PROPERTY ASSESSMENT

The dollar amount assigned to taxable real and personal property by the assessor for the purpose of taxation is the assessed value. Assessed value is estimated as of January 1 and will apply to the taxes levied at the end of that year. Assessed value is called a primary assessment because a levy is applied directly against it to determine the tax due. Accurate assessed values ensure fairness between properties within the taxing jurisdiction.
The amount of tax that a property owner pays is based on two factors: the value of the property owned by the taxpayer and the local property tax rate. A local assessor determines the value of each individual’s property. The local property tax rate depends on the amount of taxes levied by local jurisdictions (municipalities, counties, school districts, technical college districts, and special purpose districts) and the total value of taxable property in the jurisdiction. Multiplying the value by the rate produces the amount of taxes levied on each property. A portion of the tax is paid by the state through state tax credits and the remainder is paid by the owner.
The Wisconsin Constitution, which requires the uniform taxation of property, was adopted as part of the original state constitution. It is called “the uniformity clause” in reference to the words with which it begins: “The rule of taxation shall be uniform.” The uniformity clause was intended to prevent the legislature and local officials from granting preferential tax treatment to influential property owners and “to protect the citizen against unequal and consequently unjust taxation.” Weeks v. Milwaukee, 10 Wis. 186, 201 (1860). [1]
The Supreme Court has provided the notion that the Uniformity Clause requires practical uniformity – not absolute, and that practicality is viewed “under the circumstances.” Norquist v. Zeuske, 211 Wis.2d 241, 564 N.W.2d 748 (S. Ct. 1997), fn 6.[2]
Property value is assessed in one of three ways, depending on the type of property. In residential areas, yearly property value is based on the recent sales of comparable properties. In other areas, a local assessor surveys the value or potential to generate revenue of a piece of property in the city every year.
Most property is assessed according to its highest and best use, or that use which will produce the greatest net return to the property owner over a reasonable period of time. The assessor determines that value by employing the sales comparison, cost, or income approaches to valuation. Each approach is intended to produce a value comparable to the property’s price if sold. Under the sales comparison method, value is determined by analyzing sales of properties similar in size, age, use, location, and other factors. Under the cost method, the value of the land is estimated and added to the cost of replacing any attached structures. Under the income method, the present value of a property is determined from the estimated future income of the property (for example, rent minus expenses). Although all three are used, the sales method is the preferred approach.
The Department Of Revenue administers several programs intended to promote uniform local assessments.
Review of Total Local Assessments. State law requires every municipality to assess property at full value at least once every five years.
Review of Assessments by Class of Property. Since 1992, the ratio of assessed value to full value for each locally assessed major class of property, except agricultural land, must be within 10% of full value at least once every four years. Municipalities not meeting the requirement are notified, and if the requirement is not met in the succeeding year, the municipality’s assessment staff must participate in a training program sponsored by DOR. The Department must supervise the succeeding year’s assessment of any municipality that does not meet the requirement over a six-year period.
Property Assessment Manual. Each year, DOR publishes or updates a manual for local assessors that include guidelines and procedures for identifying, classifying, and valuing taxable property. State law instructs local assessors to follow the guidelines and procedures in the manual. The updated material includes recommended per acre values for grades 1, 2, and 3 cropland and for pasture land under use value assessment. Since the values are published as guidelines, local assessors may adopt or modify them.The main thing to remember is that assessment is highly regulated by the State with little local control.
[1] http://www.legis.state.wi.us/LRB/pubs/consthi/02consthiII02.htm
[2] Hagopian, Gregg C., Assistant Milwaukee City Attorney. Memo #3, Special Committee on Tax Exemptions (Nov. 2004)