30.36. City of Manitowoc - Manitowoc county
31.37. City of Marshfield - Marathon and Wood counties
32.38. City of Mequon - Ozaukee county
33.39. City of Middleton - Dane county
34.40. City of Monona - Dane county
35.41. City of Muskego - Waukesha county
36.42. City of Neenah - Winnebago county
37.43. City of New Berlin - Waukesha county
38.44. City of Oak Creek - Milwaukee county
39.45. City of Oconomowoc - Waukesha county
40.46. City of Oshkosh - Winnebago county
41.47. City of Racine - Racine county
42.48. City of Sheboygan - Sheboygan county
43.49. City of South Milwaukee - Milwaukee county
44.50. City of Stevens Point - Portage county
45.51. City of Sun Prairie - Dane county
46.52. City of Superior - Douglas county
47.53. City of Waukesha - Waukesha county
48.54. City of Wausau - Marathon county
49.55. City of Wauwatosa - Milwaukee county
50.56. City of West Allis - Milwaukee county
51.57. City of West Bend - Washington county
52.58. City of Wisconsin Rapids - Wood county
Initial Regulatory Flexibility Analysis
The rule order does not have a significant economic impact on a substantial number of small businesses.
Fiscal Estimate
Currently, all municipalities, except those in Kenosha County, require a specific level of assessor certification based on the complexity of the assessment. Municipalities in Kenosha County were not rated for a level of assessor certification because they were under a county assessor system, which has been dissolved.
The proposed rule adds six municipalities in Kenosha County to the list of those that require an Assessor 2 level of certification due to the complexity of the assessment.
Local Fiscal Effect:
Assessment costs are determined by the amount of work required to assess a municipality, not the assessor certification level. This means that the proposed rule has no fiscal effect on the six municipalities to which it pertains.
State Fiscal Effect:
The proposed rule will require minor changes to update the Wisconsin Property Assessment Manual.
Revenue
Notice is hereby given that pursuant to ss. 70.32 (2) (c) 1 and 227.24 (1), Stats., and interpreting s. 70.32 (2) and (2r) (a), Stats., the State of Wisconsin Department of Revenue will hold a public hearing at the time and place indicated below, to consider the emergency rule promulgated December 6, 1995, relating to the assessment of agricultural land in 1996.
Hearing Information
January 25, 1996 Room 207, GEF #3
Thursday 125 South Webster St.
Commencing at 1:00 p.m. MADISON, WI
Analysis by the Dept. of Revenue
Statutory authority: ss. 70.32 (2) (c) 1 and 227.24 (1)
Statute interpreted: s. 70.32 (2) and (2r) (a)
Chapter Tax 18 is repealed and recreated to guide assessors in classifying and valuing agricultural property for the assessments on January 1, 1996.
Under prior law, agricultural land was assessed for property tax purposes at the market value of its highest and best use. 1995 Wis. Act 27 changes the way certain agricultural land is assessed for property taxes, and requires the Department of Revenue to promulgate rules and define terms necessary to implement the new assessment procedure.
This rule provides the following definitions:
1) “Land devoted primarily to agricultural use” means land classified agricultural in 1995 that is not in a use that is incompatible with agricultural use on the assessment date. Swamp or waste or productive forest land located in villages and cities is not devoted primarily to agricultural use, and agricultural buildings and improvements and the land necessary for their location and convenience are not devoted primarily to agricultural use. Under prior law, swamp or waste or productive forest land located in villages and cities was classified agricultural because villages and cities were not permitted to classify land swamp or waste or productive forest land. Since 1995 Wis. Act 27 requires villages and cities to use the swamp or waste and productive forest land classifications, all such land located in villages or cities is to be reclassified swamp or waste or productive forest, according to the Wisconsin Property Assessment Manual.
2) “Other” means agricultural buildings and improvements and the land necessary for their location and convenience.
3) “Parcel of agricultural land” means land devoted primarily to agricultural use within a single legal description.
The definition of “parcel of agricultural land” used here implements the intent of the legislature in only freezing the assessment of agricultural land. If a “parcel of agricultural land” were defined as the complete legal description of a tract which was predominantly agricultural, the assessment of agricultural land within a legal description which was not predominantly agricultural would not be frozen.
Under 1995 Wis. Act 27, the assessment of each parcel of agricultural land on January 1, 1996 is frozen at the amount of its assessment on January 1, 1995. “Other”, which consists solely of agricultural buildings and improvements and the land necessary for their location and convenience, is assessed according to s. 70.32 (1), Stats., on January 1, 1996.
