Despite voter support by a 3-to-1 margin, state lawmakers from Walworth County are not on board with a new effort to halt “dark store” property tax breaks for big-box retailers.
The tax breaks, currently permitted in Wisconsin, allow retail businesses to reduce their tax bills by lowering the assessed value of stores to the same level as stores that are vacant and unused.
Local officials in Lake Geneva and elsewhere say the practice unfairly contributes to higher property taxes for homeowners and others, by letting businesses pay less than their fair share.
Walworth County voters in November supported a referendum, with a majority of nearly 75 percent, that called on state lawmakers to pass legislation outlawing dark-store taxation methods. The county board responded by sending the referendum results to local representatives in Madison and demanding action.
Gov. Tony Evers has announced that he wants to do away with the tax breaks, and legislation has been introduced to carry out the newly elected governor’s wishes in the current legislative session.
None of Walworth County’s legislators, however, have added their names to support the legislation.
State Sen. Steve Nass, R-Whitewater, sent a letter to the county board recently announcing that he would oppose the dark-store tax reform measure, citing opposition from many business organizations, including the powerful pro-business lobby Wisconsin Manufacturers & Commerce.
Nass spokesman Mike Mikalsen said Walworth County voters were misinformed when they supported the November referendum seeking an end to dark-store taxation.
“The question was slanted,” Mikalsen said. “That question was created to get a result.”
State Reps. Amy Loudenbeck, R-Clinton, and Tyler August, R-Lake Geneva, both are voicing indecision on the current legislative proposal, both calling into question how Walworth County’s referendum was conducted.
Loudenbeck said the referendum was poorly worded, while August said the referendum failed to capture the complexity of the issue.
“It’s more complicated than just a couple of sentences on a ballot,” August said.
Walworth County Board members are expressing disappointment that the county’s elected representatives in Madison are not taking action to stop dark-store tax breaks in accordance with local voters’ wishes.
County Board Chairwoman Nancy Russell said homeowners are paying higher property taxes needlessly because state leaders are allowing big-box retailers to take unfair advantage of the system.
“There appears to be no political will at the state level to take this on,” Russell said.
Referring to voters who cast ballots in November calling for state action on the issue, Supervisor Tim Brellenthin said: “I think they should feel that they’re not being properly represented.”
The referendum asked voters if the state should enact legislation to close “dark store loopholes” that allow retail properties to lower their property tax bills, either forcing local governments to reduce services or shifting the tax burden to homeowners and others.
In Walworth County, a total of 31,039 people voted “yes” and 10,620 voted “no,” for a margin of 3 to 1. The margin was higher in Lake Geneva, Williams Bay, Elkhorn and some other communities.
The county board then approved a resolution urging state legislators to “heed the clear results” of the referendum and halt dark-store tax breaks.
Similar referendums were passed in other counties throughout Wisconsin, in a coordinated effort to push lawmakers in Madison to take action.
Local government officials for years have been seeking action against the methods of big-box retailers such as Walmart, Home Depot and Target. Retailers have saved themselves millions of dollars in property taxes by successfully pushing to have their stores assessed for tax purposes at the same level as empty stores.
Businesses and their supporters argue that such tax strategies are fair, because prosperous stores should not be valued by tax assessors any differently than stores that are vacant and dormant.
In his letter to Walworth County officials, Nass wrote that forcing big-box stores to pay higher taxes could backfire and result in higher taxes for everybody, including homeowners.
Noting that Wisconsin taxes are high already, Nass wrote of the proposed dark-store reform: “This proposal would over time make it worse.”
Loudenbeck and August both said they are willing to consider proposals on the issue, but neither has gotten behind the governor’s measure.
Loudenbeck said other ideas are being discussed that she considers worthy of consideration. She called the issue “incredibly complex,” and said she is still reviewing it.
“I’m not saying I don’t think there’s an issue, because I think there is,” she said. “It’s important to get to the right answer.”
August said big-box retailers already pay income taxes on profitable stores, so denying them property tax breaks on those stores could constitute unfair double taxation.
But he said he agrees there have been some “bad actors” on the issue in the retail industry, and he is willing to consider legislation that would exert some new controls.
“I just want to make sure we do it the right way,” he said. “There’s good arguments on both sides of the issue.”