This is the second in a series of articles about the upcoming school referendum. Like the previous one, this article provides background information on property taxes. If you have not read the first article, you can find it here. Since these articles build on each other, if you have not read it, I would encourage you to do so before you read this article.
This article was initially going to include a section comparing Dunn County property taxes to surrounding counties. However, this article was getting a little long and contained a lot of information, so I broke it into two separate articles. Please check the website over the weekend for the second half with the comparisons.
Sources used for this article include the Dunn County Treasurer's website, the Wisconsin Department of Revenue website, the UW Extension website, and interviews with the City of Menomonie Administrator Eric Atkinson, County Manager Kristin Korpela, Dunn County Treasurer Sifia Jevne, and assessor Randy Prochnow. A big thank you to these individuals for taking the time to speak with me.
PROPERTY TAX COMPONENTS
Budget and Levy
A key component of tax calculation is the levy. The levy is the portion of any taxing entity's budget that needs to be funded by property taxes. Before the levy can be calculated, a budget must be created.
All taxing entities - counties, municipalities, schools - must create a yearly budget. The budget lists all of the likely expenses for the upcoming year. Expected revenue (income other than property taxes) is subtracted from the budget, leaving the amount that needs to be collected from property taxes. Other sources of income will include state and federal aids, collectible fees, etc.
To keep things simple, this article will only discuss the county tax.
The Dunn County budget for 2024 is $99,453,355. The county will collect revenue from other sources in the amount of $74,892,039. So, $99,453,355 minus $74,892,039 equals a levy of $24,561,316. This is the amount that needs to be raised or levied from property taxes.
The mill rate is the amount of tax for every $1,000 of a property's assessed value. Thus, a mill is one-thousandth of a dollar, or $1 of tax for every $1,000 of a property's assessed value.
To calculate the mill rate, the levy is divided by the equalized value. Equalized values are provided by the Wisconsin Department of Revenue.
The mill rate for Dunn County in 2024 is $4.97 per $1000 of property value. That is the levy ($24,561,316) divided by the equalized value of all taxable property in Dunn County ($4,942,284,900).
There are two things about mill rates to be aware of:
Number 1 - When the equalized value goes up, the mill rate will go down.
If you look at the chart below, you will see that while the budget increased, the levy was virtually unchanged due to increased revenue (other than property taxes), yet the mill rate dropped 26%.
This can happen because the other number in the levy equation - the county's equalized value - increased quite a bit, from $4,194,299,800 to $4,942,284,900.
Number 2 - The mill rate can vary from municipality to municipality.
Just because the county mill rate is set at $4.97 per $1000 does not mean that that will be the county mill rate in your municipality. This will be explained in the next section.
HOW APPORTIONMENT AND EQUALIZATION AFFECT THE MILL RATE
Apportioning is the process of dividing the tax levies for each taxing jurisdiction among all municipalities containing territory in the jurisdiction, based on each district's equalized value.
How county taxes are apportioned
Apportioning divides the county's levy of $24,561,316 among the municipalities based on how much of the county's equalized value the municipality has. For example, the City of Menomonie accounts for 31.7% of Dunn County's equalized value, so 31.7% of Dunn County's levy will be apportioned to the City of Menomonie.
That levy amount is divided by the city's assessed value (the assessed value of all property within the city) to get the mill rate. The State of Wisconsin provides the assessed value for all municipalities.
The chart below shows the percent of equalized value for three municipalities in Dunn County, the share of the county levy and the county mill rate for each.
Note: The percentages used in the examples were taken from a report dated August 2023, the numbers changed a little bit before taxes were finalized, so if you try to do the math with the numbers on your tax bill, they will be off a little.
Variations in the mill rate
Each municipality ends up with a different county mill rate which is necessary to keep taxes equitable among the different municipalities.
While it may seem like property owners in the Town of Menomonie, with a mill rate of $7.81, will be paying more, keep in mind that the mill rate is multiplied by the assessed value, and assessed values in the Town of Menomonie are low.
Here's a comparison of two similar properties, one in the Town of Menomonie, which is due for a reassessment, and one in the Town of Red Cedar, which was just reassessed. To make a fair comparison, it must be based on similar fair market value, not the assessed value.
You can see from this chart that the county tax paid on similarly valued properties in different municipalities is very close.
Assessment ratios (discussed in the previous article) are provided by the Wisconsin Department of Revenue (DOR). The assessed value multiplied by the assessment ratio gives you the estimated fair market value. When those two values are close, the assessment ratio will be close to 1.0, like the Town of Red Cedar in the above chart.
Looking at the chart below, notice that as the assessment ratio for a municipality gets closer to 1.0, the closer its mill rate gets to the county mill rate of $4.97.
All of this ties in with the key concept that was mentioned in the previous article.
Taxes are apportioned based on equalized value which maintains equity between municipalities within a taxing jurisdiction. Taxes are calculated based on assessed value which maintains equity among individual taxpayers within the municipality.
What can affect your property taxes
1) Changes in any of the tax levies - did the county, school, or municipality budgets increase or decrease, or did other sources of revenue increase or decrease?
2) Changes in equalized value - when the equalized value goes up, the mill rate will go down.
3) Differences in rates of equalized value growth among municipalities. If one municipality experiences a significant increase in equalized value, they will be apportioned a larger share of the levy.
All the remaining taxing municipality's mill rates are calculated similarly, with the levy divided by the assessed value from the Statement of Assessment. All mill rates - county, municipality, school, and tech school - are combined into one number which can be found in the Net Assessed Value Rate box on the property tax bill. This number multiplied by the assessed value equals the gross property tax (before credits, except the school levy tax credit - see prior article for more information)
The graphic below was shared by Dunn County Treasurer Sifia Jevne. It shows the net mill rate calculation for the Town of Hay River.
This township has two school districts within it, and it illustrates how the total tax will differ depending on the school district where the property is located.
Be sure to check the website this weekend for the second half of this article where I compare property taxes in Dunn County to surrounding counties. Next week, I will start to look at school funding and the referendum.
While all the information contained in this article is believed to be accurate, it is not guaranteed. The user should not rely solely on the information provided and should seek additional information from other sources. While some information was provided through interviews with individuals, any errors are my own.
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