Municipalities are struggling to keep pace with rapidly rising home prices, creating the largest gap between local property tax assessments and market values in recent years. That’s according to a new report by the Wisconsin Policy Forum. The report says the gap between assessed and market values has spawned concerns about the fairness of Wisconsin’s property tax system.
Over 800 Wisconsin municipalities have assessed values for the properties in their borders that are lower than 80 percent of their market value, according to the report. That’s the largest gap since at least 2011.
Ari Brown, a researcher for Wisconsin Policy Forum and the report’s author, said the main cause for that gap is “the hottest housing market in recent memory” over the last few years.
“When property values are rising so quickly, it is hard for local assessors to keep up with that,” he said. “There’s just a lack of supply and housing right now to meet demand.”
On top of trying to catch up to a booming housing market, revaluations can be a major expense for local governments, on top of other necessary costs like infrastructure investment, Brown said. A revaluation is a program undertaken by a municipality to appraise all property within its boundary to its full and fair value.
For example, a full revaluation for the city of Rhinelander — which has a population of roughly 7,800 — would cost nearly $160,000, according to the report.
Staffing constraints also make it difficult for local governments to catch up on assessments, said Jerry Deschane, executive director of the League of Wisconsin Municipalities.
“Municipalities are trying to do their job — they’re trying to catch up,” he said. “But there’s a limited number of human beings out there, called state-certified assessors, and there are not enough of them to go around.”