Happy September! Welcome back to another edition of the WPT Weekly Insider.
This week will bring you news from the Capitol and around Wisconsin, circulating legislation, your weekly poll responses, and an all new Weekly Member Poll.
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Here is the article from the Milwaukee Journal Sentinel, in which WPT is referenced and quoted.
Government Paid Lobbyists Are Looking to Increase Your Taxes
By Corydon Fish
A month ago, a representative of the League of Wisconsin Municipalities (LWM) wrote an article in this publication characterizing Wisconsin Manufacturers and Commerce (WMC) and Wisconsin employers as little better than charlatans using nefarious legal tactics to avoid paying their "fair share" of property taxes. Nothing could be farther from the truth.
WMC advocates for responsible spending and fair, competitive, and uniform taxation that makes Wisconsin a great place to do business, work, and live. We certainly do not push for "loopholes" in the law. We do work to protect all businesses in Wisconsin from unpredictable tax increases that come through no fault of their own. Wisconsin has the fourteenth highest per capita property tax burden in the United States, higher than all our neighbors except Illinois. Increasing this tax burden on all property taxpayers by closing a non-existent "loophole" would make Wisconsin a property tax outlier and cause even more problems for those who live and build businesses in our great state.
Make no mistake, LWM is not a champion for taxpayers, they are one of the largest lobbying entities in the state pushing to increase your taxes. The advocated against Governor Walker's signature property tax reform - levy limits - in 2011 and they are still arguing to repeal the levy limit today. They are not looking out for any property taxpayers - homeowners or businesses - they are not concerned if everyone pays more in taxes. Advocating closing the "dark stores loophole" and eliminating the levy limit will lead to everyone paying more.
Below is a long-read rebuttal of LWM's article. However, here is the short version: advocates of Senate Bill 291/Assembly Bill 387 and Senate Bill 292/Assembly Bill 386 are pushing for higher property taxes. They want to shift the property tax burden to businesses because businesses cannot vote. The LWM implies as much when they state businesses need to pay more to cover the share of services they use. Wisconsin's Constitution requires all classes of property to be taxed the same so the same methods used to assess tax on retail stores will be used to assess taxes on main street businesses and homeowners. This detail does not concern government lobbyists because it just means more tax revenue for their clients. These same groups push to overturn the levy limit and with these new assessment tools, tax collectors will be able to increase taxes on all taxable property owners.
Correcting the record:
First, there has not been a statewide tax shift to residential property.
Local Governments are shifting the property tax burden on to businesses. There has been an approximately three-percent shift in the statewide property tax burden from residential properties to businesses over the last decade. LWM points out "homeowners pay 68% of property taxes in Wisconsin." What LWM purposefully leaves out is that homeowners own 72% of the property value in the state. Since the Wisconsin Constitution's Uniformity Clause prohibits different classes of property taxpayers, in practice residential taxpayers will pay approximately the percentage of property taxes as the percentage of property tax value they own. Local governments are the ones trying to create a loophole to stick businesses with a greater portion of the tax bill because they cannot vote. Businesses already pay more than their "fair share" in property taxes.
Second, there is no "dark stores loophole."
It is simply ominous sounding branding, a great PR move except that it is not true. The LWM stated, "tax attorneys for big box stores...use the dark store loophole to argue that the value of a new store in a busy commercial district should be based on the value of former retail properties in unpopular areas that are now vacant." This is already not allowed in Wisconsin. No court would allow a brand new store in a desirable part of town to use a physically rundown vacant property as a comparable. The "dark stores" legislation, Senate Bill 292/ Assembly Bill 387, goes significantly farther than this by allowing local governments to tax property based on occupancy.
For example, if you had two homes identical in every respect except that one was occupied and one was vacant, the occupied home would be valued and taxed more than the vacant one - even though the fair market value would be the same for each home. No rational buyer would pay more for the occupied home than the vacant one. For businesses, this means a local government would get to implement an income tax collected through the property tax.
