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DISCUSSION: There's Nothing Sexy About A Tax

We sure like to talk about them, but we often leave out a few details.

I’m concerned about how politicians talk about taxes—Republicans and Democrats alike.

More specifically, I’m concerned with what they don’t say. Politicians tend to ignore the interdependent cash flow relationships between lower levels of government. And, you often don’t hear about their role in that decision, the tax shifting that continues to impact these budgets and overall increases in state spending.

To underscore this point, officials with the Wisconsin Taxpayer Alliance (WISTax) reported last month that state spending increased in Wisconsin and exceeded national averages in both 2011 and 2012. Our budget reserves are also among the smallest in the nation.

“State spending here rose 5.8 percent in 2011 and was budgeted to grow 4.4 percent in 2012. National averages were 4.0 percent and 2.9 percent, respectively,” according to the report.

Closer to home, state lawmakers cut state shared revenues and state aids to Racine County, Village of Caledonia, Gateway Technical College and the Racine Unified School District by $5.8 million, a 13.86 percent decrease over last year. But I have to point out that my overall property tax bill increased and the only line item that decreased was the state portion of the bill, which represents about 1 percent of my total tax bill. Meanwhile, most of my $95, or 3.4 percent, increase included tax levy increases from Racine Unified (7.2 percent increase), Gateway (2.9 percent increase), County (1.3 percent increase, and the Village (.9 percent increase).

But I also want to tell the other side of the story, that yes, state lawmakers cut funding to schools, but they also allowed school boards to increase their tax levies.

Why is this? Tax shifting.

The 2010-11 property tax increase was driven by school taxes. Although school levies rose less this year (3.4 percent) than last (6 percent), the increase was larger than that of municipalities (2.1 percent), counties (1.9 percent), and technical colleges (2 percent), according to WISTax.

So what’s up with that?

The state cut the payments they typically made to schools, but the state in turn marked the non-payments as a savings back to their budget and offered up tools that allowed school boards to control spending by nixing collective bargaining, requiring employees to kick in more in their pension payments and paying higher premiums for their insurance. Racine Unified lost $13 million of the $137 million in state aid payments they received in 2010-11. So, even though they spent less money in their , the school districts were allowed to increase the school levy and the school district’s portion on your tax bill represents 39 percent of the total bill while the state portion represents less than 1 percent.

Confused yet? At the end of the day, the District still raised the school portion of your tax bill and that represented most of the increase (at least in my tax bill). To be fair, I know that some people saw a net tax decrease, but I guess I’m not so lucky. So is that really a tax cut if taxpayers still pay more property taxes at the end of the day?

As taxpayers, I don’t think we realize how much money flows between federal, state, county and local governments and the impact that has on us. We look at the line items on our tax bills as separate items–the Racine Unified School District, Gateway Technical College, the County and the Village.

And to an extent, they are also separate entities, but there’s a financial tie each of those entities that the state controls.

To be fair, you also saw this same thing happen during Gov. Jim Doyle’s administration, but not to this degree. He too reduced shared revenue payments to municipalities and school districts, but not nearly as much. When I covered the City of West Allis, elected officials counteracted that decrease in revenue by pulling the cost of recycling (because it wasn’t a mandated service) out of the city’s budget and set it up as a user fee as a separate line item on their tax bill.  Taxpayers were still paying for the cost of recycling, but it was no longer embedded in the City’s budget and they increased their budget accordingly to spend the money on other things.

So what am I really getting at here?

Even though both sides of the aisle tend to favor certain programs in how they spend tax dollars, I have often heard state Republicans and Democrats ignore their role in intergovernmental transfers and aids. 

In short, cuts in state aids become savings, but the weird thing is… the state still spent more money than it did last year.

Let me be clear, I’m not saying that I oppose this shifting. It happens. These shifts represent different political ideologies on how tax dollars are spent and that happens when we elect government officials.

But I don’t really think we’re showing the whole picture when it comes to taxes. I respect the differences ideologies between the parties, but we need to think about our taxes in a more holistic way – after all, aren’t all of those property taxes coming from the same person…the taxpayer?

