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County equalized values take it on the chin

Equalized values in St. Croix and Pierce counties have declined for a second straight year.

The Wisconsin Department of Revenue released its 2010 Equalized Values report on Aug. 13 and the numbers weren't too much of a surprise.

According to the report, the value of real estate in St. Croix County dropped 7.45 percent from 2009 to 2010.

That's quite a bit higher than Wisconsin's overall reduction in equalized value through the past year. The state saw a 3.1 percent decline in valuation in 2010.

Of the state's 72 counties, 63 saw a reduction in their equalized value this year.

"It's just symptomatic of the economy," said Chuck Whiting, administrative coordinator for St. Croix County. "You'd like to see those values hold, but it's an economic adjustment."

Why are equalized values important?

The numbers are used by school districts, counties and technical college districts to calculate the amount each municipality owes for the operational expenses for those entities. The school district part of a property owner's tax bill is usually the largest portion, typically about half of a property tax bill.

"They use the equalized values to keep the taxes fair for everyone," said Joe Bjelland, New Richmond's city clerk.

If everyone's equalized value declines or increases by the same amount each year, the impact on a person's overall tax bill is minimal. Governmental units levy the dollars they need to operate and if every municipality's piece of the pie remains the same, there is usually little or no change in property taxes.

In this case, however, there are some clear winners and losers in the equalized valuation shift.

Communities that realize a decline in their equalized value that equals a taxing district's overall drop will likely see no change in their bills.

But if a municipality's equalized value drops more than the taxing entity's average reduction, tax bills in that community could decline. If another community's equalized value doesn't drop as much as the average, tax bills there could rise.

In New Richmond, the equalized value dropped from $647.5 million in 2009 to $598 million in 2010. That translates into a decrease of 7.6 percent, or similar to the county's reported drop.

In the Village of Hammond, equalized values also dropped by about 7 percent. Deer Park's value dropped about 6 percent and Somerset's declined by about 8 percent overall.

Roberts, however, saw a 9 percent drop in its equalized value. In Star Prairie, the drop totaled about 18 percent, so taxpayers there could see a noticeable cut in their school district, county and Wisconsin Indianhead Technical College tax bills.

The Town of Richmond's equalized value was cut by 8 percent and the Town of Star Prairie's declined 7 percent.

But the Town of Stanton saw a 10 percent reduction in its valuation, while the Town of Warren's valuation decreased by about 14 percent.

In Pierce County, River Falls saw an overall equalized valuation reduction of 12 percent and Ellsworth's valuation total declined by 10 percent. In Pierce County overall, there was a 5.59 percent decrease in the equalized valuation.

Aside from changing tax bills, the equalized value decline can have a negative impact on communities.

A municipality's debt limit is set by the state at 5 percent of a community's equalized value. If the equalized value declines, communities aren't able to borrow as much money for capital projects and other needs.

"Your debt might be the same, but you might be closer to your debt capacity," Bjelland said.

As equalized values decline, a community's established tax increment financing districts also take a hit. With the lower values, each TIF generates less revenue and paying off the debt associated with the districts is more difficult, Bjelland explained.

Whiting said declining property values also make it difficult for governmental units to keep a lid on mill rates. To cover a taxing entity's budget for the year, a higher mill rate is required to make up the difference that's created from less tax base.

"It can create upward pressure on the mill rate. But we just try to make things work and be mindful of the times we're in," he said. "We want to be coming forward with a responsible budget."

Even though the economy is showing signs of improvement, Whiting said he expects next year's equalized valuation numbers to decline even more. The numbers basically lag a year behind and right now things aren't improving dramatically.