The example LWM put forward is intentionally devoid of any context. No property is taxed at the value of the materials used to construct it; property is taxed at fair market value. You could build a home for $250,000 but if it is ugly or impractical, the market will value the home less than it cost to build it, say $200,000. If market value is $200,000 then the assessed value should be $200,000 not $250,000. The same goes for businesses, if a retailer builds their store in a certain manner to fit their supply chain, product layout, and other highly specific needs the market may not value it as it cost to build. This is doubly true with retail because big box stores are dying - over 7,000 stores closed in the US last year. There are not many people looking to buy 100,000 square foot facilities with unique features custom built to a single business's business plan.
The "dark stores loophole" is about eliminating comparable properties to allow tax assessors to tax business income, not closing a loophole.
Third, there is no "Walgreens loophole."
LWM claims that the Wisconsin Supreme Court created and "exception" to the rule that an arms-length sale of the property is the best evidence of fair market value pointing out that "Walgreens and CVS are popular investment properties and typically sell for $4 million or more depending on their location" yet are assessed at a lower dollar amount. This is inaccurate. LWM is conflating the sale of the property and the sale of the above-market rent lease which is an investment tool routinely used by all sorts of businesses from restaurants to manufacturers to cover the cost of construction or expansion. The leaser charges an above market rate rent which is how the tenant pays back the loan the leaser provided. The Walgreens property does not sell for $4 million. The sale of the property AND the lease, when added together, equal $4 million. Real property is taxed under the property tax. A financing agreement is not real property and should not be taxed as such.
If this were applied to residential property - which could easily happen because of the Uniformity Clause - mortgages and home equity loans could easily fall into the same category as one of these financing agreements. This is picking winners and losers based on how much capital you have. If you can buy your home in cash, then your taxes will be lower than if you need to take out a loan.
The Walgreens example used by the LWM is disingenuous. The assessor in this case illegally used the value of the financial agreement and combined it with the value of the property to inflate the assessed value. This is illegal and unfair taxation. All taxpayers have a right to appeal tax assessments they view as unfair. This practice is incredibly common in Wisconsin.
Take for example a Walgreens in West Bend. The Walgreens opened in September of 2010 and the initial assessment following the completion of construction was $3,311,000 for 2011. Even though there was no physical change to the property from the time the store opened in September 2010, the assessor increased the assessment of the Walgreens to $5,520,000 in 2012 (an increase of 67%) and then to $5,700,000 for 2013 and 2014. Walgreens challenged the assessment and the City agreed to reduce the assessment to $2,400,000 in 2015 where it has remained. Absent physical alternations to the property it would take an economic miracle for the market value of the property to go up by 67%. At $5,700,000, the 2013 and 2014 assessments valued the Walgreens at $385/sq. ft. This value is what one would expect to see on North Michigan Avenue in Chicago, some of the highest price real estate in the Midwest. Clearly, the assessment was not valuing the physical real estate, but the business value of Walgreens, the tenant in both properties. Wisconsin already taxes business value through its state income tax. Localities cannot, and should not, be allowed to tax income under the guise of a property tax. Further, because many Wisconsin businesses and manufacturers use precisely the same type of lease financing as does Walgreens, permitting assessors to tax business value and the credit-worthiness of occupants will lead to a dramatic shift in the property tax burden to businesses.
The LWM has one thing right, legislative fixes are needed. A few are in fact. Wisconsin does not require any educational or training requirements to be a tax assessor; all you have to do is take a test. Wisconsin licenses approximately 100 professions, many of which have far less of an impact on our society than the individuals we trust to fairly and accurate value our property and collect taxes. Further, Wisconsin does not have any meaningful penalties for assessors who continually get assessments horribly wrong. Municipalities should have to pay a penalty or interest on the illegal taxes collected if there is a pattern or practice of illegally taxing their constituents.
The LWM and other lobbying groups in favor of this legislation are not standing up for taxpayers, they are looking to take more money from them. WMC is not promoting unfair taxation. We are merely recognizing that Wisconsin is the 14th worst state for property taxes and the 12th worst state for business taxes and that the Legislature should not pass legislation that will make our tax climate even worse for all taxpayers. We hope Wisconsin Property Taxpayers, Inc. will support us on that mission.
