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Why Hamilton’s Mill Rate Dropped After the 2018 Referendum

CFAC 2-Minute Videos: Why Hamilton’s Mill Rate Dropped After the 2018 Referendum

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Property owners in the Hamilton School District are enjoying the lowest mill rate in the district’s 60-year history. At its height in the 1970s, the district mill rate reached $25.69 — significantly higher than the current rate of $7.93. The district is experiencing this low tax rate in spite of the fact that voters approved a referendum in 2018 that was expected to increase the mill rate by $1.37.

This 2-minute video takes a look at the factors that determine school tax rates and why Hamilton’s mill rate actually dropped after passage of the last referendum.

First, some general terms:

The tax levy is the portion of the budget that is funded through local property taxes. Local property taxes and state aid are the two most significant sources of revenue for the school district. Federal aid and local fees are other revenue sources.

The tax base is the total value of all property in the district that is subject to local property taxes. 

The tax levy divided by the tax base is the tax rate. It is expressed in terms of dollars per thousand, or a mill rate. With the current mill rate at $7.93, property owners pay $7.93 for each $1,000 of property to support the local school district.

A number of factors can affect the tax rate, but the three most prominent are:

  • spending
  • amount of state aid received and 
  • property value in the community.

Let’s look at how each of these affects the Hamilton School District.

When the Wisconsin Legislature enacted revenue caps in 1993, Hamilton was a lower-spending district and the inequities with other school districts were locked in making Hamilton one of the lowest spending districts in the area.

When a greater portion of revenue comes from state aid, local property taxpayers have a smaller share of the tax burden. Distribution of state aid is a complex formula with student enrollment one aspect of it. Hamilton’s enrollment growth is reflected in the amount of aid the district receives. 

When property values increase – either because the value of existing homes increases or new development occurs – there is a broader base to support the budget and the rate goes down. In Hamilton’s case, the value of existing property and new homes being built have been consistently higher than the state average. 

When voters approved the referendum in 2018, they were expecting the mill rate to increase $1.37 – from $8.55 to $9.92. Instead, four years after the referendum passed, the district’s mill rate is down 62 cents.

Among all the factors affecting the mill rate, community property value growth had the most significant impact. In projecting the tax impact of the referendum, the district estimated a 2% increase in property value. The average annual increase over the past four years was actually 6.28%.