FROM: Robert Magnus, Mayor
Mark Frye, City Administrator
Beth Sheridan, CPA, OASD Director of Business Services
DATE: December 16, 2022
RE: Property Tax Bills
TO: City Residents and Business Owners
We are all frustrated when costs increase, and many are struggling right now with the costs of about everything; mortgage payments, rent, food, basic services, and more. Outlined below is a brief summary to clarify the cost increases in the 2022 property tax bills.
There are five lines with tax dollar amounts and one annual fee for garbage on most residential property tax bills:
- Oconomowoc School District – (separate entity not run by the city)
- Waukesha Technical College - (separate entity not run by the city)
- City of Oconomowoc - (primary change/increase due from 8/9/22 WLFD referendum)
- County of Waukesha - (separate entity not run by the city)
- Fowler Lake or Lac La Belle Lake District - (separate entities with city oversight on Fowler)
- Garbage and Recycling $195.00
For municipalities, the State of Wisconsin limits the amount we can increase the tax levy (levy limits). This limit is based on the percentage of new construction multiplied by the previous year’s base levy plus net debt adjustments. The goal is to use these increases to cover our added costs for municipal services. With growth, this increase is spread out over a large base of taxpayers (new homes, new businesses, etc.) to buffer the increase in municipal costs. Without this growth, we would have to drastically cut city services for our residents. Based on this, the levy for the City only budget was $13,191,524, an increase of $436,000 over last year. This levy would increase the City portion of the tax bill by about $40 for a property valued at $350,000 (average home value).
The Western Lakes Fire District approved to increase funding levels $6.3 million in total for all participating communities. On August 9, 2022, City of Oconomowoc voters approved a referendum to levy an additional $2,238,470 for the City’s portion of the Western Lakes Fire District funding increase. The passing of a referendum allows the levy to increase over and above the levy limits. When this is added to the city levy, it increases the total operating budget to $15,429,994. The Western Lakes referendum adds an additional $250 for a property valued at $350,000 (the increase seen on your tax bill under the heading of the City of Oconomowoc).
Many are saying, wait a minute, the referendum didn’t pass in all of the communities and the budget for Western Lakes Fire District only increased the 2023 by about $4 million dollars. You are correct.
The communities where the referendum didn’t pass, are using other options like separate fire fees, debt, etc. to obtain the revenues for the additional $6.3 million. The City is only paying their portion of the Western Lakes cost and not assisting or subsidizing the other communities. The WLFD Board recommended to phase in the increase over three years; however, the City needs to levy the full amount to meet the full cost. The State does not permit any municipality to phase in a referendum as is permitted by law for school systems. As per the State of Wisconsin, if we levy less than the approved referendum amount, we are locked into the lower levy going forward. Should we do this, we wouldn’t have the necessary funds in the next several years once full staffing levels are realized, and the City would be back to the voters with another referendum. In 2023, the difference of $964,291 will be held in a City controlled reserve account for future Western Lakes Fire Department expenditures only.
The Oconomowoc Area School District is one of the five taxing entities on the property tax bill. They have provided the information shown below to assist in understanding their portion of the cost.
OASD has continued to reduce its mill rate over the past decade. At $8.25, the 2023 mill rate remains below the rate in 2010. The mill rate is the amount of tax payable per $1000 of equalized property value. Mill Rate = Tax Levy / (Equalized Property Value/$1000).
There are 16 taxing municipalities within the school district's boundaries. The district's mill rate for each taxing municipality might vary slightly depending on the change in its property values compared with the district's overall equalized value growth and how much of the district's overall levy is thereby allocated to the municipality.
The District’s levy increased by 10% from $58.9M to $65M. The increase was not related to the District’s operational levy, but rather it resulted from additional debt service levy to be used for early repayment of existing debt. The 14% increase in equalized property values, compared with the 3% increase initially forecasted, provided an opportunity for long-range strategic debt planning. Early debt repayment directly benefits taxpayers with lower mill rates by avoiding interest expense and reducing future debt service levies for existing debt.
There will be future information shared regarding the budget process and the adjustments made by City Staff, Mayor and Common Council this past fall to arrive at a balanced budget that maintained City services, added an additional Police Officer and increased the contingency fund to address the volatility from inflation and supply chain issues. Inflation, labor shortages, rising costs and supply chain issues are affecting everyone. Stay tuned, we will provide more details in the days and weeks ahead.