By Andrew Pelkey
Special to the Times
A decade after the Milwaukee Journal Sentinel published a Watchdog Report, many Wisconsin property owners are still paying more property taxes than they should be. More than $14 billion dollars in property taxes are still unfairly distributed. As a result, many property owners in Wisconsin will receive a property tax bill this year that is unjust and unequal. Most will never know that their property tax bill is wrong. The people responsible will continue to falsely claim there is nothing wrong.
How are property taxes determined?
Each Wisconsin property owner is required to pay a share of the more than $14 billion dollars collected each year in property taxes. An owner’s share is determined by the value of their property and the various taxing jurisdictions their property is located within. Examples of taxing jurisdictions are the county, municipality and school districts providing services to their property. State law requires that the assessed value of each property be uniform compared with all other properties.
What is uniform?
Throughout the industry, the legal term “uniform” is sometimes referred to as “fair” or “just and equal”. They are all the same.
Uniform means “at the same level of assessment.” If one property is assessed at 90% of full market value, then all other properties must be assessed at 90% of full market value. In layman’s terms, uniform requires that similar properties have similar values. This requires the assessed value of a property to be similar to its neighbor to the extent that two properties are similar and different to the extent that the two properties are different.
How is uniformity achieved?
Each municipality is required to assess all property within their borders uniformly using professionally accepted mass appraisal methods. This means that, within any one municipality, if one property is assessed at 90% of full value then all properties are assessed at 90% of full value. The use of mass appraisal methods is critical to achieving uniformity.
Mass appraisal is a method of valuing a large number of properties at once. It involves:
1. Listing — A municipal assessor gathers information about each property that affects its value.
2. Valuing — A municipal assessor uses carefully calibrated computer valuation models to generate a market value from the listing data using one of three professionally accepted approaches to value. The three approaches are the cost approach, sales comparison approach and income approach.
3. Classifying — A municipal assessor assigns a tax classification to each property based on current tax law. Common tax classes are residential, commercial, manufacturing and exempt.
The result of these three steps is a municipal assessment roll where all properties are assessed uniformly as required by state law.
After a municipality completes its assessment roll, the Department of Revenue (DOR) calculates the overall level of assessment for the municipality using a process call equalization. If the overall level of assessment calculated by the DOR is wrong, then all property taxes will be wrong.
What is the problem?
Pretty much everything that can go wrong, does.
● Data collected on each property is often wrong resulting in bad appraisals.
● Fraudulent appraisals are rampant. Fraudulent appraisals happen when assessors do not follow professionally accepted mass appraisal methods. Some assessors do not even have working computer valuation models and “fake it” instead.
● Property can be classified incorrectly, giving some owners tax breaks they do not qualify for.
● The Department of Revenue’s calculation of the overall level of assessment is often wrong, resulting in erroneous property taxes.
Why does this happen?
There are a lot reasons. Starting at the top, per Wisconsin Statute 73.03(1), the regulatory agency responsible for oversight to ensure that all assessments are just and equal is the Department of Revenue. DOR oversight is practically non-existent. They have completely lost control of uniformity as a result of decades of mismanagement.
A decade ago, in October of 2014, the Milwaukee Journal Sentinel published a Watchdog Report (https://tinyurl.com/2dt4eema) stating that property taxes across Wisconsin were uneven and therefore unfair. Their analysis found that, in dozens of communities, 20% or more of the property taxes were being paid by the wrong people.
A decade later, the Milwaukee Journal Sentinel could simply change the year to 2024 and republished the Watchdog Report as written; it would still be completely accurate.
How is this possible? The DOR seemingly does not care
Over the last decade, I have asked the Department of Revenue periodically for a copy of their plan to correct the problems in the Watchdog Report. Each time the answer is the same; they have none. I asked again a month ago, they did not even respond.
On the DOR website (https://tinyurl.com/mwsbw385) current DOR Secretary David Casey, like his predecessor Peter Barca, acknowledges that the Secretary is responsible for administrating state and local taxes in a fair, efficient and equitable manner. At the same time, he hasn’t done anything to ensure this happens.
Department secretaries report to Gov. Tony Evers. When asked whether either former Barca or Casey had done a satisfactory job, Evers had no comment.
No assessor training
There is no institutionalized training to teach people how to be an assessor in Wisconsin.
State law requires that only people who have been “certified as qualified” by the DOR can perform assessment work; nobody else can legally do it. However, there is no degree or certificate a person can earn from the University of Wisconsin or a Technical College that ensures they have been trained on how to do assessment work.
Instead, the DOR certifies people who pass a multiple-choice test. The test questions rarely change and the answers are available on the internet. No training is required. The DOR even advertises how easy it is to become an assessor.
As a result, the small pool of certified assessors has many untrained and unqualified individuals.
No municipal assessment roll audits
The DOR does not audit municipal assessment rolls to ensure assessments are uniform.
According to longtime industry professionals, active DOR staff does not know how to implement mass appraisal techniques themselves because the people with the right qualifications have either retired, quit or have been sidelined. The result is that people in leadership positions at the DOR lack the appropriate knowledge and skills to know what to look for.
In response to a City of Monona resident, who filed a complaint about non-uniform taxation, a DOR attorney responded by saying:
“DOR does not have employees that are versed in Uniformity clause requirements as it relates to property assessment in Wisconsin.”
How is the DOR supposed to provide sufficient oversight to ensure just and equal taxation if it has no employees that understand what is required to achieve it?
The same attorney goes on to say:
“It is our position that courts determine uniformity clause violations, not the DOR.”
By this admission, the DOR has acknowledged that it does not comply with Wisconsin Statute 73.03(1) but rather passes those duties to the courts. This means that unless a property owner can afford to litigate their property assessment in court, their constitutional right to uniform taxation is a nice idea, but is not attainable.
Does equalization equal fairness?
One way the DOR deflects criticism is by telling a series of well-worn stories. For example, on the DOR website’s home page, DOR Secretary Casey repeats one of the department’s enduring claims that the DOR’s equalized values “ensure statewide fairness and equity in property tax distribution.”
However, equalization does not fix any of the problems in the Journal Sentinel’s Watchdog Report. Equalization existed 10 years ago when the Watchdog Report showed property taxes were not fair. It did not ensure fairness back then and it does not ensure fairness now.
DOR doesn’t admit fault or accept responsibility
The causes of unfair property taxes are many and go beyond just the DOR. However, fixing it starts with them as the regulatory body tasked with oversight. The DOR refuses to admit they are at fault or accept any responsibility. In the only statement they provided for this article, they said:
“[assessment uniformity] is the shared responsibility of DOR, assessors, local officials, and property owners. Assessors […] are largely responsible for ensuring uniformity within a municipality using proper assessment practices and valuation methods.”
However, according to Wisconsin Statute 73.03(1), the DOR is responsible for ensuring uniformity.
“Powers and duties defined: It shall be the duty of the department of revenue, and it shall have power and authority:
73.03(1)(1)To have and exercise general supervision over the administration of the assessment and tax laws of the state, over assessors, boards of review, supervisors of equalization, and assessors of incomes, and over the county boards in the performance of their duties in making the taxation district assessment, to the end that all assessments of property be made relatively just and equal at full value and that all assessments of income may be legally and accurately made in substantial compliance with law.”
— Andy Pelkey worked in the property assessment industry for 25 years before retiring in 2021. He designed and developed Wisconsin’s most successful mass appraisal computer software. He can be reached by email at AndyPelkey@waac.pro or by phone at 414-687-0368.