Mr. William E. Malkasian, President
Mr. Michael Theo, Vice President
Wisconsin Realtors Association
4801 Forest Run Road Suite 201
Madison, WI 53704-7337

Dear Bill and Mike:

As the Wisconsin Realtors Association discusses public policy alternatives for dealing with the state budget deficit, I urge you to avoid embracing simplistic devices that may be attractive from a public-relations standpoint but may also destroy economic growth in Wisconsin.

It’s easy to accuse local elected officials and the governor of causing a property tax increase that hasn’t occurred, and to suggest tying the hands of local elected officials as you debate public policy issues surrounding state government’s $3.2 billion budget deficit.

I’m speaking, of course, of the proposed property tax freeze. It’s simplistic to point to overall state and local tax rankings and blame local officials. It sounds a lot like labeling them "big spenders."

Do you know how much development these "big spenders" have spawned? The total amount of new development in tax increment districts alone stands at more than $13.8 billion — and counting. Most of that money represents industrial development, which creates jobs, which creates demand for housing, etc. You know the drill.

A property tax freeze would discourage our communities from seeking that kind of development in the future. The costs of providing additional services to a tax increment district are spread among other property taxpayers until a tax increment district is paid off — usually about a dozen years.

As each new housing subdivision is added to a community, there are also expenses for street lights, garbage collection, recycling, police and fire protection, snow plowing and street maintenance, to name a few. Taxes paid by those properties help pay for all those services.

In West Bend, Mayor Mike Miller has already told his Common Council that the proposed levy freeze could force the city to postpone approval of two subdivisions totaling 196 acres and more than 450 homes.

If that’s not sobering enough, think of it as more than $4 million in lost Realtors’ commissions.

In Milwaukee, officials are putting on hold $8.4 million in street and alley projects because of the uncertain situation surrounding shared revenues. It’s a decision that will not enhance home values in Milwaukee, but it’s necessary because city leaders there vow not to increase property taxes.

All local development decisions could become moot, however, if a property tax freeze were enacted. A freeze could have the same devastating effect on local government bond ratings as state government’s budgeting policies have had on the state’s bond ratings. It could even be worse: a levy freeze being considered in Minnesota, almost the mirror image of the one proposed for Wisconsin, could bring local borrowing for new infrastructure there to a grinding halt.

Instead of freezing a bad system in place, the Legislature should reform the system of local finance. Instead of imperiling our communities, it should empower them. It should give local governments the ability to finance essential public services from revenue sources other than the property tax. It should give our communities the tools to solve regional problems on a regional basis. It should recognize that Wisconsin doesn’t have a state economy, it has an array of regional economies, each with its own strengths and weaknesses. It should give those regions the ability to band together and develop sustainability report cards to measure each region’s strengths and weaknesses, and then plan for economic growth.

Forward-looking business leaders are advocating for just that. I don’t recall the Governor’s Task Force on State and Local Government, headed by the Metropolitan Milwaukee Association of Commerce’s Tim Sheehy, recommending a property tax freeze. Study the task force’s recommendations to find ways to grow Wisconsin’s economy rather than shrink it.

Sincerely,

Edward J. Huck
executive director.