LETTER: City counting on law change to save data center TID gains

To Ozaukee Press:

In his letter to the editor in last week’s Ozaukee Press, Michael Beaster did correctly identify that current state law is not compatible with very large tax incremental financing districts (TID). This is a challenge that the city identified very early in the process of creating TID 5 for the data centers and was my chief concern in approving the developer’s agreement with Vantage in August 2025. 

As Mayor Neitzke explained at the Jan. 6 Common Council meeting, the city has been working with our state legislators and with other municipalities such as Mount Pleasant and Beaver Dam to correct current state TID law for these large projects. 

There is momentum in Madison on changing state statutes to allow for any levy gains to be deferred to the end of the TID, and we are confident that a fix is forthcoming that would allow cities such as Port Washington to see the full financial benefits of such TIDs at the time of their closure.

While current state law would allow a city to raise property taxes to realize the levy gains before a large TID closes, the city is under no obligation to do so and instead can simply not accept the levy increase and instead see taxes reduced at the closure of the TID. 

The Common Council members are taxpayers too and do not want to have property taxes increased. The Council sees the data center as a way to diversify our tax base—easing the burden on residential properties—and to bring in future revenues to manage the costs of inflation, to improve city services that are currently underfunded (such as the library), to put an end to our reliance on the annual bond issues that are used to pay for yearly capital improvements such as street repairs and fire trucks and for property tax cuts for our citizens.

The city does not have a budget shortfall, but we do have budgetary challenges. Under state law since 2011, Wisconsin municipalities have not been able to increase the tax levy to keep up with inflation; instead, the only way to increase revenues is through “net new construction,” where new developments are the only way to provide more revenue to a municipality other than via referendums to raise taxes (such as the referendum two years ago to allow the city to hire more paramedics). Without new development the city loses spending power as inflation occurs. This does not mean that the city is in a financial crisis, or that there is a budget shortfall, it only means that the city is proactive in identifying future challenges before they have the chance to become problems.

If the city were to give large property tax cuts at the closure of TID 5, the result would not be, as Mr. Beaster wrote, that the city would need twice as much development to keep pace with inflation. That would be a disastrous policy. If taxes are reduced far enough, greenspace development revenues would be fleeting, with each new development costing more revenues to support than it would produce. This is the scenario colloquially known as the “Growth Ponzi Scheme.” In this case, growth of the city boundaries would end, and only internal redevelopment would be fiscally responsible.

The city is facing this issue and is not the only municipality dealing with it. We hope to see a solution from the state this year but have other options and several years if one is not passed into law. The city government is aware of this issue, has been since the beginning, and will see through a good resolution for the city and its people. The benefits of TID 5 to the city still far outweigh these challenges.

Michael Gasper

Third ward alderman

City of Port Washington