Times are tough for Wisconsin homeowners. Property taxes increased on average four percent last year, and are expected to go up 4.2 percent this year. Times are so bad a Hartland couple was arrested for allegedly growing marijuana to pay their property tax bill. It’s the type of organic problem solving Wisconsinites face when confronting a government who only knows one direction for property taxes –higher.
If Governor Jim Doyle has his way, we may all need to indulge to kill the financial pain. Legislation resulting from Doyle’s Global Warming Task Force is working its way through the state legislature. If the bill proponents like to sell as “The Clean Energy Jobs Act” passes, Wisconsinites will likely see energy bills increased by $18.9 billion and 40,000 jobs lost.
Wisconsinites can also expect to see their local property tax bills increase under the proposed law because of a provision allowing local governments to bypass local spending caps if the expenditures are to increase “energy efficiency” and purchase renewable energy products. Current law prohibits any city, village, town, or county from increasing its tax levy by a percentage that exceeds its “valuation factor,” which is defined as either 3 percent or the percentage change in the equalized value due to new construction, whichever is greater. The proposed exception to the cap is large enough to drive an ethanol-powered bus through.
According to Tom Larson of the Wisconsin Realtors Association, “The sky is the limit” with the potential for local property tax increases because the definition of what would qualify as an exception is left to the Department of Administration to determine. There is no way to know what the potential for property tax increases could be because a city, town, village or county could do anything from a wind farm to large solar panels on every building.
Scott Manley of Wisconsin Manufacturers and Commerce agrees. “We don’t really know what would qualify.” Until the Department of Administration makes the rule and defines the terms, local energy efficiency projects could cost local taxpayers, according to Manley, “hundreds of thousands of dollars, or even millions,” in municipalities and counties across the state.
A recent example of the type of project that could be considered as exempt from the cap of the property tax levy is the announcement by Dane County they will be installing solar panels on the roof of the city-county building and replacing the city’s hot water system. The project is expected to cost $2.2 million.
Last year the City of Wauwatosa considered a plan to spend $190,000 to put solar panels on the roof of city hall. However, the solar panels would only save Wauwatosa $3,000 per year in energy costs. It would take sixty years for the cost savings to pay for that investment in renewable energy. Wauwatosa rejected the plan, accordingly.
While federal stimulus money would have paid for both projects, in the future the financial burden of such projects could fall directly on the taxpayers who would have no recourse.
Current law allows local government units to exceed the property tax levy cap by going to referendum. If an energy-saving project is worth the expenditure above and beyond the cap, local government can appeal directly to the taxpayers to approve it. Under the global warming bill, Wisconsin taxpayers would be robbed of the opportunity to vote down such projects and keep property tax increases under the current cap.
Wisconsin property taxes are already too high. Wisconsin has the fourth highest median real estate tax as a percentage of median home value and is ninth highest in the country for median real estate taxes paid. The property tax levy cap may not be the most effective tool taxpayers have, but right now it’s the only tool.
Proponents of the bill like to tout the cost-effectiveness and the savings from going green, but it begs the question why it’s necessary to allow local governments to raise taxes to pay for it? And if the projects would create more savings, why won’t they trust local property taxpayers to judge these projects for themselves?
Taxpayers can already see how much their electric bills are going to go up by using the “Clean Energy Jobs Act Electric Bill Cost Calculator” at the Wisconsin Electric Cooperative Association’s website. When they add in the likely property tax increases, they’ll discover why it’s called “green energy.”
The cost will make them sick.
As for our couple in Hartland, perhaps they should have just waited until the bill passes. Then they could have claimed they were just growing bio-fuel.
By James Wigderson
Special Guest Perspective for the MacIver Institute