DISCUSSION: There's Nothing Sexy About A Tax

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?