SUN PRAIRIE RISING

By Bryce Baker, via Reddit r/SunPrairieWI

The following article was originally posted by Mr. Baker on the subreddit r/SunPrairieWI

Hello fellow Sun Prairians. 

Firstly, I acknowledge that this is a very long post – but the issue of the upcoming referendum is complex, messy, and has a lot of very unintuitive data around it. This is a slightly modified version of a post I made on Reddit that received positive feedback, so I hope it is informative to you. I am just a regular resident with Google and an email account, not an expert.

However, I have spoken with my alders, emailed the main support line, and attended a town hall session and only after all that do I somewhat understand what is actually going on. My goal with this post is to make a one stop, as non-biased as possible explanation of what the referendum is, and what it isn’t, and why it is being called so everyone can feel educated and empowered in their decision. I will try to keep this as factual as possible so you can make up your mind, although I obviously have my own opinions.

Note: I am going to give numbers based on an average home valued at $381,000. A lot of the numbers will be estimates because it can be hard to get exact dollar amounts when it comes to property. You can do some division and multiplication to find the proportion this would be for your home. 

Also note, I am trying to simplify an extremely complex and dry municipal funding program so am over-simplifying many things. If you’re an urban planner who catches that I’ve skipped over details, please forgive me.

What we’re voting on

Your property tax bill (the total you pay each year) looks like this and is made up of 4 different taxing jurisdictions.

Jurisdiction	Amount	Description
Dane County	$970	The county government. TBH I don’t really know exactly what they do. Courts???
City of Sun Prairie	$2,440	This is the portion that is being voted to increase
SP School District	$3,282	The school district – they have gone to referendum like 16 times in the last few decades, and make up the absolute lion’s share of your bill. This is NOT what is being voted on
Madison Tech College	$232	MATC funding
Total	$6,926

The SP School District passed several referendums over the last few years which has made this portion skyrocket. The City of Sun Prairie has never gone to referendum. Most of this year’s sticker shock on taxes came from the school referendum that voters passed, not from the city.

So, what do you get for that $2,440 each year?

1. Street maintenance and construction, snow plowing, other public works
2. Parks and recreation (including the aquatic center)
3. Fire, EMS, and Police. NOTE – this makes up approx 56% of the budget
4. The Library
5. Bus and transit service
6. Running our elections
7. Zoning and building inspections
8. Community safety events (like checking car seats and fire inspections)
9. Water, sewer, and wastewater
10. Administration (BORING) but appraising our properties and collecting taxes
11. Municipal court
12. Media center
13. Sun Prairie Utilities 
14. A few other smaller things like small business development, liquor licenses etc

How are taxes calculated?

Okay, I am going to preface this by saying this is extremely unintuitive and strange, so please bear with me as we try to make sense of this together. 

Each year, the city assessor assesses a total “tax levy” – remember this word, it is important. The “ tax levy” = the “operational levy” + “debt levy”. So it is the sum of TWO separate levies. 

The operational levy is what we are voting to increase. This is calculated as a hard-coded, raw number – NOT a percent of your property value. It equals the total value of last year’s levy + the percentage of net new construction that occurred within the city. 

The city CANNOT raise the operational levy in a way that does not directly reflect new growth. This restriction was put in place about 20 years ago to encourage cities to develop and allow new growth, and restrict their ability to continuously increase taxes on residents. 

Each year, the assessor assesses the total value of all land and buildings within the city to give a total city value. Any new buildings added are divided against the old buildings total, to calculate the net increase in construction. 

So, let’s say last year’s levy was $10 million dollars, and the city added 10% of its total value in new construction last year. The new levy would be $11 million dollars which forms the new “base” for the following year. If there is no new construction, the levy remains $10 million dollars for the following year.  

Your portion of the bill represents the percentage of the total value of the city that your property represents, then that proportion is divided by the total levy. 

So in our example, if the total levy is $10 million, and the total value of the city is $100 million, and your property is valued at $1 million, your property represents 1% of the total value of the city and therefore your operating levy would be $100,000 (10mil x 0.01). It uses an obscure and confusing concept called a “mill rate” to find that.

A common misconception is that the city taxes just levy a firm % of your home, so as your house goes up in value, you pay more tax. This is not true. If everybody’s home increases by the same %, your taxes will stay stable. If your neighbours all build pools that increase their value, and your value stays the same, your taxes would go down. If you build a stable in your backyard and your price shoots up higher than your neighbours, your taxes will go up and theirs will go down. 

This technically means that your taxes should never increase, since they’re set to a fixed dollar amount as part of the levy. However, this is affected by a few things including the debt levy which I’ll talk about later.

So why are we going to referendum?

You’ll notice that this formula does not directly account for standard inflation. Remember, cities have to buy goods too, whether that’s labour (wages and benefits), gas for vehicles, road salt, pool chlorine, fire engines, repairs to community centres, paper ballots etc. These are all subject to inflationary pressure and it costs them more money to operate this year than it did the year before – just like it does for us as citizens. 