This rule took effect December 6, 1995, upon publication in the official state newspaper as provided in s. 227.22 (2) (c), Stats.
Fiscal Estimate
Under prior law, agricultural land was assessed at full market value. Under current law, parcels of agricultural land are assessed on January 1, 1996 at the January 1, 1995 level of assessment.
Since the taxable value of agricultural land will not increase on January 1, 1996, property taxes will be shifted from agricultural land to other classes of property; therefore, state equalization aids will be reallocated and state forestry laws will be lower than under prior law. The property tax shift will also affect state costs for tax credit programs and state tax revenues. In addition, the state and municipalities will incur costs to implement the new assessment system.
Local Fiscal Effect:
Property Tax Shifts:
Assuming the value of agricultural land grows by 5.9% in 1996, as it did in 1995, agricultural land assessments in 1996 would be lower than under prior law by $0.53 billion (5.9% x 1995 equalized value of agricultural land of $9.02 billion). Assuming a net statewide tax rate of $24 per $1,000 of value in 1996, $12.7 million ($0.53 billion x 0.024) in property taxes would be shifted from agricultural land to other classes of property. On average, property taxes on agricultural land would be 5.53% less, and property taxes on other classes of property would be 0.22% higher, than under prior law.
Administrative Costs:
Under the new system for assessing agricultural land, property assessors will have to determine how much land is devoted primarily to agricultural use. Assessors will have to reclassify agricultural buildings and improvements into a new class of property, called “other”. In addition, some land in cities and villages must be reclassified forest or swamp or waste under the new classification system. Also, the number of objections filed with boards of review are likely to increase as the new system of property classification and assessment of agricultural land is implemented. The costs of reclassification and other implementation costs required under the new system cannot be reliably estimated.
State Fiscal Effect:
Revenue and Expenditure Effects:
The $12.7 million shift in property taxes from agricultural land to other classes of property would also affect state revenues. The major effects are:
1) Farmland Preservation tax credits will decline by approximately $1.4 million, due to the decline in property taxes of claimants of about $5 million and a consequent increase of $5 million in their household incomes.
2) Farmland Tax Relief credits are 10% of up to $10,000 in property tax paid on agricultural land. Assuming $10 million of the $12.7 million reduction in the property tax on agricultural land is attributable to Farmland Tax Relief credit claimants, the credits will decline by $1 million (10% x $10 million). The $1 million decline in Farmland Tax Relief credits will increase the amount available for the lottery credit by $1 million.
3) State income tax paid by owners of agricultural land will increase, since a $12.7 million property tax reduction increases their incomes by $12.7 million. Assuming a 5% marginal income tax rate, income taxes paid by owners of agricultural land would increase by $635,000 (5% x 12.7 million). Income taxes of other property owners, whose property taxes are slightly higher, would decline.
4) Revenues from the state forestry tax, levied at $0.20 per $1,000, would be about $106,000 ($0.0002 x $0.53 billion) less than under prior law.
Administrative Costs:
The Department of Revenue will have to reprogram its computer systems to include “other” property and update its equalization databases for property reclassifications and for changes in acreages. The Department will also have to change a number of property tax reporting forms and systems. In addition, the Wisconsin Property Assessment Manual will require revision to incorporate the substance of this rule.
Contact Person
Following the public hearing, the hearing record will remain open until February 2, 1996, for additional written comments.
Copies of the complete rule text and fiscal estimate are available at no charge on request from Gregory Landretti at the address listed below. An interpreter for the hearing-impaired will be available on request for the hearing. Please make reservations for a hearing interpreter by January 22, 1996, either by writing or by calling:
Gregory Landretti, (608) 266-8202
FAX (608) 264-6887
Office of Assessment Practices
Wisconsin Department of Revenue
125 South Webster Street
Madison, WI 53702
E m e r g e n c y R u l e s N o w I n E f f e c t
Under s. 227.24, Stats., state agencies may promulgate rules without complying with the usual rule-making procedures. Using this special procedure to issue emergency rules, an agency must find that either the preservation of the public peace, health, safety or welfare necessitates its action in bypassing normal rule-making procedures.
Emergency rules are published in the official state newspaper, which is currently the Milwaukee Journal Sentinel. Emergency rules are in effect for 150 days and can be extended up to an additional 120 days with no single extension to exceed 60 days.
Extension of the effective period of an emergency rule is granted at the discretion of the Joint Committee for Review of Administrative Rules under s. 227.24 (2), Stats.
