Tax law change has official worried about city cash flow

Fewer people may pay taxes by year’s end because of standard deduction change
By 
KRISTYN HALBIG ZIEHM
Ozaukee Press staff

City of Port Washington residents received their property tax bills this week, and a few people have already come to City Hall to pay them.

But with the changes in the federal tax code this year, City Administrator Mark Grams said, he’s concerned that fewer people will pay their taxes by the end of 2018.

And that could be an issue for the community’s cash flow next year, he said.

In the past, Grams said, a significant number of people paid their property tax bill in full by the end of the year so they could deduct it from their income taxes.

But with the standard deduction increasing to $24,000 for a married couple and $12,000 for an individual, fewer people will do this, he said.

“Most people won’t be itemizing their deductions,” he said, “so they won’t need to pay their property taxes by the end of the year.”

They will have to pay the first half of their tax bill by the end of January, he said, and the rest by the end of June — meaning taxpayers can hold onto their money longer and municipalities won’t get the funds until later than they’re used to.

“It could pose a problem with cash flow,” Grams said.

And while that could be an issue for the city, it may be an even bigger one for the school district, Grams said. That’s because the city runs on a calendar year basis, but the school district’s fiscal year runs from July 1 to June 30, meaning they’re in the middle of their budget cycle.

Grams said his concern has been alleviated a bit since property tax bills went out this week.

He’s spoken to a number of people who were unaware about the change or who have said they will continue to pay their taxes as usual, by the end of the year.

“We’ll see if this happens or if most people, at least for this year, continue to pay their taxes by Jan. 1,” Grams said.

Port Washington’s tax bills increased about 1.7% overall, Grams said. Taxes for the city, county and technical schools increased while the school district’s taxes went down.

But the biggest change was the lottery credit, which increased “significantly,” offsetting the hike in the rest of the tax bill, he said.

The lottery credit this year is $165.20, almost $42 more than last year’s credit of $123.35.

“Don’t ask me why?” Grams said when asked the reason for the increase. “I have no idea how that’s divvied up by the state.”

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