On the General Election ballot on Tuesday, April 1, 2025, resident taxpayers for the City of Green Lake will be asked a referendum question on whether or not the City should be allowed to exceed its property tax levy limit for the purpose of maintaining or expanding public safety protection services. 

To help Green Lake residents better understand this important referendum, starting today, the City of Green Lake will email a weekly purposeful series of educational information which will lead you to the reason for the referendum. Our goal is to keep everyone informed and ensure transparency about this municipal financial matter.

Mayor Radis and Adam Ruechel, the City’s municipal financial consultant with 

Baird, will host an open meeting during which you can ask questions and have 

more clarity on the need for the referendum. We encourage you to attend 

and to invite your Green Lake friends and neighbors to join you.

What are levy limits and why were they implemented?

In 2005, the state enacted Wisconsin Act 25 which imposed property tax levy limits to restrict the amount of additional revenue a municipality could raise through property taxes.

Per the Wisconsin Policy forum “Levy limits, created in 2005, were initially applied to 2006 property tax levies. When first implemented levy limits were linked to new construction, but a “floor” was established to allow increases of up to 2% for all communities. The floor varied between 2% and 3.86% between 2006 and 2010.” (1)

Prior to the limits from 1998 to 2005 property tax levies increased an average of 5.2% annually, compared to an average inflation rate of 2.2%. This sharp growth in property tax levies was a primary factor in the state’s consideration of adopting a levy limit. (1)  From 2005-2011, the average increase in property tax levies declined to 3.7% annually, compared to an average inflation rate of 2.4%. (1) 

 In 2011 the state updated the act by linking the allowable levy increase exclusively to any increase in property values due to new construction. This update removed the minimums and tied increases in municipal property taxes solely to rates of new construction.

Per the League of Wisconsin Municipalities website” Under state law, a municipality is allowed to increase its levy over the amount it levied the prior year by the percentage increase in equalized value from net new construction. If no new construction occurred in your community, then your allowable increase is zero percent.” (2)

With the elimination of the floor increase this meant slow growth communities such as Green Lake no longer had the mechanism to increase their levies outside of net new construction except for exceptions for debt service or by a successful referendum.

What is Net New Construction and how does it impact property taxes?

The Wisconsin Department of Revenue’s Equalization Bureau (3) calculates net new construction each year. Net New Construction (NNC) is the number of changes to equalized value due to new building construction and land improvements minus changes to equalized value due to the demolition and/or destruction of buildings and removal of land improvements each year.

Also, any net new construction which occurs within a tax incremental district counts towards the overall net new construction figures and percentage.

This NNC net amount is divided by the prior year’s total equalized value to determine the allowable percentage to apply an increase to the property tax levy. This percentage, along with any increase that may result from closing tax incremental financing districts, determines the property tax levy limit before adjustments a homeowner sees on their tax bill.

Therefore, continued growth for the City of Green Lake in residential, industrial, and commercial is essential to continue to be able to cover the cost and service delivery increases necessary for the city on a year-to-year basis.

Below lists the City of Green Lake’s equalized values, net new construction, and percentage increase for the prior eight years. Of note, the largest percentage increase to the levy was in 2022 at 3.73%. As you can see from the chart below, this increase does not keep pace with the growth of Green Lake in terms of costs and service delivery.

The City of Green Lake over the last fifteen years has seen a net new construction increase average of 0.97% while inflation has risen on average 2.59%.

First, it is important to note that when taxpayers receive their property tax bill in the mail, the City’s portion of the tax bill is only around 29-35% of the total. The rest of the bill goes to other taxing jurisdictions including the Green Lake Public Schools, Green Lake County, and the Moraine Park Technical College.

The levy (municipal budgetary authority) is generally only increased via net new construction and/or a referendum. Increased assessments do not increase budgetary authority. Assessments do determine the tax rate and what proportion of the levy a property pays.

Each year the governing bodies of the various taxing entities, including the City, look at how much property tax the state will allow them to collect (which, as explained above, is much less than the growth in service expenses), and propose budgets for the next year. To determine the amount, they can spend on services, they total all expected sources of revenue such as state aids and shared taxes, license fees, and tuition. The total amount to be collected through property taxes, which is called the "tax levy" is determined by the state via the net new construction formula outlined above. The levy is then raised by multiplying the value of all the property in the City by a percentage, called the tax rate. The rate is the same for all property owners. When this tax rate is applied to the value of all the taxable property in the City, it will total the exact amount of money the state levy limits will allow the City to spend on services.

The tax rate is calculated by simply dividing the amount of taxes allowed by the total assessed value of all taxable property in the City.

Tax Rate = Levy ÷ Total Assessed Value

Once the rate is set, the assessed value of your property is used to determine the portion of the levy your property contributes. The tax rate when multiplied by the assessed value of the property, equals what is owed in taxes -- the tax bill. The tax rate is often expressed in terms of dollars per thousand, or as a "mill rate."

Generally, if the assessed value of a property increases, the taxes for that property do not increase at the same dollar amount. Assessments are supposed to be revenue neutral, so an increase in assessment does not necessarily correspond to an increase in taxes. The growth in tax collections for local taxing jurisdictions is expected to be much lower than the increase in property values. Overall, higher values will result in a lower tax rate, while state aid and tax credits will also influence property taxes.

An increased levy means that the city has more budget to apply to municipal needs. State law only allows for a dollar amount increase to the levy. If this occurs, that increased dollar amount will be applied to property taxes. In other words, the increased budget will be filled by property taxes. This means that each parcel would see an increase in taxes proportional to the value of the property. 

Stay tuned for more information next week.