I just finished watching the News 2 First Alert TV video from WBAY. They reported that the Village of Luxemburg raised property taxes this year by 69%. This means that someone with a $2,500 property tax bill last year in Luxemburg will pay $4225 this year, and even more every year afterwards. There was lots of yelling going on at the Council meeting. Here in Kewaunee, I am not sure of our exact financial situation. I’m hoping that our new interim administrator can help us with this. I was told in the most recent council meeting that I was not allowed to sit in on upcoming meetings with our auditors. I have been asking for a finance committee for months to try and get a handle on the city’s finances, but we have been so far unsuccessful in making that happen. But make no mistake, if we find out in the June auditor’s report that our books are problematic, I will be writing some Howler blogs—Harry Potter fans will know what I’m talking about.
But getting back to Luxemburg—their situation is very instructive. And I have been trying to make sure everyone understands it. People say taxes go down if the city’s population goes up. Well, that’s not often true. In fact, as Luxemburg is finding out, it’s the other way around. Luxemburg has grown over the past decade. And Kewaunee has very slightly lost population. So, why are Luxemburg taxes going up so much? It’s because population growth can, and often does, cause your taxes to go up a lot.
Here’s how. If the new population causes your infrastructure to be replaced or upgraded, then the new infrastructure will cause taxes to go up. Schools, police and safety, sewage, water and other utilities will need upgrades. And that is often the largest expense for cities.
Another cause for property taxes to go up is the taxability of the new population. Low-cost housing becomes very expensive because it generates few taxes, causing the average taxpayer to pay more taxes. For lowering taxes, the best new population lives in single family homes above the average cost of the current homes. That means they will pay more taxes. And that will lower everyone else’s taxes. Low cost R3 (apartments) housing will raise taxes for current residents through both increased infrastructure needs and lowering the average tax bill of the new residents. Which of course, raises the tax bill of the current residents.
Buffalo Heights, Hathaway Drive and the homes near Little Seidl Lake were great for lowering the average tax bill of existing homeowners in Kewaunee. But the zoning for Scott Street R3 housing will absolutely raise the average property tax bill in Kewaunee for those who already live here. Kewaunee’s average home is well below the national average home price. Current residents aren’t rich. But Kewaunee’s property taxes are already amongst the highest in the nation. Large apartment complexes do little to pay for the new infrastructure that is required to support them. And high property taxes cause home prices to go down. You pay more in taxes and your home is less valuable.
I know you have been told that all growth is good for lowering taxes. And if you still believe that, just watch the news in Luxemburg. I don’t want our voters to get horrible surprises in their next property tax bills. I’m trying very hard to be transparent and sensible with the city’s money. I could do that better if I could be in the auditor’s meetings, or if we could at least bring back a finance committee. Hopefully I won’t be writing any Howlers in June.
Thanks for listening,