Kaufert and Tax Loophole (Newark)

Press Release on 5/30 from the Wheeler Report:

BILL TO CLOSE NEWARK LOOPHOLE ADVANCES THROUGH COMMITTEE - Court Decision Threatens to Shift Millions of Taxes to Homeowners

(Madison)—A bi-partisan bill aimed at closing a tax loophole that could shift millions of dollars in property taxes to homeowners received unanimous support today from the Legislature’s Joint Survey Committee on Tax Exemptions. The bill, sponsored by State Senators Dave Hansen (D-Green Bay) and Rob Cowles (R-Green Bay) and State Rep Dean Kaufert (R-Neenah), is designed to reverse a controversial Tax Appeals Commission ruling that has already forced homeowners and small businesses to pick up over $34 million in extra property taxes throughout the state, with many millions more possibly on the way.

“I am thankful to the members of the committee for their support, but we must continue to fight to get this bill to the Governor’s desk as soon as possible,” said Cowles. “The longer we wait, the more taxes will be shifted to our homeowners and small businesses.”

A 2004 decision by the Tax Appeals Commission, upheld on appeal at circuit court, extended the property tax exemption for treatment plant and pollution abatement equipment to property of a paper board manufacturing facility in Milwaukee owned by the New Jersey-based Newark Group, Inc. The ruling was loose interpretation of a 1953 statute designed to reduce air and water pollution from manufacturing sources.

The decision has become known as the Newark decision. “This bill has now received unanimous, bi-partisan support from both committees that have acted on it and Wisconsin homeowners need to know that leaders of both parties are committed to closing this outrageous loophole,” said Hansen. “It is my hope that leadership on both sides can avoid the temptation to play politicswith this bill so we can get this to the Governor’s desk as soon as possible.”

Exemptions based on the Newark decision have been granted to paper makers, wood product manufacturers, oil and grease shops and even a cheese maker. Over $34 million in manufacturing property has been removed from the tax rolls because of Newark-based appeals of property tax assessments. It is expected that the effects of the exemption may spread much further unless the loophole is closed. Up to $1.8 billion in manufacturing property value may become exempt from property taxes because of the court ruling. This would cause a massive property tax shift to homeowners and small businesses.

"We need to keep this moving through the legislative process to send a clear signal to municipalities that the Legislature is going to resolve this problem," said Kaufert. "We have a good bill here and there is no reason to delay action any longer."

The legislation now needs approval from the Joint Committee on Finance, before being voted on for final approval by the Senate and Assembly.