Property Assessments and Taxes: How are they Determined?

Hello, District 19 Residents!

I will be posting a more comprehensive blog over the weekend related to events and announcements for the week of May 8th, but wanted to create a post focused specifically on property assessments and property taxes for those of you who wold like to learn more. There is information at the end about a Town Hall Meeting on this topic, as well.

Property Assessments and Property Taxes

Your property tax bill factors in several key things: (1) the amount of state aid to municipalities and schools or “shared revenue” and “school aid”; (2) state tax credits (e.g., from the lottery, school property tax credit and first dollar credit; (3) the total assessed value of properties in the city; and (4) the value of your property. Property values are, in turn, primarily derived by property sale prices due to state law, and sale prices can be influenced by things like economic fluctuations, a pandemic, interest rates, and the supply of homes on the market.
 

There are other factors that influence the property tax rate (also called the “mill rate”), including the local tax levy (the total amount of funds a municipality is allowed to collect from taxpayers, collectively determined by the levies for the city, county, technical colleges, and public schools; in Wisconsin, and capped by the state); local tax levies can generally increase by the ratio of net new construction value in the city to the total property value in the city (for the City of Madison, that amount has averaged around 2% over the past few years); local referenda (e.g., a school funding referendum) that can increase the tax levy limit; and funding necessary to repay city debt issued to fund capital projects, such as street repairs, facility remodeling and construction, and city equipment and vehicles.

Your property tax bill can go up or down depending on any of these factors. For example, as the total assessed property values rise, and given restrictions on raising property tax levies, it is possible that your tax bill will decrease. If state aid to local governments and schools were to increase, you might see a property tax bill decline, as well. This year (2023), assessed property values rose substantially, and the property tax or mill rate rose, as well, but not nearly as much. See Table 6 of The 2023 Property Tax Base of the City of Madison report issued by the City Assessor. The variation between the total increase in assessed value and the increase in the average value home is due to the variation in increases in each of the various assessment categories (single-family residential, condominiums, 2 units, 3 units, etc.). You can see the city-wide average value home compared to other average assessed value by property type in Table 4 of the Property Tax Base report.

I would like to thank staff of the City Finance Department for assistance in developing the above portion of this blog post.

Town Hall Meeting on Property Assessments

Alder Bill Tishler (District 11) is hosting a town hall meeting on property assessments. He will be joined by the City of Madison Assessor, Michelle Drea, Esq. You are welcome to attend; I will be joining, as well. Please see his recent blog post for more details. The event is being held at the Sequoya Library on Monday, May 22nd, 2023 at 7 pm. The title of the presentation is "Property assessment in Madison: Understanding the taxation puzzle and finding your voice."  Topics to be covered include:

• What does the Assessor’s Office do?

• How does property assessment work in Madison?

• Taxation Process

• Impacts to Taxes: Shifts of the Tax Burden

• Finding Your Voice in the Process

I hope to see you there!