Property taxation
Repeal of the personal property tax
Under current law, beginning with the property tax assessments as of January
1, 2018, machinery, tools, and patterns, not including those items used in
manufacturing, are exempt from the personal property tax. However, beginning in
2019, the state pays each taxing jurisdiction an amount equal to the property taxes
levied on those items of personal property for the property tax assessments as of
January 1, 2017.
Under the bill, beginning with the property tax assessments as of January 1,
2024, no items of personal property will be subject to the property tax. Beginning in
2025, the state will pay each taxing jurisdiction an additional amount equal to the
property taxes levied on the items made exempt under the bill for the property tax
assessments as of January 1, 2023. Beginning in 2026, each taxing jurisdiction will
receive a payment to compensate it for its loss in personal property revenue equal
to the payment it received in the previous year, increased by the annual percentage
change in the consumer price index.
Under current law, generally, public utilities, including railroad companies, are
subject to a license fee imposed by the state instead of being subject to local property
taxes. The bill creates a personal property tax exemption for railroad companies in
order to comply with the requirements of the federal Railroad Revitalization and
Regulatory Reform Act.
Finally, the bill makes a number of technical changes related to the repeal of
the personal property tax, such as providing a process whereby manufacturing
establishments located in this state that do not own real property in this state may
continue to claim the manufacturing income tax credit.
Assessments; leased property and comparable sales
The bill provides that, for property tax purposes, real property includes any
leases, rights, and privileges pertaining to the property, including assets that cannot
be taxed separately as real property, but are inextricably intertwined with the real
property. The bill also requires real property to be assessed at its highest and best
use. Current law requires that real property be assessed at its full value and upon
actual view or from the best information that the assessor can obtain from
“arm's-length sales" of comparable property. The bill defines an “arm's-length sale"
as a sale between a willing buyer and willing seller, neither being under compulsion
to buy or sell and each being familiar with the attributes of the property sold.
The bill also provides that an assessor may determine the value of leased
property by considering the lease provisions and actual rent pertaining to the
property, if the lease provisions and rent are the result of an “arm's-length
transaction.” The bill defines an “arm's-length transaction” as an agreement
between willing parties, neither being under compulsion to act and each being
familiar with the attributes of the property.
The Wisconsin Supreme Court decided in 2008 that a property tax assessment
of leased retail property using the income approach must be based on “market rents,"
which is what a person would pay to rent the property, based on rentals of similar
property, as opposed to “contract rents," which is the amount that the lessee actually
paid to rent the property. See, Walgreen Company v. City of Madison, 2008 WI 80,
752 N.W.2d 689 (2008). The bill changes Wisconsin law to specify that an assessment
using the income approach must be based instead on contract rents.
The bill also provides that to determine the value of property using generally
accepted appraisal methods, an assessor must consider all of the following as
comparable to the property being assessed:
1. Sales or rentals of properties exhibiting the same or a similar highest and
best use with placement in the same real estate market segment.
2. Sales or rentals of properties that are similar to the property being assessed
with regard to age, condition, use, type of construction, location, design, physical
features, and economic characteristics.
The bill defines “real estate market segment” to mean a pool of potential buyers
and sellers that typically buy or sell properties similar to the property being
assessed, including potential buyers who are investors or owner-occupants.
The bill also provides that a property is not comparable to the property being
assessed if the seller has placed restrictions on the highest and best use of the
property or if the property is dark property and the property being assessed is not
dark property. The bill defines “dark property” as property that is vacant or
unoccupied beyond the normal period for property in the same real estate market
segment.
School aid reduction information
The bill requires that a person's property tax bill include information from the
school district where the property is located regarding the amount of any gross
reduction in state aid to the district as a result of pupils enrolled in the statewide
choice program, the Racine choice program, or the Milwaukee choice program or as
a result of making payments to private schools under the special needs scholarship
program.
Property tax exemption for WHEDA headquarters
The bill exempts land and buildings owned by WHEDA and used as its
corporate headquarters, including associated parking facilities, from the property
tax.
Property tax exemption for cranberry research station
The bill exempts from the property tax all property, not exceeding 50 acres of
land, owned or leased by a tax-exempt entity that is used primarily for research and
educational activities associated with commercial cranberry production.
