MILWAUKEE (AP) — The state Supreme Court ruled Friday that taxpayers who want to challenge their tax assessments are entitled to full court reviews of their challenges, a decision that critics feared could embolden businesses to threaten litigation unless cities reduce their property taxes.
The 4-3 ruling overturns a 2008 state law that would have allowed municipalities to restrict the scope of court challenges.
Taxpayers who think their annual property-tax assessments are too high may challenge the decisions before a Board of Review. If they’re still unsatisfied they can appeal to a circuit court.
The taxpayers had two choices: Have the court review the board’s decision or ask the court to perform a full review, hearing the entire case from scratch.
The 2008 law allowed municipalities to pass an ordinance opting out of the full review, limiting taxpayers to a less thorough choice. Milwaukee did so, arguing that having to defend a case from the start was a costly burden that large businesses could use to intimidate cities with threat of litigation.
Metropolitan Associates, which owns apartment buildings in southeastern Wisconsin, filed a lawsuit challenging Milwaukee’s ordinance. The company alleged that opt-out options meant taxpayers in different municipalities were being treated differently.
The lawsuit ended in a series of back-and-forth rulings among successively higher courts.
A circuit court first ruled the law unconstitutional, saying taxpayers in opt-out areas were being deprived of access to full reviews. A court of appeals overruled, saying the law didn’t create significant differences for taxpayers in one area or another.
The Wisconsin Supreme Court reversed one more time, agreeing that the law wasn’t constitutional.
“We conclude that the treatment taxpayers in opt-out municipalities receive under Act 86 is significantly different than the treatment all other taxpayers receive,” the majority wrote, “and we conclude that this difference in treatment lacks a rational basis.”
The majority was comprised of the four justices generally seen as conservative: Justices Michael Gableman, David Prosser, Patience Roggensack and Annette Ziegler. Dissenting were Chief Justice Shirley Abrahamson and Justices Ann Walsh Bradley, who are both seen as liberal, and Patrick Crooks, generally considered a swing vote.
In her dissent, Abrahamson wrote that even if taxpayers in different municipalities were subject to certain differences, those differences were too slight to justify throwing away a law approved by the Legislature.
She also said that individual tax districts vary in their ratios of commercial to residential properties, so they should be given the flexibility to address their own sets of circumstances.
“Apparently, more challenges can be expected regarding commercial properties,” she wrote.
Robert Gordon, the lawyer representing Metropolitan Associates, disagreed. Clients only turn to litigation as a last resort when they haven’t been treated fairly by the review board, he said.
“I don’t look at it as threat, just that the process requires fairness. It protects all taxpayers,” he said. “Property owners throughout the state should have a full panoply of rights available to them to challenge property-tax assessments.”
Milwaukee deputy city attorney Vince Moschella said the ruling will cost the city time and money defending cases twice — once before the review board and again, in its entirety, in a circuit court.
“This form of appeal is used mostly by commercial taxpayers at the higher end of the socio-economic scale,” he said. “This will mean more work, more costs for the benefit of a few taxpayers at the expense of many.”
The state Department of Revenue told The Associated Press it would review its records to see whether it could compile statistics on assessment challenges.
Dinesh Ramde can be reached at email@example.com.