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Changes in Shared Revenue and the Effects on Wisconsin Taxpayers

This study by Jenna Griffin, Jennifer Klippel, Kathryn Maguire, and Brendon Riggs analyzes the effects of changes in the Shared Revenue Program on Wisconsin taxpayers. The study covers the background, goals, and components of the program, as well as the analytical approach, results, and conclusions drawn. The impact of changes such as level-funding, per capita reductions, and discontinuation of formulas are discussed, along with measures of fiscal disparity and taxpayer equity. The study suggests alternatives for addressing disparities and emphasizes the importance of long-term consequences.

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Changes in Shared Revenue and the Effects on Wisconsin Taxpayers

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  1. Changes in Shared Revenue and the Effects on Wisconsin Taxpayers Jenna Griffin, Jennifer Klippel, Kathryn Maguire, Brendon Riggs May 5, 2006

  2. Overview • The Shared Revenue Program • Measures • Analytical Approach • Results • Conclusions

  3. The Shared Revenue Program • Background • Goals • Property Tax Relief • Guaranteed Tax Base

  4. Formula Components • Per-capita • Utilities • Aidable Revenues • Local purpose revenues • Tax base weight • Minimum Guarantee

  5. The Issue • Changes to Shared Revenue • Level-Funding • Discontinuation of Formula • Per Capita Reductions • Circumstances • Medicaid • Truth in Sentencing • School Aid

  6. Measures of Fiscal Disparity • Tax price: price to taxpayers, in mills, of a given level of expenditures • t/E ratio: tax price of $1,000 in per capita expenditures • low t/E ratio indicates a high level of fiscal well-being • Coefficient of variation: measures of disparity across time, using variation in t/E ratios for each year (standard deviation ÷ mean x 100) • high coefficient of variation (given as %) means high disparity • Taxpayer equity: municipalities with similar property tax rates should be able to afford similar expenditures, regardless of property wealth

  7. Analytical Approach • Municipalities by 2000 EQV deciles • not population weighted • not counties and school districts • Milwaukee analyzed separately • Interaction with School Aid

  8. Municipal t/E Ratio, 2004

  9. Coefficient of Variation of Mills-per-$1,000 Expenditures

  10. 2000 Mills-per-$1,000 of Expenditures by EQV Deciles

  11. 2004 Mills-per-$1,000 of Expenditures by EQV Deciles

  12. 2000-04 Cuts in Shared Revenue as Percent of Total Revenue Loss

  13. Impact on Municipal Levy2000-2004

  14. Impact on Combined Levy (School and Municipal), 2000-2004

  15. Coefficient of Variation of Combined Municipal and School District Mill Rate

  16. Alternatives • Return to Equalizing Formula • Revisiting Land-Use Assessment Policy • Reconfiguring the Current Expenditure Restraint Program • Diversifying Municipal Revenue Sources

  17. Conclusion • Formula Decreased Disparities • Changes Increased Disparities • Long-term Consequences

  18. Questions?

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