Annually, during the month of December, home owners in Wisconsin receive their property tax bill. The property tax dollars you pay are divided among six different taxing entities (the Village, County, State, KUSD, Gateway and library system). Each of the six entities then use their portion of your payment to provide public services that benefit the community.

In Pleasant Prairie, the calculation of a single property tax bill is a complex process that relies on a State mandated formula, the annual budgets of six different taxing entities, the collective financial value of the municipality in which your home is located, and the value of your property as a percentage of the whole value of the Village. Property assessments are conducted every other year in the Village of Pleasant Prairie to determine any changes in property value. While public perception and understanding of the assessment process varies, the relationship between assessed values and property taxes is often misunderstood.

The common belief that an increase in assessed value should translate to an increase in property tax, or that a decrease in assessed value should translate to a decrease in property tax, is not an accurate understanding of the relationship between the two components. An increase or decrease in assessed value will not always cause an increase or decrease in the property tax. See the sample scenario below...


SAMPLE SCENARIO...
Imagine a fictional Village with only two residents. Each resident owns a home. Mr. A and Ms. B both have homes with an assessed value of $100,000. Being the Village’s only two residents, Mr. A and Ms. B both own 50% or half of the Village’s total value, therefore, each will pay 50% or half of the property tax collected by the Village.

Imagine that the Village needs to collect $2,000 in order to cover expenses for snow plowing and street maintenance for the year. Because Mr. A and Ms. B are each responsible for half of the property tax collected, Mr. A will pay $1,000 and Ms. B
will pay $1,000.


ALTERNATIVE 1...
Now consider that Mr. A and Ms. B have both just received a notice stating that the assessed values of their homes has risen from $100,000 to $200,000. Many may assume that because the value of their homes doubled, that their property tax would do the same.

Consider, however, that expenses for snow plowing and street maintenance in their Village have remained the same. Their Village will still need to collect $2,000 in order to cover expenses for snow plowing and street maintenance for the year. Because Mr. A and Ms. B each still own 50% of the Village’s total value, Mr. A will continue to pay half, or $1,000, and Ms. A will continue to pay half, or $1,000.

ALTERNATIVE 2...

Imagine that Mr. A has recently made improvements to his home and has just received a notice stating that the assessed value of his home has risen from $200,000 to $300,000. Ms. B, however, has just received a notice stating that the assessed value of her home has remained the same at $200,000. Mr. A and Ms. B no longer both own 50% of the total value of their Village. Mr. A now owns 60% of the total value of their Village, while Ms. B owns 40%.

Let’s imagine again that expenses for snow plowing and street maintenance in their Village have remained the same. Their Village will still need to collect $2,000 in order to cover expenses for snow plowing and street maintenance for the year. Because Mr. A owns 60% of the value of their Village, he will pay $1,200, while Ms. B will pay 40% of the property tax levy, or $800.

To read a related article from the Wisconsin Taxpayers Alliance, click View PDF below

WisTax Focus 06182008.pdf