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April 10, 2009

Property Tax Alarms in Budget Bill


Few taxes are as onerous as the local property tax.  Paid in large installments and not directly related to income or spending, the property tax can be the most burdensome for families and seniors.  

While property taxes are largely determined by local units of government, state policies and aids to local governments affect tax levies.  Therefore it is helpful to look at changes proposed by our Governor in his two-year budget bill that could impact your local property tax bill.

Here are some of the policy changes that the Governor has included in his budget proposal that could unleash big increases in future property tax bills:

Eliminate the consideration of economic conditions in arbitration.  In negotiating union wages, arbitrators are required to consider current economic conditions and taxpayer ability to pay.  Governor Doyle has proposed eliminating economic conditions from consideration.

Repeal of the state’s Qualified Economic Offer (QEO).  Commonly referred to as the QEO, a repeal of this cost control measure would reduce school boards’ ability to negotiate contracts with teachers’ unions.  Personnel costs are at least 80% of most school budgets and schools make up over 40% of the average property tax bill.  Removing cost controls on personnel would be a disaster for school budgets and create enormous pressure for higher property taxes.

Requiring payment of the “prevailing wage” on any projects using public funding.  This change would drive up costs for both public and private construction projects.  River Falls, Prescott, and Ellsworth have already passed resolutions opposing such changes.

Leaving the full cost of revenue limit increases with property taxpayers.  A funding shift in the state budget bill leaves property taxpayers fully on the hook for allowable spending increases in K-12 education.  By allowing for such increases and not funding it, property taxpayers would pick up an estimated $240 million more statewide. 

Doubling the allowable property tax increases for municipal and county governments. 

What do you think of these property tax policy changes by the Governor?  You can email me at or call me at 1-800-862-1092.