It's tax season. People are receiving their property tax bills for the January 1st, 2008 assessment. So there is a lot of chatter about values, property assessments, budgets, and the like. A common complaint I hear is, "I couldn't get that value if I tried to sell it now." This may be true. But the value is of January 1st, not as of the day you received the bill. The assessed values are produced early in the year. Assessors analyze data (sales) from the previous year to see where the market is trending. They arrive at a value for January 1st of the year. Property owners receive a notice in late April, they then have the first three weeks in May to formally object to this value. This seems to be ample notification and time given to homeowners for them to present their case for a discrepancy in the assessed value to the local assessor’s office.
[Since 2008 saw a national slowdown in economic activity during the last quarter, assessors may weigh sales during that period more heavily in their analysis to reflect such for their January 1st, 2009 assessment.]
By state statute, assessments are conducted to determine the fair market value of a property as of January 1st. It’s “as of” such a date because of the complexities and vagaries of the market place. Stability for this municipality revenue-producer, as with any operation, is needed for budgetary and planning constraints. Having some type of moving-target date would allow endless arbitration, court costs, and gridlock.
If a compelling case can be made by a property owner for much-needed repairs (provide a written estimate for the repair), an adverse adjacent influence, or other encumbrances that may detrimentally affect the value of the property, I don’t know of an assessor who wouldn’t make the adjustment to the property value to reflect these negatives.
But the usual thing I hear is “the market.” The market is bad and the property owner wouldn’t receive the assessed value if he tried to sell it. As if assessors aren’t paying attention to the market. Sale of the subject property, or a comparable property, gives the best indicator of the market value of a property (also by state statute). An assessor wouldn’t believe the value of your property either if he or she didn’t have the sales of that property or other similar properties indicating the value.
Assessors follow sales throughout the year. They can see trends, increases and/or decreases. They can see if recent purchases are the same, higher, or lower than the present assessment. If most valid, arms-length sales of a specific type of property in a specific area of a city are moving in one direction or another, it’s relatively easy to see.
Too often homeowners use anecdotal and incomplete information to jump to conclusions from one market to another. Yes, a housing bubble popped. But, as with all bubbles, some areas are affected more than others. Wisconsin towns and cities did not see the stratospheric rise in prices that was witnessed on the Coasts. Also, Wisconsin banks, in general, were nowhere near as invested into the Ponzi-schemes that the financial industry created over the last few decades. Arizona, California, Florida, and Nevada are taking most of the hard hits in the deflation of the housing bubble. Does that mean we won’t experience any aftershocks? Of course not. But it also means that thirty-five percent declines in the Las Vegas property market do not equate to thirty-five percent loses in the Milwaukee property market.
Valid, open-market, arms-length sales are the number one indicator of value. And, the sales must be comparable. Don't reference the homes in bad condition, that are one-thousand square feet smaller than your home, that just sold for a lower amount than your assessment. This isn't a comparable home. Compare apples to apples. Don't just search for homes that sold at lower values than your assessment and reason that your home is only worth that much.
The assessed value is used in your property tax equation. But what you’re assessed at matters much less than what the needs of the locality are, and the budget to fund such operations, in determining what your tax bill will be each year. Your assessment may go down, your tax bill can still increase. Alongside budgetary downturns are usually increased needs for public provisions – food pantry, shelter, etc – which increases city, county, and state budgets. Also, the public (MPS) and technical schools (MATC) need funding, the State takes a share to redistribute to areas of the state where the funds are needed even more, the County uses part of this money to fund it’s operations, MMSD gets part of the money to manage our sewage, and the City uses the rest for it’s day-to-day functions.
The bill for the total of these budgets is divided by the total assessed value of all the parcels in the city to determine a mill rate. Your property’s assessed value divided by one thousand, then multiplied by the mill rate will give you your property tax bill.
The bottom line comes down to: what kind of a society do we want, with what kind of quality-of-life, and what is the fair distribution of the tax burden to provide such an existence. The total bill is quite a bargain for all it provides. I would even like to see it increased so we can provide an infrastructure spending plan and create jobs, and also to provide a heightened quality of service provision throughout the state. But, I also feel that the bill does impose too heavy a burden on working and middle class families as a percentage of their income.
Making corporations pay their fair share and getting rid of many exemptions, tax breaks, depreciation schedules, and other pointless giveaways to the well-to-do would balance the budget and provide the long-term funds and infrastructure needed to attract and maintain business and assure a good quality of life that Wisconsinites have come to expect.
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