So, this means that in good years the city will grow more than inflation – yay! If inflation is 2.5% and we grow by 5%, we can “pocket” that additional 2.5% and use it to fund more parks, police, etc. If it tends to hover around inflation over the long-term, the city can maintain its services but it cannot add new ones (no new firefighters or librarians, but keep the same amount as before).

However, if it doesn’t grow by inflation, the city starts to see deficits as it can only raise an absolute, firm dollar amount, and that is worth less every year. 

The operational levy is around $27 million so 3% inflation means the city “loses” ~$810,000 each year. I was also told that inflation has been higher for municipality type purchasing, specifically big ticket items like fire engine parts, health insurance for employees, and even salaries demanded have gone up more than consumer inflation. For example, they said they’ve had trouble hiring IT staff and building inspectors, which they have a legal duty to provide, so they have to increase the offering salary to poach from other municipalities. 

Because of this, the city has a forecast deficit over the next 3 years.

Why have my taxes gone up even when they shouldn’t?

This is the key question I was trying to dig into – when the levy should stay stable, why have my taxes gone up over time?

There’s two answers to this, TIF/TID, and the Debt Levy.

Debt Levy – the city can finance expensive capital projects such as new roads via debt to “bypass” the operational levy to a certain extent. This is limited in what they can/can’t do (can’t use it for operational purposes), but this has increased from 6.5million per year to 9.5 million per year, over the last 5 years. It has gone to fund the new Sun Prairie Utilities building, the new Library, the new wastewater treatment plant, but also, replacing roads that are 40-50 years old as we age out of the baby boom growth expansion in older neighbourhoods. 

TIF/TID – Okay, I am probably going to butcher this one so bear with me as I over-simpify this. Remember how cities NEED to attract growth to sustain? One mechanism they have to attract and compete for development is a Tax Increment District which leads to Tax Increment Funding. Basically, the government says “this physical location is a priority to develop – if people develop there, we’ll reimburse their property taxes up to a certain amount or until a certain period of time has passed”. This is traditionally done to offset development of roads, water mains, electric lines etc – things the developer builds but end up as public assets.

Example: the big stretch near the Wildwood Apartments has (I believe) a $9 million TIF for that entire area. So essentially the first $9 million of property taxes are returned to the developers, then afterwards, those properties all start paying tax to the city. This affects all 4 taxing jurisdictions, not just the city.

The pros of TID/TIF is that it’s a low risk way to attract developers. It’s better to have a promise of future taxes than empty land sitting vacant. The cons are twofold – firstly it’s basically a subsidy to developers and can be abused to pay for things they would have paid anyway. Secondly, and most importantly – the value of those new buildings contribute to the new operational levy (see, I said this was important) without offsetting the tax growth.

So, let’s say the city has 5% growth in a year, all of which is in a TID. They can increase the total levy by 5%, but their actual tax base has not increased – meaning that the existing properties pay 5% more tax. This is why it is controversial – it is asking today’s residents to pay extra to offset future growth in the tax base, and the city has been doing a lot of TIF in recent years.

So what exactly are we voting on?

We are voting to increase the base levy by ~$4 million, and the associated tax increase that comes with it. This comes out to a cumulative additional ~$80 for an average home each year over the next 3 years – so ~$80 in the first year, ~$160 in the second, ~$240 in the 3rd. 

The ~$4mil aims to achieve the following:

1. Offset inflation and continue with the current budget (the lion’s share of the money)
2. Add one new police officer
3. Add two new firefighters
4. Increase the hourly wage of our part time fire fighters from $12.50 per hour to $13.60 per hour
5. Add a part time position in the library to run the Maker’s Space

If the referendum fails, they’ll have to make around $3 million worth of cuts from the budget to offset inflation, and won’t hire the new roles.

Last thing, then I’ll shut up

One controversial thing is that the city has been honest that in 3-4 years, they’ll run into the same problem again, and again, ad nauseum. This is something to consider. One one hand, if we cut now the city will never be able to catch up on service growth without a really heavy tax increase in the future. On the other hand, voting yes now means another vote yes in 3 years and so on and so forth. Neither option is good. 

One last piece of context is that referenda have become incredibly common now – 75 municipalities have passed them in the last 10 years, and there were 19 across the state in 2024 alone. School districts are facing the same pressure, and 241 went to referendum in 2024 alone. This is not a Sun Prairie specific issue. This is in part due to the fact that the state government/legislature is sharing less and less money with cities and school districts each year, which they used to use to offset some of this tax growth, forcing it down to the taxpayers. 

Ultimately, when a city cuts budget, it’s not the Mayor and the City Administrator who feel the pain – it’s the people who want to use the library or who have to wait longer for a police call. 

Disclaimer: This article was contributed by a third-party guest author. The views, opinions, and statistical data expressed within this piece are solely those of the author and do not necessarily reflect the official policy or position of Sun Prairie Rising. Sun Prairie Rising has not independently verified the accuracy of the data presented and does not endorse or assume liability for any business, product, service or information mentioned herein.