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Changes in Shared Revenue and the Effects on Wisconsin Taxpayers
Jenna Griffin, Jennifer Klippel, Kathryn Maguire, Brendon Riggs
May 5, 2006
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Overview
The Shared Revenue Program
Measures
Analytical Approach
Results
Conclusions
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The Shared Revenue Program
Background
Goals
– Property Tax Relief
– Guaranteed Tax Base
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Formula Components
Per-capita
Utilities
Aidable Revenues
– Local purpose revenues
– Tax base weight
Minimum Guarantee
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The Issue
Changes to Shared Revenue
– Level-Funding
– Discontinuation of Formula
– Per Capita Reductions
Circumstances
– Medicaid
– Truth in Sentencing
– School Aid
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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
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Analytical Approach
Municipalities by 2000 EQV deciles
– not population weighted
– not counties and school districts
Milwaukee analyzed separately
Interaction with School Aid
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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
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Coefficient of Variation of Mills-per-$1,000 Expenditures
0%
10%
20%
30%
40%
50%
60%
1990 1995 2000 2004
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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
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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
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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
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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
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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
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Coefficient of Variation of Combined Municipal and School District Mill Rate
0%
5%
10%
15%
20%
25%
30%
1990 1995 2000 2004
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Alternatives
Return to Equalizing Formula
Revisiting Land-Use Assessment Policy
Reconfiguring the Current Expenditure
Restraint Program
Diversifying Municipal Revenue Sources
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Conclusion
Formula Decreased Disparities
Changes Increased Disparities
Long-term Consequences
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Questions?