Corydon Fish is the Director of Tax, Transportation & Legal Affairs at Wisconsin Manufacturers & Commerce
NEWS FROM THE CAPITOL
AND AROUND WISCONSIN
WALKER DECLARES STATEWIDE STATE OF EMERGENCY
Governor Scott Walker late last week declared a statewide State of Emergency due to an ongoing statewide weather pattern, which has led to severe storms, heavy downpours, flooding, and tornadoes, according to a statement from his office.
"After the latest round of continuing storms and their tremendous impact in Wisconsin, we have declared a statewide State of Emergency," Governor Walker said." We are ready to provide any tools and resources necessary to impacted communities. I thank all of those who continue to work diligently to help those in need."
Additional personnel and resources are available to counties in need. Wisconsinites are encouraged to contact their insurance companies and local counties about any damages resulting from the recent weather. You can view Governor Walker's executive order here.
FOXCONN FORMS $100 MILLION VENTURE CAPITAL FUND WITH THREE WISCONSIN CORPORATIONS
Foxconn Technology Group has teamed up with three of Wisconsin's largest and most well-known corporations last week to announce their formation of a $100 million venture capital fund to invest in entrepreneurs and start-ups around the globe.
Advocate Aurora Health, Johnson Controls, and Northwestern Mutual Life are joining the newly-arrived Chinese tech manufacturing giant Foxconn for this project by each investing $25 million into the fund. A Foxconn executive said this investment should demonstrate the company's intentions to drive innovation.
The new fund will be called the Wisconn Valley Venture Fund, and will be headquartered in the state's largest city, Milwaukee. There is no guarantee of investments from the fund into Wisconsin companies, with one Northwestern Mutual executive saying that there is "no specific target in terms of the percentage or portion of the fund that would be invested in Wisconsin."
JOINT FINANCE COMMITTEE CO-CHAIRS: REVENUE ESTIMATES REMAIN ON TRACK
On Thursday, the Co-Chairs of the state's budget-writing committee, the Joint Finance Committee, Senator Alberta Darling (R-River Hills), and Representative John Nygren (R-Marinette), issued a statement regarding the non-partisan Legislative Fiscal Bureau's most recent general fund tax revenue estimates.
"Wisconsin's financial situation continues to be strong. Tax collections are up 4% from 2017 and 2018's collections are $18.4 million higher than expected. Our state's economy is on solid financial ground and is growing, thanks, in part, to reforms an careful budgeting," Darling and Nygren said.
The statement said "Under Governor Walker's leadership, Republican cut taxes, made historic investments in education, while borrowing less than any budget in more than a decade. Republicans eliminated the state's portion of the property tax bill and the alternative minimum tax. Parents received $100 million in tax credits and we created our first sales tax holiday. Since 2011, we've delivered more than $8 billion in tax relief.
For the first time in history, Wisconsin's unemployment rate dropped below 3% for six straight months, and Business Insider ranked the state's economy as the 10th best in the nation, the statement also pointed out.
MASSIVE OAK CREEK WAREHOUSE APPROVED
The Oak Creek plan commission last week signed off on a massive, four-story, 2.6 million-square-foot distribution and warehouse facility last week, and though the development is unnamed, Amazon is circulating through the rumor mill.
The plan will also include a more-than-1,800-space parking lot, and 294 truck and trailer stalls, according to the Milwaukee Journal Sentinel. The space's designation is for 1,000 employees, and would operate seven days per week, 24 hours per day.
Currently, Amazon owns and operates a 1 million-square-foot facility in Kenosha, so the new development would dominate the current property's numbers in sheer size. Other notable massive facilities in the area are Target, whose facility is 1.5 million-square feet, and Roundy's, with 1.1 million-square-feet.
The city's common council is the next stop for the development's approval, and one city official said they are working on a tax-incremental financing (TIF) district for the area.
STATE SUPREME COURT JUSTICE SHIRLEY ABRAHAMSON ANNOUNCES CANCER DIAGNOSIS
Wisconsin Supreme Court Justice Shirley Abrahamson, the state's longest-serving justice, and once-Chief Justice, has announced that she has cancer. Abrahamson was also the first woman in Wisconsin to serve on the state's Supreme Court.