Property tax exemption for baseball park development
The bill exempts from the property tax all baseball park development operated
by a professional baseball team for any legally permissible use. Current law exempts
sports and entertainment home stadiums and any functionally related or auxiliary
facilities from the property tax.
Manufacturing property assessment fees
Under current law, DOR assesses manufacturing property for property tax
purposes and imposes a fee on each municipality in which the property is located to
cover part of the assessment costs. If a municipality does not pay by March 31 of the
following year, DOR reduces the municipality's July and November shared revenue
distribution by the amount of the fee. Under the bill, if DOR is unable to collect the
fee from a municipality in this manner, then the fee is directly imposed on the
municipality.
General taxation
Milwaukee County sales and use tax
Current law allows a county to enact an ordinance to impose sales and use taxes
at the rate of 0.5 percent of the sales price or purchase price on tangible personal
property and taxable services. The county must use the revenue from the taxes for
property tax relief. The bill allows Milwaukee County to impose, by ordinance, an
additional sales and use tax at the rate of 1 percent of the sales price or purchase price
on tangible personal property and taxable services. However, the ordinance does not
take effect unless approved by a majority of the voters of the county at a referendum.
The bill requires 50 percent of the revenue from those taxes to be distributed to the
City of Milwaukee, and the revenue may be used for any purpose designated by the
common council. The revenue retained by Milwaukee County may be used for any
purpose designated by the county board or specified in the ordinance or in the
referendum approving the ordinance.
County and municipality sales and use taxes
The bill allows counties besides Milwaukee County to impose, by ordinance, an
additional sales and use tax at the rate of 0.5 percent of the sales price or purchase
price on tangible personal property and taxable services. However, the ordinance
does not take effect unless approved by a majority of the voters of the county at a
referendum. The revenue from those taxes may be used for any purpose designated
by the county board or specified in the ordinance or in the referendum approving the
ordinance.
The bill also allows a municipality, except for the City of Milwaukee, with a 2020
population exceeding 30,000 to enact an ordinance to impose sales and use taxes at
the rate of 0.5 percent of the sales price or purchase price on tangible personal
property and taxable services. The ordinance does not take effect unless approved
by a majority of the voters of the municipality at a referendum. The revenue from
those taxes may be used for any purpose designated by the governing body of the
municipality or specified in the ordinance or in the referendum approving the
ordinance.
Little cigars
The bill taxes little cigars at the same rate as the excise tax imposed on
cigarettes. Under current law, all cigars are taxed at the rate of 71 percent of the
manufacturer's established list price, limited to 50 cents per cigar. Under the bill,
little cigars are taxed at the rate of 126 mills per little cigar, regardless of weight.
The bill defines “little cigar” to mean a cigar that has an integrated cellulose acetate
filter and is wrapped in any substance containing tobacco.
Vapor products
Current law imposes a tax on vapor products, which are any noncombustible
products that produce vapor or aerosol for inhalation from the application of a
heating element to a liquid or other substance that is depleted as the product is used,
regardless of whether the liquid or other substance contains nicotine. The tax is
imposed at the rate of 5 cents per milliliter of the liquid or other substance based on
the volume as listed by the manufacturer.
The bill taxes vapor products at the rate of 71 percent of the manufacturer's
established list price and modifies the definition of “vapor product.” Under the bill,
“vapor product” means a noncombustible product that employs a heating element,
power source, electronic circuit, or other electronic, chemical, or mechanical means
that can be used to produce vapor from a solution or other substance, regardless of
whether the product contains nicotine. A “vapor product” is defined to include an
electronic cigarette, electronic cigar, electronic cigarillo, electronic pipe, or similar
product or device, as well as any container of a solution or other substance that is
intended to be used with these items. The bill specifies that any product regulated
by the federal Food and Drug Administration as a drug or device is not a vapor
product.
Definition of “manufacturer's list price”
Current law imposes a tax on tobacco products based on the “manufacturer's
established list price,” without defining the term. The bill removes the word
“established” and defines “manufacturer's list price” to mean the total price of
tobacco products charged by the manufacturer or other seller to an unrelated
distributor. The bill specifies that the total price must include all charges by the
manufacturer or other seller that are necessary to complete the sale, without
reduction for any cost or expense incurred by the manufacturer or other seller or for
the value or cost of discounts or free promotional or sample products. The bill
provides that a manufacturer or other seller is related to a distributor if they have
significant common purposes and either substantial common membership or
substantial common direction or control.
