Weekly Fiscal Facts are provided to Wisconsin Newspaper Association members by the Wisconsin Policy Forum, the state’s leading resource for nonpartisan state and local government research and civic education. The Wisconsin Policy Forum logo can be downloaded here.
Wisconsin’s cities and villages increased their overall spending in 2021, but it still lagged rising inflation.
Municipal property tax rates accelerated their ongoing decline, due to soaring property values and state-imposed limits on local levies. And an important source of city and village reserves increased in 2021 to the highest levels in recent memory, defying earlier concerns that they could dwindle during the COVID-19 pandemic.
These are among the key findings from the Forum’s latest annual update to its interactive Municipal DataTool, which provides data on all 604 cities and villages in Wisconsin — from the village of Big Falls (population 60) to the city of Milwaukee.
Data used in this year’s Municipal DataTool come from reports compiled by the Wisconsin Department of Revenue for 2021 and 2022. It’s grouped into the following areas: property taxes, spending, debt, fund balances, shared revenue (a key form of state aid) and property values, and income and population. The latest nine years of data are provided.
Cities’ and villages’ net operating spending, which includes most municipal operating expenditures, increased 2.4% from $1,059 per capita in 2020 to $1,085 in 2021. But municipal spending still lost ground to inflation, which increased 4.7% per the Consumer Price Index. Spending on public safety services – police, fire, and EMS – increased slightly in 2021 but lagged inflation considerably.
For more than a decade, municipal property tax levies for operations were capped at the rate of “net new construction,” or the value of property created in that municipality during that year divided by the total property value. In 2022, net new construction rose 1.7%, the largest increase since 2008.
Meanwhile equalized property values, or the total value of all taxable property in a municipality, have increased rapidly. This accelerated in 2022, as equalized property values jumped 13.4% in Wisconsin’s municipalities, the largest increase in the past nine years by a wide margin.
Over the last few years, state limits on property tax increases paired with booming property values have meant that the tax rates paid by Wisconsin’s property owners – the tax levy divided by total property value – have fallen substantially. While municipalities have increased their overall property tax collections, their tax rates have dropped in each of the past seven years and by a total of 18.8% since 2015. None of the decreases has been larger than the 7.9% decline from 2021 to 2022.
When the COVID-19 pandemic hit Wisconsin, a particular concern for municipalities was whether they had adequate reserves. However, after reaching highs in 2020, fund balance levels per capita rose again, from $860 in 2020 to $927 in 2021 – a 7.7% increase. Municipal fund balances now sit at their highest levels in recent memory. This is likely due in part to influxes of federal pandemic aid and large numbers of vacant positions due to hiring difficulties.This information is a service of the Wisconsin Policy Forum, the state’s leading resource for nonpartisan state and local government research and civic education. Learn more at wispolicyforum.org