Abrahamson announced earlier this year that she would not seek re-election next year, having served on the court since the mid-1970s, and plans to finish her term, though says she may be bound to a wheelchair.
Justice Abrahamson did not disclose the type of cancer.
TAXPAYERS WILL FOOT THE BILL FOR UW-OSHKOSH FOUNDATION IMPROPRIETY
A federal judge last week ordered the University of Wisconsin-Oshkosh to pick up the $15 million tab for the school's private foundation, which has been embroiled in criminal and legal issues.
The university will now be on the hook for all outstanding debts, including those for large building projects. Eastern District Chief bankruptcy Judge Susan Kelly said there is "no question" those building projects serve a public purpose.
Kelly also denied the University's private foundation's motion for the State of Wisconsin to directly cover attorney and other fees related to the case. Though the taxpayers won't directly pay for these fees, through Kelly's ruling, taxpayer-funded UW-Oshkosh will instead foot the bill.
AAA PREDICTS DROP IN FUEL PRICE
Your friendly AAA auto club is predicting that the national average for fuel costs will dip 14 cents from its current price to $2.70 per gallon sometime this fall. With demand set to drop, and steady crude oil prices, the circumstances are just right to see a reduction.
On average, the current driver is paying $2.84 across the country, up nearly 50 cents from last year, but down over 12 cents since May of this year. Some states on the east coast are paying over $3 per gallon.
Refiners are expected to switch over to their winter blend later this month, which are cheaper to produce. Add that to crude oil hovering at $69 per barrel, down $5 since the beginning of July, and AAA predicts a drop.
EMERGENCY RULE WILL IMPACT DEER HUNTING IN 55 COUNTIES
The State of Wisconsin's Natural Resources Board have enacted an emergency rule that is aimed at reducing the spread of chronic wasting disease, but will change the way hunters handle their deer, including those who will partake in archery season in a few weeks.
The emergency rule will put new restrictions on the transport of deer.
Jeff Pritzl, the state Department of Natural Resources Regional Wildlife Biologist said that over half of the counties in Wisconsin are CWD-affected, and deer carcasses cannot leave that county unless it's moved to a commercial meat processor or taxidermist. Hunters will need to quarter their deer, or "bone it out" before moving it from the affected county.
Pritzl also says that the DNR is developing informational materials, including a video, that will explain the new changes to hunters and demonstrate how to quarter a deer in the field.
OFFICE OF THE COMMISSIONER OF INSURANCE: TIPS FOR WISCONSINITES
Wisconsin Insurance Commissioner Ted Nickel last week "reassured" support from the Office of the Commissioner of Insurance (OCI) for citizens facing damages from the severe storms and flash flooding continuing to affect Wisconsin.
In a statement, the commissioner said that his thoughts are with the residents of the state experiencing hardship due to the storms. "Many Wisconsin residents are not in the clear yet, with continued risks of rising lakes and rivers and saturated ground. Facing property damage can be overwhelming. After notifying your insurance agent or company, you should take time to make a detailed list of all damaged or lost personal property. Remember, OCI and other state agencies are ready and here to help."
You can find helpful tips for insurance purposes from OCI by
WEEKLY MEMBER POLL RESULTS
Foxconn will invest $100 million in UW-Madison. After reading the article, what do you think?
Good news, I hope. Need to see the fine print
If I read the article correctly, UW- Madison also has to raise $100 million in order to get the full amount from Foxconn.
Madison is so liberal I'm not sure that they will fully appreciate it. We do have other colleges that could put the investment to good use
it will only help defray some taxpayer expense , corporation investment in the future generation
Good news as long as there are no strings attached.
Maybe they can build the new natatorium with their name on it
Didnt we just give them huge tax incentives?
Are they trying to buy the State of Wi in ever level
It seems Foxconn may just be the real deal. They are investing in different areas of the state which I was not expecting. This deal may turn out to be the win it was touted to be.
