coming year because its property value declined just .24 percent, well below the county average of 1.2 percent. City officials have attributed that to industrial growth, namely Rexcon, a maker of portable concrete mixing plants that moved from Milwaukee to the city’s manufacturing and office park.

The municipalities with the highest equalized tax rates for 2010 were Union Grove ($23.80), Village of Waterford ($23.75) and City of Burlington ($22.40). Cities and villages typically have higher tax rates because they provide a greater level of municipal services than townships.

The bottom three tax rates on the comparison belonged to the Town of Dover ($17.66), Town of Burlington ($17.78) and Town of Norway ($18.14).

The comparison uses gross full-value tax rates, which are computed using the general property tax from each of the community’s taxing districts divided by the full value of the municipality, according to the DOR.

The comparisons are not always absolute because some municipalities are served by multiple school districts. In those cases averages rates are applied.