Sales and use tax exemption for gun safety items
The bill creates a sales and use tax exemption for sales of gun safes, trigger
locks, and gun barrel locks.
Breastfeeding equipment
The bill creates a sales and use tax exemption for breast pumps, breast pump
kits, and breast pump storage and collection supplies.
Sales tax exemption for diapers and feminine hygiene products
The bill creates a sales and use tax exemption for the sale of diapers and
feminine hygiene products.
Prewritten computer software
The bill imposes the sales tax on the sale of the right to access and use
prewritten computer software that remains in the possession of the seller or third
party, including sales made on a per use, per user, per license, or subscription basis.
Current law defines “prewritten computer software” as computer software that is not
designed and developed by the author to the specifications of a specific purchaser.
Sales tax exemption for energy systems
Current law provides a sales and use tax exemption for a product that has as
its power source wind energy, direct radiant energy received from the sun, or gas
generated from anaerobic digestion of animal manure and other agricultural waste,
if the product produces at least 200 watts of alternating current or 600 British
thermal units per day. The sale of electricity or energy produced by the product is
also exempt.
The bill modifies current law so that the exemption applies to solar power
systems and wind energy systems that produce electrical or heat energy directly
from the sun or wind and are capable of continuously producing at least 200 watts
of alternating current or 600 British thermal units. In addition, the exemption
applies to a waste energy system that produces electrical or heat energy directly from
gas generated from anaerobic digestion of animal manure and other agricultural
waste and is capable of continuously producing at least 200 watts of alternating
current or 600 British thermal units. A system for which the exemption applies
includes tangible personal property sold with the system that is used primarily to
store or facilitate the storage of the electrical or heat energy produced by the system.
Prairie and wetland counseling services
Under current law, the sale of landscaping and lawn maintenance services is
subject to the sales tax. The bill excludes from taxable landscaping services the
planning and counseling services for the restoration, reclamation, or revitalization
of prairie, savanna, or wetlands if such services are provided for a separate and
optional fee distinct from other services.
Sales and use tax exemption for professional baseball park districts
The bill exempts from the sales and use tax tangible personal property and
taxable services sold to a local professional baseball park district.
Sales and use tax exemption for improving professional sports and
entertainment home stadiums
The bill exempts from the sales and use tax building materials, supplies, and
equipment sold to owners, contractors, subcontractors, or builders solely for the
improvement, repair, or maintenance of a professional sports and entertainment
home stadium.
Repeal of sales tax exemption for farm-raised deer
The bill repeals the sales and use tax exemption that applies to the sale of
farm-raised deer to a person operating a hunting preserve or game farm in this state.
Providing notices for public utility taxes
Under current law, public utility companies, including railroads and air
carriers, are exempt from local property taxes and instead subject to special state
taxes. Current law requires DOR to send certain notices regarding these taxes by
certified mail. Under the bill, DOR must still provide the notices but is no longer
required to send them by certified mail.
Other taxation
Real estate transfer fee
Current law, generally, requires a person who conveys an interest in real
property to file a real estate transfer return with the county register of deeds and pay
a real estate transfer fee equal to 30 cents for each $100 of the value of the
conveyance. Current law provides certain exemptions from paying the fee, including
exemptions for conveyances between an entity and the members of the entity who
are related to each other as spouses, lineal ascendants, lineal descendants, or
siblings.
The bill modifies current law so that the exemptions for conveyances between
entities and related members also apply to conveyances to members who are related
as an uncle and his nieces or nephews, an aunt and her nieces or nephews, or first
cousins.
transportation
Highways and local assistance
Transportation revenue bonds
Under current law, the Building Commission may issue revenue bonds for
major highway projects and transportation administrative facilities in a principal
amount that may not exceed $4,325,885,700. The bill increases the revenue bond
limit to $4,493,600,000, an increase of $167,714,300.
