Jason Stein on Home Values and Property Taxes in Wisconsin

Frederica Freyberg:
The good news if you’re sitting in a house you own, your home values remain high, and the 2024 increase, while slowed, is still up more than 8.5%. Now that’s not great news if you’re in the market to buy a house. And how might it affect your property tax bill come December? Here to unpack the numbers from a recent report from the Wisconsin Policy Forum is its director, Jason Stein. And thanks for being here.

Jason Stein:
Thank you for having me.

Frederica Freyberg:
So the headline of your report, Wisconsin property tax levies see the biggest increase since 2007 but that actually cuts the tax rate. So what does that mean we can expect when we open our December tax bill?

Jason Stein:
Right. So the bills back in December of last year was a significant increase. Now that’s in the gross levy so there are state tax credits that lower that a little bit. But it’s still a very significant increase that we saw in December 2023. And I think December 2024 bills are shaping up to be a big increase as well, because if you look at the statewide level, there was a large referendum that passed. $250 million in the Milwaukee Public Schools in Milwaukee and then in Madison, we see two significant school referenda up and in many, you know, surrounding Dane County districts. So I think we’re going to see some significant increases in December.

Frederica Freyberg:
So we were also talking about home values. Now, those increases in home values have cooled, but they are still historically high.

Jason Stein:
Right. I think what we could say is they’re still rising rapidly, home values, just maybe not at ridiculous speeds as we saw in 2022 and 2023.

Frederica Freyberg:
So I mean, that’s good, as we said, if you’re sitting in a house that you own, but what about people who are trying to get into that market?

Jason Stein:
I mean, I think that’s something to watch because, you know, there’s already been a lot of angst and worry for, you know, the younger generations as they try and angle their way into that market. You know, we are seeing — we have seen uptick in construction of — particularly of multi-family housing, but to a lesser extent of single family housing. So that will help. But, you know, we’re still do not seem to be meeting the demand with just the housing stock we have and the construction projects in the pipeline.

Frederica Freyberg:
As to taxes on properties, property tax revenues don’t seem to be keeping pace for local governments and schools, some of which, like Madison, that you spoke to find themselves with deep budget holes in both the city and school coffers. But how could a growing city like Madison be in that place?

Jason Stein:
When you look at cities, it does help under state law, if a city is growing like Madison is, and adding new property value. However this – the property tax levy for the city of Madison and any other city, it’s limited by the increase in net new construction. And you know, the city, in other words, can have hundreds of millions of dollars in new construction and what that adds is just a $1 or $2 or $3 million on the existing levy. It’s a relatively small amount. And so, you know, when you look at a budget where they need to generate in a given year, tens of millions of dollars to pay for the inflationary costs, then that ends up translating into something of a shortfall. Madison, in particular, hasn’t gotten a lot of state aid in recent years. You know, so that’s another factor for Madison. And then also, there’s inflation and local governments in some cases and school districts have promised wage increases that they know their revenues are not sufficient to pay for. So that leaves them with either cutting in other areas or going to referendum, which is what many of them are doing.

Frederica Freyberg:
So there we are on the budget hole kind of circumstance. But as to property taxes, you’ve said that lawmakers over the decades obviously have tried to implement ways to constrain property tax increases and you feel like that might be coming up again?

Jason Stein:
Yes. I mean, I think particularly since 2011, in Wisconsin, state officials, elected officials have taken very many efforts to rein in local property taxes, and they have been very successful. So, you know, the property tax burden in the state has fallen. The state’s overall tax burden ranking nationally has fallen. But this approach, which is to essentially put state mandates on the local government, that they can’t do those increases without a referendum. And then, you know, some state aid, but not in general, huge amounts, although there was some big increases last year, what that approach, I think seems to be coming to an end or faltering. And I think we still need to see, but I think the December bills are probably going to demonstrate that. And spark a conversation in 2025 at the state Capitol about, well, what do we do about this? How do we respond?

Frederica Freyberg:
So you are also out today with a new report on post-pandemic pandemic job recovery in Wisconsin. What’s the takeaway?

Jason Stein:
You know, what we’re seeing is a pretty strong recovery from the pandemic in which we’ve now made up for the job losses that we had and employment levels overall statewide have reached their highest levels. But at the same time, in more than half the counties of the state, that is not the case. So in some of our urbanized areas like Dane County and then some suburban Twin Cities suburbs area in northwest Wisconsin, other Chicago suburbs like Kenosha County doing well. But at a statewide level, still many places that have been left behind that have not caught up and in particular, one industry that really stands out is manufacturing, our signature industry in Wisconsin. Again you’re seeing some weakness there in terms of the jobs numbers for manufacturing. Food processing strong but other legacy industries like printing and paper making have just not recovered and are areas of weakness.

Frederica Freyberg:
We’ll do more reporting on that. Jason Stein, thanks very much.

Jason Stein:
Thank you.