Madison referendums: Here's a quick explainer on how property taxes work
Property taxes are dominating this election cycle for Madison's city government and public schools.
Three referendums aim to raise property taxes so that the city of Madison and the Madison School District can bring in more revenue to avert cuts, as well as upgrade 10 schools.
But year to year, more than just referendums have an effect on property taxes. How much a homeowner pays varies according to where the property is, how much the home's value changes and how much the tax base has grown.
The basics
There are four main taxing entities that levy property taxes in Madison: the city, the School District, Dane County and the Madison Area Technical College district.
The Madison School District accounts for about half of the property tax bill and the city about a third. The county and MATC, respectively, made up 13% and 3% of the total tax bill this year.
Local governments have long been subject to restrictions on how much they can raise property taxes each year. In 2011, former Gov. Scott Walker signed into law even stricter limits on property tax hikes that allow tax levies to grow only by a "net new construction factor."
That does not mean the levy grows by the actual value of new building in the city. For example, Madison had $1.1 billion worth of net new construction in 2024. But that will only increase the tax levy by $9.6 million, about 3%.
Walker's reforms and how tax levy limits are calculated under them has actually led to property tax rates falling in Madison.
For the city's portion of tax bills, the tax rate for 2019 stood at $9 per $1,000 of property value. By 2024, the rate had fallen to $7.10 per thousand. If the city's referendum passes, that rate will jump to $7.30 per $1,000 in property value.
But because property values have boomed, people are ultimately paying higher property taxes despite the lower rates. If the city's referendum fails, the owner of an average home in Madison — which has seen its value go up about 8% in the past year — will pay about $83 more on their tax bill even though the tax rate has fallen.
A key exemption from the Walker-era property tax rules is capital borrowing. The levy can change in line with how much debt a government takes on to fund its infrastructure and other capital projects.
Between 2011 and now, property taxes have gone up 2.3% to pay the city's debt. In 2025, about 17% of the city's portion of the property tax bill will go toward debt service.
School districts are different
Schools districts in Wisconsin set their property tax levies differently from municipalities.
The Madison School District sets its levy by subtracting state aid from a revenue limit formula. But, as with municipal governments, the city's expanding tax base has led to lower rates producing higher tax bills nonetheless.
In 2019, the Madison School District's rate was $11.60 per $1,000 of property value. By 2024, that rate had fallen to $9.80 per $1,000.
The property tax rate does technically fall in the first year because of increased state aid regardless of the election outcome, dropping to $9.20 per $1,000 of property value if the operating referendum succeeds, and $8.50 per $1,000 if it is rejected. Taxes on the average home would go up by $40 if the operating referendum is approved. They'd fall $278 if it is rejected.
If voters approve the $100 million operating referendum, tax bills would then go up $632 in year two, $841 in year three and $1,049 in year four — and continue in perpetuity.
If voters say "yes" to the $507 million facilities question on Tuesday, homeowners will pay about an extra $324 a year for 23 years starting in 2025.
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