MADISON — Wisconsin's municipalities rely on property taxes far more than most states, according to a new report.
The state's municipalities received about 42 percent of their revenue from property taxes, Wisconsin Policy Forum said in a study released Thursday. The national average totals around 23 percent, according to the nonpartisan research group.
The study ranks Wisconsin seventh in the country and top in the Midwest for its reliance on property taxes, the Milwaukee Journal Sentinel reported.
Property taxes account for twice as much revenue for local governments as state aid, the report found.
The findings also show Wisconsin's property tax caps, which have been in place for more than a decade, appear to be tighter than other states as reliant on the revenue.
"It's a classic good news-bad news story," said Rob Henken, the group's president. "I don't think there's any question that the property tax caps have been a contributor to the successful effort to reduce the property tax burden in the state of Wisconsin."
But Henken said the state is starting to see unintended consequences from the property tax caps, such as rising debt and increased use of wheel taxes.
Local governments have limited options for raising funds when needed, and borrowing provides one of the few avenues of relief for local officials.
In most states, sales taxes are commonly used by municipalities to fund operations. Wisconsin's sales tax, which is set a 5.5 percent in most parts of the state, is the lowest rate in the Midwest, according to the report.
Henken acknowledge that local spending should be considered, but expenditures weren't included in the report.