As part of the 2017-19 State Budget, the Wisconsin State Legislature repealed a portion of the personal property tax formerly collected by local governments and dispersed to cities, villages, counties and school districts. To account for this over $70 million loss in local tax revenue, the State Legislature also agreed to backfill the loss in the form of state aid.
New state law required the Department of Revenue (DOR) to collect tax levy information from local governments so the state would know what to distribute to cities, villages, school districts and counties. The DOR created a formula that it felt would approximate the former personal property tax levies. Unfortunately, the formula resulted in substantial misallocations of tax revenue for certain communities with tax incremental finance districts, which are special tax districts created by local governments to generate development.
Numerous municipalities throughout Wisconsin took issue with the DOR in late 2018 when estimates of aid under its formula were released. In October 2018, the City of Mosinee, represented by Attorney Jacobson, became the first community in Wisconsin to file suit against the DOR to compel it to follow the plain language of the statute and preclude it from using the formula of its own creation. This would require the DOR to collect actual tax levy information from local governments to ensure that state aid was sent to the right tax entities.
In June 2019, Judge Huber of Marathon County found that the DOR’s use of a formula was contrary to state law and declared that the City of Mosinee had been shorted nearly $50,000 in state aid. Finding that Mosinee’s case applied equally to all other communities in Wisconsin, Judge Huber went on to issue a statewide injunction prohibiting the DOR from using its formula anywhere in Wisconsin.
Attorney Jacobson was honored to represent the City of Mosinee in achieving a result that benefits all local governments throughout Wisconsin. The DOR chose not to appeal the decision and is in the process of taking steps to comply with the decision statewide.
