AB 879

This bill repeals the changes made in

2023 Wisconsin Act 12

to the calculation

of local property tax levy limits with regard to taxable property located within a tax

incremental district (TID).

Generally, under current law, local levy limits are applied to the property tax

levies that are imposed by political subdivisions. A political subdivision may not

increase its levy by a percentage that exceeds its “valuation factor," which is the

greater of either 1) the percentage change in the political subdivision's equalized

value due to new construction, less improvements removed, (net new construction)

or 2) 0 percent.

Act 12 changed the standard for determining the “valuation factor” to include

only 90 percent of new construction that occurs within TIDs created after December

31, 2024, (covered TIDs) and to exclude any improvements removed within these

TIDs. That is, under Act 12, net new construction for a political subdivision is the

percentage change in the political subdivision's equalized value due to new

construction, including 90 percent of the value of new construction occurring within

a covered TID, less improvements removed, other than improvements removed

within a covered TID. The bill repeals these changes.

Also, under current law, when a city or village creates a TID, the Department

of Revenue calculates the “tax incremental base” value of the TID, which is the

equalized value of all taxable property within the TID at the time of its creation. If

the development in the TID increases the value of the property in the TID above this

base value, the amount by which the equalized value exceeds the base value is the

TID's “value increment.” The taxes collected on this value increment pay for the

project costs of the TID.

Prior to Act 12, the statutes provided for an increase in a political subdivision's

levy limit upon the termination of a TID. If DOR did not certify a value increment

for a TID for a year because the TID had terminated, the levy limit of the political

subdivision in which the TID is located increased by an amount based on 50 percent

of the previous year's value increment for the TID. (The actual amount was equal

to the maximum allowable levy for the preceding year, multiplied by a percentage

equal to 50 percent of the amount determined by dividing the terminated TID's value

increment by the political subdivision's equalized value less any TID value

increments.) Also under pre-Act 12 law, a similar increase in levy limit resulted

when a political subdivision amended a TID to subtract territory.

Under Act 12, these existing standards for increasing the levy limit of a political

subdivision upon the termination or amendment of a TID are limited to TIDs created

before January 1, 2025. For covered TIDs, upon termination or amendment of the

covered TID, the political subdivision's levy limit is increased by an amount based