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How Your Tax Dollars are Used

High School debt paid off: How that Affects your Taxes

There was excitement in the air and celebrations when the doors opened to the new South Milwaukee High School in 2004. Superintendent David Ewald told the Milwaukee Journal Sentinel that he hoped the building would usher in a “new era of academic excellence.”

Thousands of students have passed through its doors since that first day and four years later walked across its stage with a diploma. 


A smaller, but no less significant milestone has been reached in the history of South Milwaukee. In April, a staff member in the Business Office pressed ‘enter’ on their keyboard and made the final bond payment on the $42 million (in 2004 dollars) building. One can imagine some bits of hole-puncher confetti raining onto the office floor or a satisfied sip of sparkling water as the last payment went through. 


“That last payment means we’re virtually debt-free,” said Dan Arnold, the District’s new Director of Business Services. “I think it’s an example of how fiscally responsible this district has been for almost two decades.”


The end of that particular debt payment comes at a good time for residents of South Milwaukee. The mill rate – the amount a piece of property is taxed per $1,000 of value – is projected to drop this year to $7.96 from $10.17 a year ago and $11.35 in 2018-19. 


That means a family with a house worth $230,000 may see their tax burden decrease by $500 this year. That’s some relief to taxpayers whose home values have gone up due to a housing shortage and inflation. Unfortunately, that might mean the tax bill is higher, too, maybe just not as much as it might have been if the mill rate hadn’t decreased. 


“If there were no shortage, if inflation wasn’t so high, a house worth $230,000 might see its tax burden decrease by $500 this year,” Arnold said. “That $230,000 house is worth more now, though.”


How your Tax Dollars are Used

According to the City of South Milwaukee, for every $1 in taxes, 40 cents goes to the School District, 34.6 cents goes to the City, 21.4 cents goes to Milwaukee County and 4 cents goes to Milwaukee Area Technical College.


For every $1 the District receives, about 64 cents pays for teacher and staff salaries and benefits. 14 cents goes to purchased services, like electricity and water. Hidden in that category are school vouchers – money the School District pays to private schools for South Milwaukee residents who enroll in them – that accounts for 1.6 cents of every dollar ($900,697 this year). About 7 cents goes to transfers to ensure Special Education and other unique programs are funded. The rest, just under 15 cents pays for insurance, debt, supplies, and more. 


“For every dollar we collect in taxes, about 4 cents goes to our debt - and that’s set to disappear in its entirety in the next couple of years. Currently, the district has less than half of the debt that most other districts have. The residents of South Milwaukee should be proud that its school district has stayed out of debt, kept its buildings in great shape, and employed great teachers and staff with a relatively lean budget,” Arnold said.

It’s even leaner than it looks. 


While the numbers aren’t finalized for this school year, $854,848.50 in state and local tax dollars were paid for South Milwaukee students to go to private schools last year. 


“We have to make this payment because of the Wisconsin Parental Choice program and the Special Needs Voucher program,” Arnold said. “When the district receives these dollars, they get turned around and sent to private schools. Basically, our budget is almost $1 million less than it seems because of those laws.”


Looking Ahead

Of course, city residents don’t pay for the entire school budget. $7.7 million is raised locally, while $27.6 million, about 68 percent of the general fund revenue, comes from the State. The remainder comes from federal sources, students coming to South Milwaukee from other school districts, and other sources. 


For two straight years, the State Legislature neglected to pass an increase in the District’s revenue limit. That may sound fiscally responsible, but when costs rise because of inflation – be it the electric bill in the District’s six schools or the cost of grass seed for the playing fields – it means that revenue doesn’t go as far as it used to. A zero dollar per pupil increase to the revenue limit amounts to a cut. The biggest expense for schools is salaries – people who work with and for children. No increase in revenue plus higher costs may amount to cuts.


“We’re still in a manufactured crisis,” Arnold said. “The state has $5 billion in excess funds the legislature is sitting on. If our elected officials in Madison had acted in the best interest of our students, we would have been exploring where to improve education at South Milwaukee, not tightening our belts and shrinking services to our students.”