Alderman Scott Frederick

Alderman

Scott Frederick

City of West Bend 8th District

Grading Wisconsin, May 2008 (Read Article) (City Newsletter)

How is Property Tax Revenue Spent?

All levels of government depend on taxation as their main source of revenue. Taxation in the form of sales tax, income tax and recently for homeowners, property tax. In contrast, private businesses derive revenue from providing goods and services. In either case, revenues are spent in similar ways; from paying employees and supporting health care to investing in future growth. The difference between government and private business is that private business will generally reduce spending to equal expected revenue where government will generally increase revenue (taxes) to equal expected spending.

To better understand how taxes are spent, the following illustration represents the components of our property tax bill by percentage of spending. Included also is an explanation of our two major expenditures and how other forms of taxation interact.

City of West Bend Property Tax Spending for 2006

45% City of West Bend Services

31% West Bend School District

17% Washington County

8% Vocational Schools VTAE 10

1% State of Wisconsin

45 % of our property tax is spent directly by the City of West Bend to provide services including fire and police protection, parks and recreation, garbage pick-up, road maintenance and public works. The City of West Bend 2003 general fund budget is $17.7 million of which $2.6 million is scheduled to be funded by state revenue sharing and expenditure restraint programs. Revenue sharing accounts for 9% of state spending (State Budget). The $5 million City of West Bend debt service is also included.

31% of our property tax is spent by the West Bend School District in addition to 44% of our state tax dollars (State Budget). The total general fund operating budget for the West Bend School District is $50.8 million of which $19.8 million is funded with our property taxes. Our state tax dollars contribute $28.2 million and our federal tax contribution is $2 million. The remaining $800,000 is funded by other local revenue sources.

Government Revenue Sources:

Federal - Income tax
State - Income tax, sales tax, user fees
Local - Property tax

State of Wisconsin 2002 Tax Collection Facts (1):

$11.89 billion was collected in taxes and related fees including:
$4.98 billion in individual income tax.
$3.70 billion in state sales and use tax.
$1.20 billion in motor vehicle tax.
$348 million in excise tax on alcohol and tobacco sales.

"The individual income tax is the state's single largest state revenue source." The Wisconsin Taxpayer, November 2002 Vol. 70 No. 11

Wisconsin Public Education Spending Facts:

$3.58 billion was levied in property tax for Wisconsin public education in 2002 (1).
50.9% of all Wisconsin property tax is spent on public education (1).
44% of all state personal income and sales tax is spent on public education.
$7,355 was spent on each student in the West Bend District for 2001-2002 (2).
$7.6 billion is spent on Wisconsin K-12 education annually (3).
The average salary for Wisconsin public teachers is $40,939 (3)-$49,556 annualized (4).
The average value of taxpayer funded fringe benefits per teacher is $17,135 (5).
The average compensation per Wisconsin public teacher is $58,000 / $67,000 annualized.

Although Governor Doyle has promised not to raise taxes he has stated that all levels of state spending will be cut. We can all agree that government spending is out of control and far exceeds our tax contribution, however, consider the overall effect that a reduction to shared revenue will have on our community. The City of West Bend is scheduled to receive $2.6 million in shared revenue and expenditure restraint payments in 2003 accounting for 15% of our operating budget. Any significant reduction in this payment will result in either a reduction in city services or an increase to our property tax. Remember, we have already paid for shared revenue through our state income and sales taxes. It seems to me that reducing shared revenue will allow the state to spend more of our income and sales tax dollars while increasing our property taxes at the same time.

Governor Doyle and the State Legislature must aggressively cut government spending. We can only hope that their cuts will not further contribute to double taxation for homeowners.

A comment on President Bush's tax cut and economic stimulus proposal: It is important to understand that the federal government taxes our Income, not our Assets. The tax cut proposed by the President will reduce our federal income tax burden creating an opportunity to invest that money in assets. To illustrate this point consider United States Senator Edward Kennedy. Senator Kennedy pays federal income tax on his salary of $150,000 (6) but pays no federal tax on tens of millions of dollars in personal assets. Will a federal tax cut mainly help the 'rich'? Or, will it help every taxpayer to acquire assets...like owning a home?

(1) The Wisconsin Taxpayer (November 2002 Vol. 70 No. 11) www.wistax.org

(2) http://www.wistax.org/facts/index.html

(3) http://www.edweek.org/context/states/pdf/wisconsin.pdf

(4) http://www.wpri.org/WIInterest/Vol11No3/Niederjohn11.3.pdf

(5) http://www.wpri.org/WIInterest/Vol10No3/Hruz10.3.pdf

(6) http://usgovinfo.miningco.com/library/weekly/aa031200a.htm

Revised Sunday, May 11, 2008