Governor Signs Property Tax Relief Bill; Assembly Shelves Dem Amendment with Much More Relief for Most Homeowners

Sunday, October 20, 2013 at 6:01 PM by

Today Governor Walker signed a bill that provides $100 million of property tax relief over the next two years.  The bill will do the following:

  • Reduce property taxes by an average of $13 this year and $20 next year for people owning median value homes. 
  • Increase to $725 million the fiscal hole or structural imbalance in the next biennium (which means that first $725 million of new revenue is needed just to maintain flat funding). 
  • Reduce the projected balance at the end of the current biennium to $125 million, which is enough to cover three days of state spending.    

The bill was approved by a lopsided vote in each house of the legislature.  In the Assembly, all but 12 Democrats voted for passage of the bill, but not  before they offered a substitute amendment that would have provide substantially more property tax relief and would have targeted much more of that relief to residential property owners. Specifically the Assembly Democrats’ amendment would have done the following:

  • Instead of providing $100 million of property tax relief through the school aids formula, it would have provided $200 million over the next two years through the First Dollar Credit, which is an existing credit that is divide evenly to each parcel of taxable property on which improvements are located.
  • Reduced property taxes by $45 per year over the next two years for the owner of a median value home, or almost three times the amount provided by the Governor’s bill ($90 versus $33).
  • It would restore the practice of automatically adjusting the Homestead tax credit for inflation each year, at an estimated cost over the next two years of $17.6 million.  (As we noted in a recent blog post, spending on the Homestead Credit declined by about $11 million in fiscal year 2012-13.)
  • Expand BadgerCare eligibility for adults to 133% of the poverty level, which the Fiscal Bureau projects would save the state $119 million in 2013-15, thereby funding the increased property tax relief. 
  • Add $100 million over the next two years to the Rainy Day Fund. 

I think the Assembly Democrats’ version would have reduced the closing balance to about the same level as the Governor’s bill, but according to the Fiscal Bureau it would have produced a smaller hole to close in the 2015-17 budget — $53 million less than the GOP bill ($672 million versus $725 million).

Under the final GOP plan, property owners in many school districts would not receive any relief, and in the districts that do get assistance, the property tax relief would increase in direct proportion to the value of their property.  On average, an owner of a $100,000 home would get $9 in property tax relief this winter under the Governor’s bill, versus $88 for the owner of property worth $1 million.  (Read more about the benefit to large property owners in this Capital Times article by Mike Ivey.)  In contrast,  under the Assembly Democrats’ proposal the the tax relief would be $45 this year for every owner of taxable property

The Democrats’ amendment was ruled by the Assembly Chair to be non-germane.  A motion appealing that ruling was rejected on a party-line vote.    

Jon Peacock 

Categories: 2013-15 biennial budget, Blog, Homestead credit, rainy day fund | Comments Off on Governor Signs Property Tax Relief Bill; Assembly Shelves Dem Amendment with Much More Relief for Most Homeowners

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