Heather in Caledonia January 10, 2012 at 02:45 PM
Denise, I have made my thoughts and opinions known to local leaders (school board and village) when there is an issue I want to address. I usually work evenings (or have the kids) and can't attend village meetings. I have gone to a few that have addressed things I was interested in, but I can't make it very often. I rely on the press to cover what's going on and I contact people directly. I'm guessing there are quite a few in my position, but it would be interesting to know how many contacts board members (village and school) receive from people directly.
The Racine Truth January 10, 2012 at 07:28 PM
Denise, as you know, I am big on honesty. You point out a very valid point regarding the recycling charge in West Allis (by the way it is the same in Caledonia). Both political parties are guilty of shifting the tax burden to a user fee, just to create the perception that there was no tax increase. A tax increase needs to be measured as the bottom line of what is out of a taxpayer's pocket, More important though, that little move of the recycling fee to a user fee from the general tax revenue cost West Allis and Caledonia taxpayers more than they realize. You see, most residents of Caledonia itemize on their federal tax return and accordingly they get to deduct their property tax bill from their taxable income (the property tax portion that is the general tax bill is deductible). So, lets assume the recycle fee is $100 a year. That little move of the recycle fee from the general tax levy to a user fee also cost each Caledonia taxpayer that itemizes about an additional $28 in federal income tax. You see, there is no deduction allowed for a recycle user fee, but there is a deduction allowed for a general property tax levy. So, the little game that politicans play not only made it look like or local taxes didn't go up (when in fact it did) but it also cost to $28 additional dollars to the Federal government. Now, in my book, thats a lie!!
Denise Lockwood January 10, 2012 at 07:44 PM
That's why these tax levies have also been allowed to increase because a. we either voted for it through referendum b. the state regulated teacher pay/benefits through qeo and not through levy limits c. we elected people on the board/state officials who really weren't interested in reducing levies. In my mind, the only true tax reduction occurs when an entity spends less money, doesn't shift its debt to other taxing bodies and doesn't transfer it to the tax payer via a user fee/assessment. When Mr. Denise's daughter's tuition went up by $700, I view that as a tax; when the recycling fee is pulled out of the general budget, that's a tax; when you pawn off your shortfall to another taxing body, that creates the possibility for a tax to occur and if you have the ability to control that levy and don't, well..... you are just as responsible for creating that tax increase.
GearHead January 10, 2012 at 11:15 PM
Denise, Budgeting is the ultimate tug-of-war between wants and needs. Between what is nice to have and what actually works. The problem with budgeting is you are chasing a moving target, and everyone has their own idea about what is worthwhile. Some think everything is worthwhile, that nothing can ever be cut, we associate them with higher taxing and spending. But they pat themselves on their back about being compassionate, and guys like Lyle say opposing all this compassion is being greedy and selfish. If I were budget king, my message would be "show me how your department is going to get by with 40% less next year." That means entire departments and divisions need to be examined. You can bet it will at least float up all of the buried flotsam and jetsam. You think whole departments can't be cut? Start with the department of Education. Its stated mission was blah, blah for the kids, blah blah no kid left behind. The immutable truth is test scores have declined since DOE flooded our districts (nationwide) with mandates and money. It took control away from our district. Ditto for dept of Energy. This misbegotten screw-up was foisted on us under the pretense we would actually have an energy policy. Remember long gas lines back in the '70s? We still have no policy, with most energy production blocked instead, thanks to tag-team help from the EPA, another department that should be abolished. (cont.)
GearHead January 10, 2012 at 11:18 PM
What about the "universal service fee" (the Al Gore internet connection fee) for wiring classrooms for internet. Is any classroom not wired yet? WI-FI means no wires. But we still pay. Does any of it come back to RUSD? I doubt it. Would RUSD tell you? (laughing) At some point our local budgets have to be brought back to zero as well, and "worthwhile" services added in as needed. I don't hate kids or puppies. What I hate is institutionalized sloth. Institutionalized sloth. You heard that here first. You want a hint at what is worthy? Does it pass the smell test? Can it be measured? Does it promote self-reliance, or encourage dependency? I think you get the point. It isn't rocket science. It just never gets done because there is a constiuency for every dime that is spent. The adults need to tell the whiny children "NO." And they have been, at least in some corners of the state and county. But those same adults are the ones that are bucked and pilloried every step of the way.

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