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Planning & Economic Development

Wisconsin Equalization Process

Wisconsin has a two-tiered process: local assessments, and state equalization. The process of establishing full values for municipalities is referred to as "Equalization".

Because local assessors may value property at different percentages of market value, the rule of uniformity would be violated if the assessed values were used to apportion levies for taxing authorities with property in more than one town, city, or village. Equalized values provide a more equitable distribution for apportioned tax levies, based upon the proportion of full property value each one bears in relation to the taxing jurisdiction's full value.

 

COUNTY TAX APPORTIONMENT (ASSESSED VS EQUALIZED VALUES)

County Tax To Collect

$30,000

 

 

 

 

City A

Village B

Town C

County Total

 

 

 

 

 

Municipality Assessed Value

$10,000,000

$10,000,000

$10,000,000

$30,000,000

Apportioned Rate (Assessed)

($30,000 divided by $30,000,000)

.001000000

Municipal County Apportionment

$10,000

$10,000

$10,000

$30,000

 

 

 

 

 

Level of Assessment

50%

70%

100%

 

Equalized/Full Value

$20,000,000

$14,285,700

$10,000,000

$44,285,700

Apportioned Rate (Equalized)

($30,000 divided by $44,285,700)

.00067742

Municipal County Apportionment

$13,548

$9,678

$6,774

$30,000


To determine full values for municipalities, the Wisconsin Department of Revenue uses assessment/sales ratio analysis. This develops the relationship between assessed values and actual sales prices. Dividing the total assessed value of the sales in the municipality each year, by the total sale price calculates an annual equalization ratio. If the ratio is 95%, the state increases the municipality's assessed value by 5% to determine the full value of the municipality. If that ratio is 105%, the state decreases the municipality's assessed value by 5% to determine the full value of the municipality.

A sample of the method for establishing full values is shown below.

 

SAMPLE EQUALIZED VALUE CALCULATION

Assessed Value of Properties Sold

$28,300,000

Sale Price Total of Properties Sold

$28,100,000

Ratio Calculation ($28,300,000 divided by $28,100,000)

1.007117438

Level of Assessment (State Economic Adjustment)

100.71%

 

Previous Years Assessed Value

$650,000,000

 

Value Added From Annexations

$2,000,000

Value Added From New Construction

$17,500,000

Value Added From Exempt Property Turning Assessable

$150,000

Value Added From Assessment Reviews

$4,000,000

Value Loss From Razed or Depreciated Buildings

-$1,700,000

Value Loss From Property Now Exempt

-$200,000

Value Loss From Reviews

-$500,000

Value Difference

$21,250,000

 

Adjusted Assessed Value ($650,000,000 + $21,250,000)

$671,250,000

 

Assessed Value Economically Adjusted ($671,250,000 / 100.71%)

$666,517,724

Full Value Manufacturing Values (By Department of Revenue)

$42,000,000

Equalized Value of Municipality ($666,517,724 + $42,000,000)

$708,517,724

 

Manufacturing Assessed Value ($42,000,000 X 100.71)

$42,298,200

Final Assessed Value for Municipality ($671,250,000 + $42,298,932)

$713,548,200

 
Because Wisconsin has the two-tiered valuation process, both values are printed on the tax bills, along with the level of assessment. As shown in the chart above, the level of assessment is determined by dividing the total assessed value of properties that have sold by the total sale price. On the tax bills, the equalized value is shown as "total estimate of fair market value", and is calculated by dividing the individual parcel's assessed value by the level of assessment.

When the level of assessment is 100%,


the assessed value is the same as the estimate of fair market value.


When the level of assessment is over 100%,


the estimate of fair market value is less than the assessed value.


When the level of assessment is less than 100%,


the estimate of fair market value is higher than the assessed value.


The "estimate of fair market value" is printed on the tax bills only to give taxpayers an idea of the market value of the property. It should be kept in mind that the ratioed value on the tax bill is not developed from the analysis or stratification of sales of similar properties. Owners should request a market value estimate from an appraiser or realtor before selling any property on the open market for the "estimated fair market value" printed on the tax bill.

The economic adjustments applied to towns, cities and villages by the state develop an indicator of the entire municipality's full value. However, when used in reverse on individual properties, the process strictly develops equalized values - not market values - as shown below.

 

Sale #

Assessment

Sale Price Or Market Value

Tax Bill "Estimated Market Value"

Tax Bill "Estimated Market Value" Calculation

1

$98,000

$106,000

$112,618

($ 98,000 div by .8702)

2

$35,000

$34,000

$40,220

($ 35,000 div by .8702)

3

$60,000

$70,000

$68,950

($ 60,000 div by .8702)

4

$218,500

$250,000

$251,091

($ 218,500 div by .8702)

5

$18,000

$16,500

$20,685

($ 18,000 div by .8702)

6

$547,000

$650,000

$628,591

($ 547,000 div by .8702)

7

$125,000

$134,500

$143,645

($ 125,000 div by .8702)

8

$135,000

$160,000

$155,136

($ 135,000 div by .8702)

Totals

$1,236,500

$1,421,000

$1,420,936

 

Aggregate Ratio:

$1,236,500 divided by $1,421,000

87.02%



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