RACINE COUNTY— Walmart is going on the offensive, aiming to convince the public that its challenges to local property tax assessments are justified and needed to keep local businesses.
Walmart is challenging the assessment of its two stores in Mount Pleasant, at 3049 Oakes Road and 5625 Washington Ave. The village has received similar challenges from Walgreens and Menards. These challenges are part of what’s been referred to as the “dark store” loophole, a hot-button issue which legislators have been debating.
In a letter to the editor sent to The Journal Times and several other state newspapers, Todd Peterson, Walmart regional general manager for Wisconsin, wrote: “Challenging these erroneous property assessments does not shift the tax burden to residents. Property taxes are increasing for commercial properties faster than they are increasing for residential, and commercial property owners are paying a greater share of the burden. If we want to keep our local businesses, then we must address this trend.”
Big-box stores such as Walmart have been challenging municipalities on the assessed property value, and in some cases having that property value reduced significantly by comparing the value of the store to a similar but empty building.
Cory Fish, director of tax, transportation and legal affairs for Wisconsin Manufacturers and Commerce, has said: “The dark stores legislation would allow tax assessors to value occupied property higher solely because of its occupancy. For example, if you had two homes identical in every respect except that one was occupied and one was vacant, the occupied home would be assessed and taxed more than the vacant one — even though the fair-market value would be the same for each home.”
Peterson wrote: “In challenging property assessments, Walmart is not seeking special treatment or public subsidies. We are simply seeking a fair market value for the taxation of our stores, just as any other business or homeowner should expect under Wisconsin’s constitution and state laws ... unfortunately, as municipal budget deficits have grown, so too has the trend toward over-zealous property tax assessments.”
Peterson writes that Walmart has “paid $93.5 million in state and local taxes in the past fiscal year, as well as generated about $194.7 million in sales taxes to Wisconsin.”
In addition, Walmart spend more than $4.4 billion with Wisconsin suppliers annually and employs more than 30,000 Wisconsinites, Peterson wrote.
Response from critics
Jerry Duschane, executive director for the League of Municipalities, has been an advocate for the state Legislature to pass a bill addressing the dark store loophole.
Duschane said Peterson’s comments on the effect of challenging assessments is misleading.
“For them to say that it doesn’t cause others (property taxes) to go up is simply factually inaccurate,” Duschane said.
When a challenge to an assessment is successful and the property tax is lowered, Duschane said those taxes are “shifted to all other property taxpayers, and because these big-box retailers tend to be a very large chunk of the total community, that shift is very noticeable. Taxpayers in other parts of the community will see an increase in their tax bill.”
“The bottom line is when one property owner’s tax bill goes down, everyone else’s go up to make up for it,” Duschane said. “That’s the way the tax levy works in Wisconsin.”
Duschane admits Walmart has a big presence in Wisconsin and “there are a lot of communities that have invested a lot of money in TIF (tax incremental financing) districts and transportation improvements, and a lot of other things, to make their communities attractive to a Walmart.”
On the topic of how much Walmart pays in other taxes, Duschane said those points should not carry any weight on this debate.
“That has nothing to do with which property taxpayers should pay how much in taxes,” Duschane said. “Property taxes have to be assessed fairly and uniformly. That doesn’t change no matter how much Walmart pays in sales tax or income tax or any other tax … and that’s what the ‘dark store’ loophole is all about. It’s about fairness among all property taxpayers.”
State Senators respond
State Sen. Bob Wirch, D-Somers, has been a vocal critic of the dark store loophole. He said he pushed for the Legislature to pass a bill last session but it was never brought up for a vote.
“I think the governor and the Republican majority have been dragging their feet,” Wirch said. “I think this should have been dealt with over the last year to bring forth a compromise (piece of) legislation. The consequence is going to be people all over the state, they’re going to pay hundreds of dollars more in property taxes in December.”
Wirch, who reviewed the letter, said Walmart “just got a gigantic tax break from the federal government, and they didn’t mention that in the letter.”
If more businesses continue to challenge their assessments, Wirch said it could have a “profound impact on local taxpayers and local government.”
“We cannot provide the local infrastructure and services for economic development if we lose our tax base for local government,” Wirch said. “The dark store issue is a threat to the tax base and local government.”
State Sen. Van Wanggaard, R-Racine, co-authored a bill on dark stores last session but it did not pass because of a related issue dealing with commercial leases.
Wanggaard said the Senate has convened a study group and invited parties on different sides of the issue to find the best solutions for stakeholders in regards to dark stores.
“We’ll have something, I’m hoping, by the end of October or early November,” Wanggaard said. “(The study group) really need to look at it so that we have a good clear definition on how they should be assessing and the ability to do comparisons, and the comparables is another big issue. That’s how we got into this with the dark stores.”