changes in shared revenue and the effects on wisconsin taxpayers

Changes in Shared Revenue and the Effects on Wisconsin Taxpayers

Jenna Griffin, Jennifer Klippel, Kathryn Maguire, Brendon Riggs

May 5, 2006

Overview

The Shared Revenue Program

Measures

Analytical Approach

Results

Conclusions

The Shared Revenue Program

Background

Goals

– Property Tax Relief

– Guaranteed Tax Base

Formula Components

Per-capita

Utilities

Aidable Revenues

– Local purpose revenues

– Tax base weight

Minimum Guarantee

The Issue

Changes to Shared Revenue

– Level-Funding

– Discontinuation of Formula

– Per Capita Reductions

Circumstances

– Medicaid

– Truth in Sentencing

– School Aid

Measures of Fiscal Disparity

Tax price: price to taxpayers, in mills, of a given level of expenditures

t/E ratio: tax price of $1,000 in per capita expenditures

– low t/E ratio indicates a high level of fiscal well-being

Coefficient of variation: measures of disparity across time, using

variation in t/E ratios for each year (standard deviation ÷ mean x 100)

– high coefficient of variation (given as %) means high disparity

Taxpayer equity: municipalities with similar property tax rates should

be able to afford similar expenditures, regardless of property wealth

Analytical Approach

Municipalities by 2000 EQV deciles

– not population weighted

– not counties and school districts

Milwaukee analyzed separately

Interaction with School Aid

Municipal t/E Ratio, 2004

Monona Ingram

Per-Capita Expenditures $1,400 $520

Municipal Mill Rate 5.4 mills 2.0 mills

t/E Ratio (Mills per $1,000 Per-Capita Expenditures)

3.84 3.82

Per-Capita Intergovernmental Aid

$150 $510

Per-Capita Equalized Value

$98,000 $16,000

Coefficient of Variation of Mills-per-$1,000 Expenditures

0%

10%

20%

30%

40%

50%

60%

1990 1995 2000 2004

2000 Mills-per-$1,000 of Expenditures by EQV Deciles

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

First Second Third Fourth Fifth Sixth Seventh Eighth Ninth Tenth Milwaukee

Equalized value Decile

Mills

2004 Mills-per-$1,000 of Expenditures by EQV Deciles

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

First Second Third Fourth Fifth Sixth Seventh Eighth Ninth Tenth Milwaukee

Equalized Value Decile

Mills

2000-04 Cuts in Shared Revenue as Percent of Total Revenue Loss

-7%

-6%

-5%

-4%

-3%

-2%

-1%

0%

First Second Third Fourth Fifth Sixth Seventh Eighth Ninth Tenth Milwaukee

Equalized Value Decile

Impact on Municipal Levy2000-2004

-5%

0%

5%

10%

15%

20%

25%

First Second Third Fourth Fifth Sixth Seventh Eighth Ninth Tenth Milwaukee

Equalized Value Decile

Impact on Combined Levy (School and Municipal), 2000-2004

0%

5%

10%

15%

20%

25%

30%

First Second Third Fourth Fifth Sixth Seventh Eighth Ninth Tenth Milwaukee

Equalized Value Decile

Coefficient of Variation of Combined Municipal and School District Mill Rate

0%

5%

10%

15%

20%

25%

30%

1990 1995 2000 2004

Alternatives

Return to Equalizing Formula

Revisiting Land-Use Assessment Policy

Reconfiguring the Current Expenditure

Restraint Program

Diversifying Municipal Revenue Sources

Conclusion

Formula Decreased Disparities

Changes Increased Disparities

Long-term Consequences

Questions?