By Rebecca Kemble
City of Madison District 18 Alderperson
On May 2 several dozen Northsiders gathered at Vera Court Neighborhood Center to discuss the large increases in property tax assessments. The assessment district map is available online at http://host.madison.com/wsj/news/local/growing-economy-and-high-demand-push-madison-home-values-to/article_9515861f-0031-50a8-91fc-249fb66f56cc.html. Two of the three assessment districts where values increased the most — 12 percent or more — are located in District 18. The rest of District 18 has values rising between 8 and 11.9 percent, except the Cherokee neighborhood which saw their big rise in assessments hit last year.
We heard from City Assessor Mark Hanson about the assessment process and how homeowners can appeal their assessments, and from City Finance Director David Schmiedicke about how property taxes are divided amongst different units of local government, and the historical trend of reduction in state aids shifting the burden for funding local services onto the property tax.
Hanson confirmed that Northside neighborhoods were hit hard by foreclosures after the financial crisis of 2009‒10. During that time speculators bought up many dozens of properties at highly discounted prices at sheriff’s auction and began renting them out. Those discount purchases kept average sales in our area artificially low, resulting in some years where assessments actually decreased. Within the past couple of years, speculators have been cashing in on them.
Since by state law our assessments are based on comparable sales, this dynamic has had an impact on the new tax assessment numbers we received from the City Assessor’s office.
Hanson also confirmed that Northside neighborhoods are some of the last remaining in the city with affordable homes. People are purchasing them in bidding wars, paying above asking prices and well above assessed value. Downtown, the Isthmus and the near East, West and South sides of town have been experiencing this pressure on affordable housing stock for at least the past 20 years. It is finally hitting the Northside.
While the increase in home values has typically been considered to be a positive development since for many families of modest means our homes represent our largest financial investments, the potential property tax burden is also a serious issue for folks on fixed and lower incomes.
Schmiedike described how the property tax is divided amongst different taxing authorities, with the city receiving 36 percent of the proceeds.
He also discussed the 30-year trend in decrease in state aids for cities and school districts which has put the burden on financing these services more and more on the property tax.
Schmiedike addressed questions about how the increased assessments would affect next year’s property tax bill. He shared his outlook that the mil rate would likely decrease compared to 2018 due to the limit the State of Wisconsin puts on how much money the city can raise. Since total taxable property values throughout the city have increased 9.4 percent, the rate at which property owners will be taxed will decrease in order to generate an amount of revenue to fund the city budget that is legally allowable under state law. He added that the MMSD School Board sets its own levy and has a larger effect on the total tax bill than any other local taxing jurisdiction.
State Representative Melissa Sargent gave a presentation on how state initiatives over the past seven years have had a disproportionate negative effect on people on fixed incomes and those earning modest incomes. She said increasing the Homestead and Earned Income Tax Credits could help, but the state legislature has not been willing to pursue those remedies. She urged residents to continue to communicate with their representatives about their concerns, and to advocate for policy changes at the state level.
