Here & Now

Should The Forestry Mill Tax Get Axed?

Frederica Freyberg:

Governor Scott Walker’s budget proposes eliminating the state portion of the property tax. For the average homeowner that would mean about a $27 savings. But in all, the tax raises about $180 million over the biennium. And it goes specifically to fund state forestry programs like tree management, invasive species research, even toward fighting forest fires. Part of the revenue also helps pays debt on Wisconsin’s stewardship land program. Under the budget plan, that revenue for forestry would come from the state’s general fund instead. In tonight’s “Capitol Insight,” support and opposition to this change. We start with the Wisconsin Realtors Association, and Tom Larson who favors the tax cut. Thanks for being here.

Tom Larson:

Thank you.

Frederica Freyberg:

We just said that it was an average savings about $27 for the average homeowner, it seems small. Why do you support this elimination?

Tom Larson:

The important part is it actually takes something off the property tax. Wisconsin has among the highest property taxes in the country. We’re ranked fifth in the United States. And every opportunity we have to take something off the property tax lowers the burden for both property owners and businesses.

Frederica Freyberg:

And speaking of businesses or larger commercial properties, that’s who this would benefit much more, though, right, than the average homeowner with that $27. Is that the intent?

Tom Larson:

Remember, the property tax has to be uniform. So we apply the same mill rate across the board and depending on the value, the impact would be greater. The higher the value, the higher the impact.

Frederica Freyberg:

What do you say about people who say that’s the intent? Helping, you know, the large property owners.

Tom Larson:

Well, I think the intent is to help the average homeowner. Any time you do property tax relief, it helps a broad swath of people. It helps homeowners. It helps business. It helps the middle class. It helps the lower class, the upper class. The benefit is widespread.

Frederica Freyberg:

What about concerns over the loss of that revenue to maintain the forest, even things like fighting forest fires?

Tom Larson:

Well, as you mentioned, the program is funded in whole through general purpose revenue, like every other state program. So, the forestry program is a priority for the legislature. It’s a priority for the governor. They are just shifting revenue sources. So, I don’t anticipate that changing.

Frederica Freyberg:

People are concerned, though, that shifting revenue sources and making it GPR-funded puts it at risk because there are so many other competing things needing that general tax revenue money.

Tom Larson:

As long as it remains a priority for the legislature and the governor, it will continue to be funded, maybe to the same levels that it currently is today.

Frederica Freyberg:

And maybe at the same levels, but if it’s not, you know, as a realtor and representing the realtor’s association, don’t property values kind of depend on the quality of public spaces and those kinds of things?

Tom Larson:

It does. It depends on quality of life, good schools, low crime rate, clean environment, and the forestry program is a key component of Wisconsin's quality of life.

Frederica Freyberg:

And you don’t think it’s in jeopardy?

Tom Larson:

Not that I've–not that I've heard. Again, there’s broad support for the state’s forestry program. And shifting it over to general purpose revenue does not mean there is not that same level of support.

Frederica Freyberg:

I know you especially like this because it chips away at the property tax which you say is overly burdensome in Wisconsin. What are other kinds of ways we could seek to reduce that property tax burden?

Tom Larson:

Well as I mentioned, Wisconsin is very high, ranked, our national ranking is very high in property taxes. But we’re low in other revenue sources like the sales tax. We are ranked 37th in the country. If the legislature and governor decided they wanted to raise additional revenues and further lower the property tax burden, they could increase something like the sales tax to do that.

Frederica Freyberg:

As a realtor or representing the association, how does the property tax affect property sales, for example?

Tom Larson:

It has a direct impact on affordability. There was just some polling done that looked at renters. And asked them what was the primary reason why they didn’t become homeowners? And it’s affordability. And property taxes pay, play a big part in that. It’s often the mortgage. But also the property taxes. And the lower we make that property tax burden, the more attainable home ownership will be for a lot of other people.

Frederica Freyberg:

All right. Tom Larson, thanks very much.

Tom Larson:

Thank you.

Frederica Freyberg:

Now, more on the forest mill tax. Up next, opposition to cutting the state property tax and its revenue for forests. Fred Clark is executive director of the Forest Stewards Guild. Thanks a lot for being here.

Fred Clark:

Great, thank you.

Frederica Freyberg:

What's the history of this tax?

Fred Clark:

The forestry mill tax was created actually in the state constitution in 1924 at a time when Wisconsin forests were just beginning to recover from about a 50 year period of clear cutting and overharvesting. And it was really the wisdom of legislators at that time to recognize that we needed to invest in our forest resources so they could recover and we could protect the soil, protect the water, and begin to rebuild our forestry economy.

Frederica Freyberg:

And obviously you believe that tax has been successful in doing that.

Fred Clark:

It's been hugely successful. And in fact, Wisconsin has become a leader among states in the country in investing, in our 17 million acres of forests. Investing in both the private sector and public forest lands in a way that’s really been a national success story.

Frederica Freyberg:

Why not just fund that work managing forests with general purpose revenue?

Fred Clark:

Well, the general fund in the state is not a bottomless well. And you know, public schools, parks programs, and other important programs in the state that are funded from general revenues see their budgets swing up and down from year to year. The dedicated funding provided in the constitution by the forestry mill tax assures that we have fire control and forest health and forest products experts that are available to sustain that resource year in and year out. Every Wisconsin citizen actually benefits from that investment.

Frederica Freyberg:

Your concern is that if it switches to GPR, that something else will be more of a priority than this?

Fred Clark:

I mean, it will have to be. And understandably. The legislature has a difficult job to do every two years to balance our budget. You’re already hearing the debate about how we will pay for roads, how we will pay for public schools that badly need those resources. By the governor’s proposal, adds $180 million additional draw to the general fund that legislators are going to have to figure out how to pay for.

Frederica Freyberg:

Now, we’ve talked about how this would benefit the average homeowner by a savings of about $27 a year. Who would benefit the very most from the elimination of this tax off the state property tax?

Fred Clark:

Well, certainly the people paying the largest property tax bills, including commercial property owners. And including some of the highest value property owners will benefit from seeing the mill tax go away on their tax bill. Who benefits the most from having it are rural homeowners and rural residents who live in the forested parts of the state who benefit from fire control, who benefit from forest protection and the very robust forest-based economy that we have.

Frederica Freyberg:

Now, I understand the tax also helps pay part of the debt on the state stewardship fund?

Fred Clark:

Correct.

Frederica Freyberg:

So that would go away. What’s your reaction to that?

Fred Clark:

The Knowles Nelson Stewardship Fund has continued to receive bipartisan support. It’s an important investment in conservation lands. The forestry mill tax actually helps pay for about $13 million of the cost of bonding for that program. So this is paying the bill for the land conservation that we agree is important in this state. If that goes away, additional draw on the general fund, maybe more kicking the can down the road with additional bonding, which is really not going to help us in the long run.

Frederica Freyberg:

Is it your expectation this actually will happen, as the governor would like to see?

Fred Clark:

Well, it’s not unanimous by any means. There are Republican legislators I know are in opposition to this proposal. Representative Jeff Mursau who’s chair of the Environment and Forestry Committee in the Assembly has been strongly vocal in opposing this provision right now. So has the governor’s own council on forestry. The 18 people he has appointed to advise him on forestry issues is formally in opposition to this provision. They believe a more appropriate move right now would be an audit of the forestry account, to see where those funds are being used and if appropriate, make changes.

Frederica Freyberg:

All right. We need to leave it there. Fred Clark, thanks very much.

Fred Clark:

Thanks Frederica.