Does local sales tax add up to property tax relief?

0 Comments | La Crosse Tribune, Jun 17, 2002 | by Magney, Reid

Many Wisconsin counties haven't used local sales taxes for property tax relief as the law requires, the Wisconsin Taxpayers Alliance said in a recent report.

However, the WTA noted that La Crosse, Crawford and Jackson counties have given taxpayers some property tax relief.

In Wisconsin, the state sales tax is 5 percent. Counties can collect an extra 1/2 percent for the purpose of reducing property taxes.

La Crosse, Crawford and Jackson glare certainly better than a lot of counties," said WTA President Todd A. Berry. "Statewide, property tax relief hasn't been huge."

Overall, the WTA found on average 28.3 percent of county sales tax revenue is used to reduce property taxes. Though state law requires a county sales tax to be used "only for the purpose of directly reducing the property tax levy," a study by the nonpartisan WTA found that only six of 49 counties studied did so.

Buffalo, Door, Langlade, Oconto Ozaukee and Richland counties used nearly 100 percent of their sales tax revenues for property tax relief, WTA said.

La Crosse, Crawford and Jackson fell into a group of 15 counties that provided some property tax relief. Results were inconclusive in another seven counties, including Trempealeau.

Another 21 counties, including Juneau, Monroe and Vernon, showed no evidence of property tax relief, WTA said.

La Crosse County Finance Director Gary Ingvalson took issue with the WTA study, saying the county applies all of its sales taxes to reducing property taxes.

"We've always had the philosophy to reduce property taxes," Ingvalson said. "We work our budget diligently, and the sales tax is subtracted (from the budget) to yield the property tax" amount to be levied.

In the five years before La Crosse County started collecting the half-percent sales tax in 1990, the county's property tax levy had been increasing at an average of 15.15 percent per year, Ingvalson said.

In the five following years, property taxes rose an average of 3.14 percent per year, Ingvalson said. In the 10 years after sales taxes started, property taxes increased at an average annual rate of 4.773 percent per year.

Last year, La Crosse County collected $8.4 million in sales tax. The WTA study doesn't say exactly how much of the sales taxes went to property tax relief, but Berry said the study shows a "dampening of the property tax trend" in La Crosse County after the sales tax was started.

La Crosse County collects $78.26 per capita in sales taxes, the seventh-highest in Wisconsin, which reflects La Crosse's status as a retail center for the tri-state area. The state average is $62.06.

The WTA also calculated the potential impact of sales taxes in each county on property taxes. In La Crosse County, the $8.4 million in sales taxes is equivalent to $1.91 per $1,000 of property taxes, the highest in Wisconsin.

However, Berry said, it's not likely that La Crosse's property tax rate of $4.02 would be $1.91 higher if the county didn't collect sales taxes, too. "There would not be a, dollarfor-dollar shift to property taxes," Berry said. Programs the county spends sales taxes for probably would not be politically popular enough to raise property taxes for, he said. "It's politically safer to expand spending with sales taxes," he said.

Craig Thompson, legislative director for the Wisconsin Counties Association, said counties agree that the purpose of local sales taxes is to reduce property taxes - or at least keep property taxes from increasing.

But Thompson said some of the sales tax money is going to pay for public services the state of Wisconsin requires counties to provide yet has "walked away from its responsibility" to fund.

"The bulk of a county's budget is dictated by the state," Thompson said.

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For a free copy of the report on sales taxes, write the Wisconsin Taxpayers Alliance, 335 W. Wilson St., Madison, Wl 53703-3694 or visit their Web site at www.wistax.org.