Milwaukee County Board chairwoman touts decrease in county portion of average tax bill for city of Milwaukee home

When the Milwaukee County Board completed its work on the 2013 budget in November 2012, the property tax levy was about $4 million higher than it was for the current year.

Supervisors overrode 22 of 24 budget vetoes from  County Executive Chris Abele, thwarting his effort to create a budget that included no increase. The final 2013 budget tallied $1.3 billion, with $279.3 million coming from property taxes. That’s an increase of 1.4 percent.

County Board Chairwoman Marina Dimitrijevic defended the board’s budget in a Nov. 14, 2012, interview on WTMJ-AM (620), noting the budget boosted public safety.

But then she touted the tax levy increase as a decrease for City of Milwaukee taxpayers.

Huh?

Here’s how Dimitrijevic explained it:

"If you live in the City of Milwaukee, the City of Milwaukee our largest municipality, the 1.4 percent that we increased taxes this year -- lower than inflation, like the city of Milwaukee, like Ozaukee County – in the city of Milwaukee on the average home, would be a $19 decrease. And I think that’s a small price to pay for enhanced public safety."

With property tax bills landing in mailboxes, time for a refresher course on how this all works.

County Board fiscal and budget analyst Steve Cady said the claim was based on City of Milwaukee property revaluations, which were set in spring 2012. These are done annually to keep up with changes in the housing market.

The average Milwaukee house had an assessed value of about $106,000. The tax rate set in the county budget is about $5.25 per $1,000 of assessed value. That’s up 54 cents. (On the tax bill, the county tax rate is lumped together with the rate to support the Southeastern Wisconsin Regional Planning Commission, but that group’s portion of the bill is tiny.)

How much you owe is determined by the value of your house.

In the 2012 reassessment, the average home in the city fell from $122,793 to $106,000. That means even though the tax rate went up, the bill for the county share of taxes went  down on that home by about $19.

So in dollars and cents terms, Dimitrijevic is correct.

But there’s a lot more to the story.

Across the country the value of residential property got hammered in the real estate bust, and Milwaukee was no exception. Between the beginning of 2008 and 2012, total assessed residential property value in Milwaukee fell by about 30 percent, said assessment commissioner Mary Reavey. Of course, it depends on your neighborhood and condition of your home -- some losses could be much higher (or lower) than others.

"Most people don’t cheer when their major asset goes down in value," noted Paula Hogan, a certified financial planner who operates her own firm in Glendale.

But, in effect, that is what Dimitrijevic is suggesting Milwaukee property owners do.

What about the reverse? Should homeowners want their house values and tax bill to increase?

Not necessarily, said Michael Arnow, a certified financial planner with Menomonee Falls-based Sattell, Johnson, Appel Financial Advisory LLC.

"A higher assessment is a double-edged sword," he said. "If your tax bill goes up, you pay more taxes. Who wants to pay more taxes? If the value of your home goes up and you are a retiree on a fixed income you can be priced out of your neighborhood."

In the case of this year’s bills, property owners may be paying somewhat less in taxes but the long-term loss is more serious, experts said.

For that average City of Milwaukee homeowner, the total tax bill for all taxing units this year would be $3,175, down about $107 from a year ago. That’s a small amount compared with the $16,000 in lost property value.

Said Hogan: "If taxes are going down because the assessed value is going down, that’s not a good thing."

Our rating

Dimitrijevic said the average city of Milwaukee homeowner would pay $19 less in county property taxes next year. She is correct on the bottom-line number. But by highlighting it as a piece of good news, she is leaving out critical information that would give a different impression. Namely, tax bills aren’t down because spending was cut by the County Board.

The bills are down in the City of Milwaukee because property values have fallen. Had there been no change in city property values, that bill would be $84 higher -- just to pay for the County Board’s decisions.

We rate the claim Mostly False.

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