Do Property Tax Limits Create An Uneven Playing Field For Wisconsin Schools?

Dec 13, 2018

For 25 years, the Wisconsin legislature has restricted how much school boards can raise local property taxes. Some education leaders argue that the rules put schools on an uneven playing field. And they say the tax ceilings have become untenable in recent years.

The restrictions at issue are called revenue limits. They impact 80 to 90 percent of school boards’ budgets, controlling how much a board can spend in state general aid and property taxes. The result: school boards' ability to raise mill rates is confined to a legislature-determined dollar amount.

But revenue limits are not uniform across the state. That irks people like Chris Thiel, the legislative policy manager for Milwaukee Public Schools.

“Depending on where you live, the state literally says you’re worth more or less than your neighbor,” Thiel said.

The Wisconsin legislature enacted revenue limits in 1993. They took the amount school districts were spending per student and told boards they couldn’t raise property taxes beyond that number.

Higher-spending districts were left with more wiggle room while frugal districts had less. Revenue limits have increased with inflation, but there is still disparity.

For example, Milwaukee’s revenue limit for the current school year is $10,506 per student. Nine miles north in suburban Glendale, the district can spend more than $13,345 per pupil. (These are preliminary numbers and could change by the end of the school year, according to DPI.)

"Depending on where you live, the state literally says you're worth more or less than your neighbor," Chris Thiel of MPS said.

“The difference between a kid in Milwaukee Public Schools and a kid in Glendale-River Hills is [approximately] $2,841,” Milwaukee’s Thiel said. “So, that disparity is now playing out in significant ways between districts.”

Districts do have other pots of funding to pull from. But the revenue limits apply to the biggest portion of the budget — affecting teacher pay, class sizes, building maintenance and more.  

One reason Glendale’s revenue limit is higher is because it went to referendum. Voter referendums are a relief valve. If revenue caps are too restrictive, districts can ask voters to raise the school levy beyond the limit.

That’s what Glendale did, first in 2011 and again in 2014. Thiel says one reason Milwaukee hasn't gone to referendum is that the last time it tried, in 1993, the question was resoundingly rejected by voters.

Glendale's referendums were approved.

“We’ve been very fortunate [in] that way,” said Glendale Superintendent Larry Smalley. “I feel even worse for teachers in Milwaukee, Oak Creek and Kettle Moraine.” Those districts have lower revenue limits.

Smalley says without the extra property taxes, the district might have to cut staff, increase class sizes and eliminate electives.

One of those electives is Shari Tucker’s contemporary youth and humanities class. On a recent Wednesday, she was leading a discussion about the Little Rock Nine — the black students who were the first to integrate an all-white high school in Arkansas.

“This is a good example of a class that might not continue on if classes went away,” due to revenue limit restrictions, Smalley said.

So, how unusual are revenue limits? Turns out, not at all. That’s according to Mike Griffith, a school finance expert with the Education Commission of the States in Colorado. Griffith says the details vary, but it is common for states to restrict school boards’ taxing power.

“There’s a tax or a revenue cap in all 50 states,” he said. “With Hawaii being the exception because Hawaii operates as a single school district.”

Griffith says removing the restrictions may actually lead to greater inequality. 

“What would happen, potentially, is you’d see an even greater difference between the wealthier areas in your state and your lower wealth places in your state,” Griffith said. “Because the higher wealth places would be able to increase and tap into local revenue.”

But Griffith says Wisconsin’s system does have a possible flaw: Revenue limits are at the whim of the governor and legislature, which makes them unpredictable. In 2011, Gov. Scott Walker slashed revenue limits, and they haven’t rebounded since.

 

That might be why so many school districts are turning to referendums. In the 2017-18 school year, one in four Wisconsin districts was operating under a revenue limit referendum. In November’s election alone, 34 districts passed revenue limit referendums. 

Glendale’s referendum is expiring soon, so superintendent Smalley says they’re planning to go back to voters in April.

“When I meet with the community members, I tell them, and I swear to God I mean this, ‘I hope this is the last referendum we have to pass,’ ” Smalley said.

It’s possible that 2019 could be the year legislators hear school leaders’ call to make revenue limits fairer. Incoming Gov. Tony Evers has signaled support for reform. And voters seem receptive to change. Polls and referendum approval rates show public opinion swinging away from property tax relief and toward increased school spending.

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