School Tax Levy to Rise 6.1% in 2012-2013 Budget

Wauwatosa property tax-payers will see a bump of 6.1 percent in their bills this year for schools under the final budget approved this week by the School Board.

The total tax levy for all school funds will be $45,299,415, up from $42,700,133 last year.

A rise was expected. In the preliminary budget passed in June for planning purposes, a tax levy increase of about 4.5 percent was projected, based mainly on the likelihood of reduced state aid and small salary increases.

The state aid reduction came to pass, and in the meantime, School District budget planners decided to use the tax levy, beginning this year, to recover $2 million in "charge back" funds the schools had to pay back to the city in its loss of a major tax lawsuit.

Despite legislation passed last year that in general limits property tax increases to any growth in the value of new construction, there are provisions that allow greater levy hikes for both reduced aid and for unanticipated charge back costs.

As previously reported, the City of Wauwatosa was sued in 2003 by Covenant Health Care (now Wheaton Franciscan Health Care) over property it thought should be tax-exempt as hospital facilities. The city fought the suit and continued to collect taxes on the property totaling about $8.4 million before losing the case last year before the Wisconsin Supreme Court.

District obliged to pay back taxes it didn't collect

Under state law, the city was allowed to recoup the portion of taxes (in principal, not interest) collected in the overall levy for other entities – including the schools.

When the state Department of Revenue approved the charge back, the School District repaid the city in a lump sum out of its general reserve and began planning for how to replenish those funds.

Using the tax levy was, at the time, only one option. Another that was considered was waiting to recoup the funds from the School District's share of the expected retirement in 2015 of the tax-incremental financing district created for the Milwaukee County Research Park.

But the district's financial planners decided to move faster, regarding it as imprudent to leave the general reserve depleted by $2 million for three years. The administration proposed the alternatives of spreading levy increases to repay the debt over either three years or five years.

However, the School Board, at the urging of board President Michael Meier, this month elected to reduce that to a two-year spread, recouping just over $1 million a year, this year and next. Meier said he did not want the district to be in a "risk position" for three years or longer.

Part of increase temporary, part is of questionable duration

So, the good news is that part of the current levy increase is a bubble that will break after two years. The cost to the average homeowner of the charge back repayment will amount to about $54 a year in 2012-'13 and 2013-'14.

Combined with the regular levy increase due to reduced state aid, the total increase this year for that homeowner is about $130.

School District officials are hopeful that the Legislature will act, and act soon, to revise the state school aid formula to halt the kind of reductions that Wauwatosa is facing.

Last year, Wauwatosa schools dealt with the uncertain status of the Act 10 budget repair bill by cutting nearly $7 million from the budget and actually reducing the school tax levy by nearly 2.5 percent.

Four unions representing school workers agreed to one- to two-year salary freezes and benefit payment increases to cope with the crisis.

Under the state formula, Wauwatosa was in effect penalized for keeping its spending down, with aid from Madison keyed to per-student spending. Other districts that spent more – in some cases by spending down reserve funds or by borrowing – were rewarded with greater aid.

The Wauwatosa School District is historically and notably risk-averse, avoiding short-term borrowing and maintaining strong reserve funds. The current School Board has made it clear that philosophy is not changing.

The teachers' union, the Wauwatosa Education Association, had agreed in 2011-'12 to a one-year salary freeze, and this year accepted pay raises that amounted to an average of 2.1 percent.