By Eric Olson, University of Wisconsin-Extension

As shoreland owners review their annual property tax bills, they no doubt wonder what they are paying for and why they are paying so much. Lakefront property owners have been enjoying a steady appreciation in the value of their property, but at the same time they feel the sting of the higher taxes associated with that higher values. Some may question the role that public lands play in the overall scheme of property taxation. Does public ownership of lands raise taxes by taking land off the tax role? Who pays for public land acquisition? What affect does public land have on nearby property values?

There is no simple answer to these questions, in part because there is no single type of public land. Federal, state, county and local governments all own land for different reasons with different impacts on local budgets. Each public land program also has different revenue sources, with some programs relying heavily on property taxes and others from �own source� revenue, or money generated from operations. With almost 2.5 million acres, county lands are the largest public land classification in the state of Wisconsin. While counties own land for a number of reasons (utilities, public services, roads, etc.), the vast majority of county land is classified as county forest, and these forestlands are the topic addressed in this article. Later articles will address other public lands such as state forests, parks, and national riverways.

In addressing the issue of public lands, it is important to understand the context in which the different land programs came about. For this reason, the history of county forests is briefly reviewed to provide a sense of how we have come to the current situation. In addition, it is important to explore the �soft� expenses and benefits that county lands provide as well as the �hard� numbers that measure the direct monetary costs and benefits of program. In this way, the article provides a more holistic view of the county forest programs in Wisconsin.

The existing system of county-owned land has its origins in the earliest settler economies of the 19^th Century. Much of Wisconsin was covered with forestland, and timber was a valuable commodity for supplying the explosive growth of cities such as Chicago and St. Louis. The laws regulating forest harvest were minimal and rarely enforced. As a result, many timber companies found it easier and more profitable to harvest with little or no concern for forest regeneration. This practice was reinforced by the widespread opinion that the plow would follow the ax, that much of the so-called cutover region was destined to become farmland.

In the early part of the 20^th Century, the promise of productive farming in the cutover proved more challenging than local boosters had anticipated. The depression further worsened a bleak situation, and droughts turned scrubby re-growth and slash into a tinderbox, fueling fires that occasionally reached catastrophic levels. Farmers abandoned their lands, as did many others who purchased land on speculation. The counties were faced with massive delinquencies in property taxes. At the same time, the remaining settlers in the north woods were scattered about the landscape. This made per-capita costs for public services like schools and road maintenance more than local governments could bear.

As the situation turned from bad to worse, the state, counties and towns agreed that public ownership was the most promising path towards reforestation of the landscape and prevention of deadly forest fires. A system of cost-sharing was developed whereby the state would levy a statewide property tax to fund forestry activities and fire protection. Local governments would take on much of the day-to-day work of forest management. Counties were granted ownership of tax delinquent lands, a move that required a constitutional amendment. Counties were also given the authority to zone rural land and even to resettle scattered households into more concentrated sites. With time and

proper management, the forests would return to provide more revenue through future timber harvests. In the meantime, the county lands would be open for recreational enjoyment by Wisconsin residents and distant tourists.

The most recent overhaul to this Great Depression-era system took place in the 1960s when the counties sought to renegotiate the cost-sharing between the state and local governments. During these deliberations, Governor Nelson agreed to yield more money to the counties and towns, but he also sought to ensure that the county forest program would be a permanent public lands system to be actively managed for forestry and recreation, benefiting all Wisconsinites.

Today�s county lands cover nearly 15% of the entire state land base. The vast majority of these lands are in the northern half of the state, with some counties owning over a quarter of the local land base. Counties manage these lands for a variety of uses, but timber production is often the most predominant. Many counties receive significant revenue from timber sales, and as time goes on more stands will be reaching valuable, mature stages. Many counties are also continuing to acquire additional forestland. Most acquisitions are �blocking� purchases or land-swaps designed to consolidate ownership within a forest boundary and eliminate in-holdings.

The impact of the county system of forestland for the Wisconsin taxpayer is complicated because it varies from county to county and year to year. On the cost side, one must consider the operating expense of running the forest system, the direct cost of acquiring any additional lands, and the foregone revenue from land not in the taxable property base. On the revenue side, one can measure gross and net revenue from timber sales, direct payments from the state for county land management, and indirect state aids that are tied to the size of the local government tax base. Though not a direct revenue, one should also consider what the expenses would be for providing services to land-uses other than county forest; in many cases, property tax revenue generated by private land does not cover all the expenses associated with the land use.

