Here & Now

Todd Berry Breaks Down Property Tax Cut

Frederica Freyberg:

Now to the state capitol where both the senate and the assembly passed the governor's $100 million property tax relief bill. The measure, once signed by the governor, will lower taxes on a typical home by about $13 for the December tax bill and $20 the following year. But one man’s property tax relief is another man’s structural deficit. Here to help us put the tax plan in context is the tax man himself, Todd Berry, the president of the Wisconsin Taxpayers Alliance. Thanks for being here, Todd.

Todd Berry:

A pleasure as always.

Frederica Freyberg:

The fast track property tax cut bill is expected to be signed into law this weekend. What do you think of it?

Todd Berry:

Well, I think the first thing I said when I was asked about this is it was sort of reminiscent in that just as Governor Doyle put money into the school aid formula in 2006 to buy down the property tax before the election. This is essentially the same approach and, of course, when schools are up against the revenue limits and you give them more school aid, they can’t spend it. It is not really money for schools, and so it lowers the property tax.

Frederica Freyberg:

That’s all you think about it? What about the idea that it’s $100 million, and the average homeowner gets a $13 cut in their property tax bill.

Todd Berry:

Well, you know, some people will think that’s not very much, but other people might think it is better than nothing, you know? If they’re having trouble paying their property taxes. You know, it should be said that our property taxes in Wisconsin tend to be about 25% above the national average, so people are a little bit sensitive to property tax.

Frederica Freyberg:

You've run the numbers though, and while a $13 cut really would sound good, not everybody's going to see that.

Todd Berry:

That’s right. Because the money goes through the school aid formula and some school districts don’t get school aid or don’t get very much, and other districts make out better in the formula than when you sort of crank the computers, you end up with a small– practically no, or no, cut in some areas, and a bigger than $13 cut in others.

Frederica Freyberg:

In your mind, because you know this stuff backwards and forwards, if you were writing the policy, what would you do about trying to reduce the property tax burden in Wisconsin?

Todd Berry:

Well, I, having watched this over the last 20 to 30 years, I have come to believe that you probably don’t get permanent property tax relief by tinkering with formulas. And that what you really need to do is identify some use of the property tax that you are not going to use anymore. The one that came to mind in this case was there is a small state property tax, $80 to $100 million. We could have put the money there and wiped out one little finger in the property tax pie forever. And I think that would have been, from a tax-wonky perspective, a better way to go. Because it would have advanced tax reform in some kind of permanent way.

Frederica Freyberg:

All right. And again, that would have been across the board and so you wouldn’t have– not that they are big winners and losers, but you wouldn’t have that anymore.

Todd Berry:

Yeah. But again there is nothing particularly wrong with the school aid formula. It’s a pretty decent formula but it’s just the way it works.

Frederica Freyberg:

And what about the idea of taking $100 million? Can we afford that?

Todd Berry:

Yeah. Well, you’ve got to put this in the context not of $100 million, but in the context of what the legislature did with the budget this summer. To the governor’s credit, he took a lot of heat and ended up getting the state surplus out of nowhere to over $700 million, but what the budget did even before this cut is it started to pull that surplus down again. And in terms of what we spend, it will end up being less than 1% of our spending. That gets down to the level where we were with Governor Doyle and then we went into recession and we had so much difficulty. Taxes got raised, programs got cut and so forth. That’s, you know, having watched the legislature and governors do this again and again and again, they don’t seem to be more cautious.

Frederica Freyberg:

All right, Todd Berry, thank you.

Todd Berry:

Thank you.