Municipalities Feel the Squeeze of Declining Property Values

Declining property values put squeeze on municipalities. As values decline, area tax rates are rising. (Milwaukee Journal-Sentinel, 8/10/2011)

Excerpt: Henken, the [Public Policy F]orum president, said the decline in values will pose challenges to government officials when combined with new limits on property tax increases that the state has imposed.

The state budget limits tax levy increases to the value of new construction.

New construction in southeast Wisconsin grew at only 0.8% from 2009 to 2010, according to the forum report.

"With reduced values, policy-makers have little choice but to contemplate raising rates in order to maintain existing levels of service," the forum study says.

Said Henken, "One of the stories of this report in previous years has been as property values have been going up it did give quite a bit of leeway to local officials to see some better than inflationary growth in property tax collections. I think the combination now of both the declining values and the strict caps has changed that dynamic."

"I think we are seeing the start of an era in which overall property tax collections are likely to be capped at the 1% to 2% or even less level," Henken said.

A number of communities already are looking at the prospect of sharing services as a way to deal with cuts in state aid to municipalities and the levy limits.  [Emphasis added.]