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Mar 12, 2019

Madison mayor says “dark store loophole” is costing cities and taxpayers

Madison Mayor Paul Soglin voiced his support Tuesday for Governor Tony Evers’s claim that his first state budget proposal will close the “dark stores” loophole that allows companies to base their property taxes off the value of an empty store rather than a working store.

Over the past three years, Soglin said the city has been seeing more and more claims from big box stores saying the city has been over-charging them. Most recently, the city received a claim from Wal-Mart reporting a $72,000 overcharge.

“But $72,000 times 10 or 20 because there’s more than one store that’s getting away with this scam,” Soglin said.

According to the current case law, based on a Wisconsin Supreme Court decision, Wal-Mart is right. The city has to treat businesses like homes, using the uniformity clause, appraising only the value of the physical property.

Still for cities like Madison, those tax dollars add up.

At face value, $72,000 is nearly the cost of an entry level police officer and its nearly $10,000 more than the salary of maintenance worker in the streets division.

As a tax, it would also be an annual source of missing revenue.

“It’s per year, every year that this will continue and more and more stores will start trying to play the game,” Soglin said.

To keep up with regular city services, the mayor said the money needs to come from somewhere else. That’s why he said if this law changes, Madison homeowners could see some relief in their property taxes.

“If this is fixed,” Soglin said. “It’s not directly a benefit to the city of Madison. The direct benefit is to the other taxpayer.”

Business leaders disagree. Senior Vice President of Government Relations with Wisconsin Manufacturers and Commerce, Scott Manley sent the following statement.

“Taxpayer funded lobbyists have pushed this legislation in an effort to cover up overly aggressive and illegal assessments of small businesses, retailers and manufacturers. This policy would raise taxes on local businesses, raise costs for consumers and should be rejected.”

The group testified to the legislature Tuesday to eliminate this change from the Governor’s budget.

The state legislature considered a similar measure back in August but the bill never made it to the floor for a vote.

Published by WKOW-TV, Feb. 5, 2019.

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