A number of studies have been conducted by state government offices, the University of Wisconsin, and local governments to determine the net total of the above costs and revenues. These studies have repeatedly found that local governments, be they counties, school districts, or towns, are relatively unaffected by county land ownership since direct state payments and state aids make up for the lost tax base. The story told again and again by these studies is that county land acquisitions are revenue neutral for local governments.

The story gets more complicated when one considers that state aid itself must come from somewhere; that is, the state does not simply print money to make up for lost tax base when counties buy land. The complexity at this level, however, is almost entirely undecipherable. Some general themes in state finances, however, can be discussed. First, the majority of state revenue comes from the income tax. These taxes are collected in their greatest amounts in dense urban areas, most concentrated in the southern half of the state. Second, aids to local governments and schools are the biggest consumer of the state budget. Third, the forestry mill tax enacted earlier in the previous century is still in use, and a significant portion of that money is collected in urban areas where total property values are highest. This revenue is then spent for a variety of state and local forestry programs throughout the state, including the Kettle Moraine forests in the southeast part of the state. The northern region, where property values tend to be lower, benefits greatly from direct and indirect expenditures associated with the forestry mill tax.

Beyond the �hard� balance sheet of revenues and expenditures one can try and identify the indirect effects of county lands on local governments and economies. It is well established that public lands yield a great deal of amenity value to residents and non-residents through the provision of outdoor recreation and scenic beauty. Properties adjacent to county lands are often valued more greatly than similar properties

without county lands. The amenity values of county forests no doubt contribute to the overall growth in private land values in the northland. The potential downside is evident when low-income households cannot capitalize on this value growth without leaving their residence.

Tourism is a long-established activity in the northland due in no small part to the public lands base of the area. The outdoor recreation opportunities bring money to the region that is spent on a variety of goods and services. The costs

of tourism are comparatively low, but they are evident in resource degradation and occasional crowding and conflict. In addition, tourist supported service jobs are most often low-paying and offer little opportunity for career enhancement.

Timber harvesting and processing based on county forests also support a large and relatively stable industrial base that may otherwise not exist in the state. From paper mills to furniture manufacturers, forest products provides income, demands other commercial inputs, and contributes to the local property tax base. The Fox River Valley, for example, relies heavily on the timber supplies of county and other lands for much of the paper-related processing in the area. Timber harvesting on county forests, however, can be contentious when people express concern over possible effects on scenic or recreation values. Many people are not aware of the prominent role that forest harvest played in the creation and ongoing maintenance of the county forest system. In general, the recognition that timber harvesting plays a major role in managing the forest ecosystem and providing access to forested lands supports the view that timber management will continue on county lands for the foreseeable future.

In summary, it is hard to make a solid case against the county forestlands system from the standpoint of direct fiscal costs and revenues. Time and again the analysis has shown that the program is a fiscal �wash� for local governments. The various state aid formulas work to make county land ownership tax neutral, and it could be argued that a disproportionate amount of the state revenue used to fund these programs is collected from outside those counties with the most county land.

Which isn�t to say that urban residents are being taken for a ride, as the county forests yield their benefits to all Wisconsin people- the urbanized southeast region included- through the support of two major industries (tourism and forest products) and through the provision of a diverse and accessible recreation resource. In addition, many people depend on these public lands for their income, while others obtain quality of life benefits from this massive land base. While difficult to quantify, these additional

amenities make the county forest system a valuable asset for Wisconsin residents worthy of protection. To get a sense of what the state might have been like without the system, one only need look back at the turn of the 20^th century and revisit the land degradation, the fires, and the bleak future for Wisconsin�s rural counties. Today, the picture is much brighter.

Anonymous (1999). �Public Land in Wisconsin.� The Wisconsin Taxpayer 67(8): 1-11.

Barrow, R. and M. Rosner (1984). The Effect of Public Land on Property Taxes. Madison, WI, University of Wisconsin-Extension.

Carstensen, V. (1958). Farms or Forests: Evolution of State Land Policy for Northern Wisconsin. Madison, WI, University of Wisconsin-Extension.

Huegel, D. P. (2000). Public Lands and Property Taxes. Madison, WI, Wisconsin Department of Revenue.

Jordahl Jr., H. C. (1984). County Forests In Transition. Madison, WI, University of Wisconsin-Extension.

Solberg, E. D. (1961). New Laws for New Forests. Madison, WI, University of Wisconsin Press.