I think it shows Foxconn's long term commitment to Wisconsin
It's good to see that this is going to bring some investment into Wisconsin, too. Anything built for the UW should improve it, and improve our student's chances in the real world.
great to invest in UW-Madison, but where is the plant they have been promising to build? more empty promises - wouldn't count on a dime
Where are the matching funds coming from?
Good news-Why turn down free money that will hopefully benefit students
Sounds like a donation match. Where is the other 100 million going to come from?!
Gosh, so Foxconn is giving up 2% of the $3b the taxpayers gave them. Hooray?
Students need to be trained for employment that is actuall available.
The USDA announced new aid for farmers impacted by tariffs. After reading the article, what do you think?
Heavy rain has caused severe damage in multiple parts of the state. Did your area experience rain in Monday night's storm?
So far we are good compared to others.
Took me a while to get home. Had to zig-zap through town.
Took me a while to get home. Had to zig-zap through town.
Just a little debris in the back yard where a large gully runs. Highest level I've ever seen intwenty years. Otherwise, my businesses lucked out. Gully is dry as a bone now.
Tuesday rain,, storm,, really bad. Lots of trees down.
Riverss and creeks are beautiful to build near but it is your own fault for building in the low lands if you get flooded
Flooding has impacted our farm crops and still water in the fields
The weather has been nasty. Over 8 inches of rain, some pretty sorry looking crops in the fields
Bridges and culverts are washed out. Water levels on the lake are still rising
Hillsboro, Elroy, Wonewoc. What a mess. Time heals.
Not too bad,but Watertown was innundated
Fortunately, Milwaukee's storm sewers worked pretty well and kept basements dry. That's all that matters.
Did not have flooding in our area
An audit revealed that the state does not have current information on about 3,000 registered sex offenders around the state. Do you keep an eye on the Sex Offender Registry in your community?
I don't, if 3000 are missing does it pay to check the registry?
State Government needs to be held accountable
The state gets a big F on this report card. A debacle. The people in charge should be fired.
They better get their information updated.. and pictures too.
I'm a guy with no kids, if I was a female or had children I'm sure I would watch that more closely
I have better things to do and has the State failed in this regard
I had seen this story elsewhere, but it failed to point out that the numbers are actually lower than they previously were. I am once again more upset by the "false" reporting of this issue even by the media within our state. Democrats pile on to the news report as if it is all Walker's fault, when his administration is actually making head way on getting these numbers lower. Is there any media outlet available that just covers current events without a prejudice viewpoint? This fact sickens me.When
As a society and especially at the government level, we need to keep better track of offenders to keep our women and children safe.
Why is it nobody in government is held accountable for not doing there job.
surprised there are so many unaccounted for - pretty scary that the offenders can be anywhere including by our children's schools
A registry doesn't help one bit.
On this date in 1928, Babe Ruth hit a game-winning home run in Milwaukee. Lou Gehrig also played in that game. What is the most memorable sports event you ever witnessed (in person, or on TV/radio)?
Game 7 of the 1987 Twins world series win. The noise and excitement was amazing! The very first opening day at Miller Park was fun too, G W Bush threw out the first pitch
In an Orioles' game many years ago, Raphael Palmeiro hit a two run home run in the bottom of the 14th inning to win the game.
Attended the Indy 500 in 1960 and the 100th race in 2017, only missed a few inbetween.
Saw Tiger Woods hit his first ball as a pro. Seeing a hole in one that day was fun. Enjoy the professionalism seen on the pro circuit.
Don't know of any, I don't follow sports.
Was able to attend game 4 of the 1982 American League Champion against the California Angels at County Stadium.
Packers winning the super bowl for the first time in ages back when I was in high school
The Ice Bowl....... Yes I am old.....
Packers defeating the Rams at the time Vince was coaching in the 60's.Travis Williams played a big part in the win at Milw,County Stadium.
Looking back it has to be watching the Packers winning the first "Super Bowl"
Packer Super Bowl victory
Marquette advancing to the Final Four in 2001.
It is the policy of WPT, Inc. to publish all comments that are submitted by members each week, often including broad differences of opinion within the weekly responses. Our organization values our role in fostering dialogue within our membership each week, but does not take responsibility for the individual views and opinions expressed herein.