I 94 east-west corridor bonding
Under current law, the state may contract up to $40,000,000 in public debt for
the purposes of reconstructing the “I 94 east-west corridor,” which is defined to mean
“all freeways, including related interchange ramps, roadways, and shoulders,
encompassing I 94 in Milwaukee County from 70th Street to 16th Street, and all
adjacent frontage roads and collector road systems.” The bill increases the
authorized general obligation bonding limit for these purposes by $140,873,000 to
$180,873,000.
Major interstate bridge bonding
Under current law, the state may contract up to $272,000,000 in public debt for
DOT to fund major interstate bridge projects, which are projects involving the
construction or reconstruction of a bridge on the state trunk highway system that
crosses a river forming a boundary of the state and for which this state's estimated
cost share is at least $100,000,000. The bill increases the authorized general
obligation bonding limit for this purpose by $47,200,000 to $319,200,000.
General transportation aids
Under current law, DOT administers a general transportation aids program
that makes aid payments to a county based on a share-of-costs formula, and to a
municipality based on the greater of a share-of-costs formula or an aid rate per mile.
The aid rate per mile is $2,734 for 2023. The bill increases the aid rate per mile to
$2,843 for 2024 and $2,957 for 2025 and thereafter.
Currently, the maximum annual amount of aid that may be paid to counties
under the program is $127,140,200. The bill maintains this amount for 2023 and
increases this amount to $132,225,800 for 2024 and $137,514,800 for 2025 and
thereafter. Currently, the maximum annual amount of aid that may be paid to
municipalities under the program is $398,996,800. The bill maintains this amount
for 2023 and increases this amount to $414,956,700 for 2024 and $431,555,000 for
2025 and thereafter.
Local roads improvement program discretionary grants
Under current law, DOT administers the local roads improvement program
(LRIP) to assist political subdivisions in improving seriously deteriorating local
roads by reimbursing political subdivisions for certain improvements. LRIP has
several components, including discretionary grants. Current law specifies dollar
amounts that DOT must allocate in each fiscal year to each of three project types that
exceed specified cost thresholds: 1) county trunk highway improvements, 2) town
road improvements, and 3) municipal street improvement projects.
Under the bill, in fiscal year 2023-24 and each fiscal year thereafter, of the
amount appropriated to DOT for LRIP discretionary grants, DOT must allocate 35.6
percent to county trunk highway improvements, 39.0 percent to town road
improvements, and 25.4 percent to municipal street improvements.
Transportation projects
Under current law, for certain highway projects for which DOT spends federal
money, federal money must make up at least 70 percent of the funding for those
projects. DOT is required to notify political subdivisions receiving aid for local
projects whether the aid includes federal moneys and how those moneys must be
spent. For certain projects that receive no federal money, DOT may not require
political subdivisions to comply with any portion of DOT's facilities development
manual other than design standards. Any local project funded with state funds
under the surface transportation program or the local bridge program must be let
through competitive bidding and by contract to the lowest responsible bidder. The
bill repeals all of these requirements.
Electric vehicle infrastructure program
Under the bill, DOT may establish and administer a program to provide
funding for electric vehicle infrastructure projects.
Establishment of bikeways and pedestrian ways in highway projects
Under current law, DOT must, with exceptions, give due consideration to
establishing bikeways and pedestrian ways in all new highway construction and
reconstruction projects funded from state or federal funds.
Under the bill, with several exceptions, DOT must ensure that bikeways and
pedestrian ways are established in all new highway construction and reconstruction
projects funded from state or federal funds and must promulgate administrative
rules identifying certain exceptions to the requirement.
Interconnected traffic signal and railroad signal systems
Under current law, DOT is appropriated federal, state, and local moneys for the
purpose of railroad crossing improvements. The bill appropriates to DOT state and
local moneys specifically for the planning and installation of interconnected traffic
signal and railroad signal systems.
State funding for local transportation facilities
Under current law, DOT is appropriated moneys received from local units of
government and the federal government for the purposes of providing public access
roads to navigable waters; improving highway connections between the UW System
and state charitable or penal institutions; constructing and maintaining UW
System, state charitable or penal institution, and state capitol roadways;
constructing and maintaining state park, forest, and riverway roads; and improving
transportation facilities.
The bill creates an appropriation of state moneys from the transportation fund
for the same purposes.
