The state Legislature had a pretty simple task: make sure nonprofit groups that provide housing for low-income people remain exempt from property taxes. New court rulings have called this exemption into question in Madison and elsewhere.
But leave it to the politicians to screw it up. The state's Joint Finance Committee worked through the night last Thursday, drafting an amendment to the state budget that would supposedly fix things. Afterward, a few people were groaning at new loopholes the Legislature might have created.
"It's all been a very frustrating process," says Rep. Terese Berceau (D-Madison), who has pushed the Legislature to act. "Too many cooks in the kitchen. And the people who know the issue best were not part of the end negotiations."
The amendments the committee drafted - which will probably be voted on next week - do seem to solve the problem for most nonprofit housing agencies. "For the most part, it's really good," says Timothy Radelet, an attorney who has been representing some providers. "It's just not perfect. I want perfect."
One potential problem is that agencies overseeing more than 30 acres (up from 10) would lose their exemptions. This might not seem like a big deal, but Radelet notes that nonprofits are under pressure to consolidate and be more efficient. Developments that aim for a mix of low-income and market-rate units would also be subject to taxes, he says. And nonprofits that form to rent office space to other nonprofits (a common practice) will now face taxation.
Meanwhile, the proposed amendment creates a new exemption for "retirement homes for the aged," possibly including high-end senior housing.
"We're nervous about how huge a loophole this is," says Curt Witynski, assistant director with League of Wisconsin Municipalities. Losing the ability to tax wealthy retirement homes would further erode the tax base for municipalities, especially as the population continues to age and the demand for high-end retirement property grows.
"If more property is taken off the tax rolls," says Witynski, "only the single-family taxpayer will be paying for services and no one else. It's just not possible to keep operating that way."