Typical Madison property taxpayers would see roughly twice as much tax relief as the state average under a bill moving quickly through the state Legislature.
The average $25 savings on property tax bills that would reach homeowners in December would come from the Madison School District’s receiving about $2.3 million in additional state aid as part of $100 million in property tax relief over two years proposed by Gov. Scott Walker and Republican legislative leaders.
The tax cut package — which passed the state Senate on a bipartisan 28-5 vote Tuesday night after unanimously passing the Legislature’s budget committee that morning — would contribute to a much larger structural deficit for the state heading into the 2015-17 budget.
The deficit would rise to
$725 million compared with the current projected $545 million, according to the nonpartisan Legislative Fiscal Bureau. The structural deficit is the amount that expenditures are expected to exceed revenues during a given budget cycle.
That figure factors in better-than-expected revenue for the fiscal year that ended June 30. It also accounts for the two-year,
$100 million property tax relief proposal, which would boost state funding to schools overall while forcing most districts to compensate by lowering property taxes.
Statewide, the typical property owner would save about $13 on the December bill and $20 the following year, according to the fiscal bureau.
The average tax cut varies between districts because the relief is being distributed through the state’s complicated school aid formula, which is designed to distribute state aid equitably based on property values and school spending levels.
The average home value also varies around the state. In Madison, it’s $230,831, compared with $148,000 statewide, though a $148,000 home in Madison would still get about $16 in relief.
The tax cut also could vary depending on whether a school district is already collecting the maximum amount of taxes under state-imposed revenue limits. Districts such as Madison could spend the additional aid on schools; however, Superintendent Jennifer Cheatham said Tuesday she intends to use the additional aid for tax relief.
“When we started our budget process, we received the largest possible cut in state aid, over $8 million,” Cheatham said. “I’m pleased that this funding will make up a portion of that cut and help us accomplish what has been one of our goals all along: to reduce the impact of a large cut in state aid on our taxpayers.”
Madison’s preliminary budget proposal would have raised the tax levy 4.5 percent; the tax relief package would cut that to about 3.5 percent, Cheatham said.
The fiscal bureau on Tuesday released an analysis of the district-by-district impact of the additional aid for 2013-14.
According to the analysis, all but three of the state’s 424 school districts would get more state aid. But 83 districts would get $1,000 or less, and altogether 295 districts would get an increase of less than 1 percent.
Madison and Middleton-Cross Plains are among the top 10 districts in terms of percent increase of aid from the bill. Madison’s increase would be 4.6 percent. Middleton would get $570,272, a 6.2 percent increase.
The bill is expected to be taken up Thursday in the Assembly, where Speaker Robin Vos applauded its bipartisan support.
“It shows once again that in Wisconsin, Republicans and Democrats can work together and do it in a way that benefits all Wisconsin families,” said Vos, R-Rochester.
When asked about the structural deficit, Vos said it’s “an important number, but not the one driving this discussion.”
Walker spokesman Tom Evenson noted the projected structural deficit is still the lowest in more than 15 years. “Even with this tax relief, the deficit is projected to be wiped out with only modest growth in revenue in the 2015-17 biennium,” he said.
Democrats, many of whom voted for the bill, nevertheless criticized Republicans for patting themselves on the back for such a tiny tax cut.
“That’s going to be half a tank of gas for me to get back to La Crosse,” Sen. Jennifer Shilling, D-La Crosse, said. “Really it is symbolic.”
Democratic gubernatorial candidate Mary Burke said Tuesday she supports lowering taxes but is concerned about the long-term effects of the property tax cut on the structural deficit.
UW-Madison economist Andrew Reschovsky also said that in Madison, more than a third of the break would go to owners of non-residential property. Weathy homeowners and those with vacation property also would benefit, he said.
“The governor could have chosen to use the $100 million to target property tax relief to those homeowners (and perhaps renters) for whom the property tax was most burdensome,” Reschovsky said. “But he chose not to.”
Democrats also accused the GOP of passing the measure to boost Republicans’ re-election hopes.
Sen. Bob Jauch, D-Poplar, accused Republicans of “pandering for a press release” and said the tax break with do nothing for most taxpayers. Jauch said the money should instead go to the state’s rainy day fund.
But Senate Majority Leader Scott Fitzgerald, R-Juneau, said he was proud to stand behind the bill.
“It is about re-election, because that’s the way the process works,” Fitzgerald said. “You do things that put the state in a better position, so that the general public thinks you’re working, doing a good job and keeping the state on track and making good decisions that put the state in a great fiscal position.”
— Reporter Mary Spicuzza and the Associated Press contributed to this report.