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.
As in the rest of Wisconsin, the pace of development in Jefferson County has slowed over the last decade, while its schools have seen sizable student enrollment declines.
A potential uptick in development would bolster revenues for Jefferson County’s local governments and schools, according to a recent Wisconsin Policy Forum report. They also would see increased demand — and costs – to provide services, though some could be accommodated within their current capacities.
This report began through a request from Jefferson County officials to analyze how development affects the finances of its local communities and schools. Similar conditions apply to many other Wisconsin communities, and this report is meant to inform the work of officials across the state.
Since 2005, state levy limits have capped the annual percentage by which all local governments in the state may increase their property tax levy, linking it to a measure of annual development within their jurisdiction. For all counties, municipalities and technical college districts, annual increases in their property tax levy for operations are essentially limited to the percentage change in property values due to net new construction.
Prior to the Great Recession, Jefferson’s County’s rate of net new construction was more than double its current rate, and it closely tracked the statewide average as well as the Consumer Price Index. Since 2011, however, Jefferson County’s rate of net new construction has trailed both the state average and inflation.
The report highlights what it calls the “central tension” imposed by these limits in Jefferson County and elsewhere. Additional revenue generated by new developments typically covers the public safety and street operating costs associated with them, often with revenue to spare.
New development also can lead to increasing enrollment, and thus additional revenues, for local school districts. Districts’ ability to absorb an influx of new students will vary. In Jefferson County, we found some districts had excess classroom capacity due to recent enrollment declines.
In other words, construction generally puts local governments in a better financial position, but it does not solve all their problems. Under state law, the costs of providing services grow over time – while revenue from existing properties in their jurisdiction does not.
This is not a critique of development, the report finds. Rather, it is an observation about how Wisconsin’s system of financing local government currently functions.
This information is provided to Wisconsin Newspaper Association members as 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.
