Wisconsin village entitled to entire tax payment under MFL program

by Melanie Thwing

Town of Somerset v. Wisconsin Department of Natural Resources
(Wisconsin Court of Appeals, March 29, 2011)

J. Peterson owned property in the Town of Somerset, Wisconsin. In 1987 he enrolled the property in the Department of Natural Resources’ managed forest land (MFL) program. The program encourages, “management of private forest lands for the production of future forest crops for commercial use through sound forestry practices.” By enrolling the property the landowner commits to the program for either twenty-five or fifty years.  In return the landowner receives reduced property taxes. If the property is withdrawn from the program the landowner must pay the Department a withdrawal tax pursuant to Wis. Stat. § 77.82(2)(h).  Under Wis. Stat. § 77.89(1) the Department is then required to pay the withdrawal tax to “each municipality in which is located the land to which the payment applies.”

When Peterson’s property was first enrolled in the MFL it was located within the Town of Somerset. In November 2007 the property was purchased by the Village of Somerset and annexed to the Village.  In August 2008 the Village withdrew the property from the program. A withdrawl tax of $43,597.28 was paid to the Department by the Village, but that money was then refunded back to the Village because the property was in the Village at the time of withdrawl.

The Town filed for judicial review of the Department’s decision. They argued that the Department did not interpret Wis. Stat.  § 77.89(1) correctly, or alternatively that the statute is “unconstitutional on its face in that it deprives [the Town] of a protected property interest, contrary to [the] Wisconsin Constitution.” The town argues the withdrawal tax payment should have been split between the municipalities where the land was located while the tax burden was lessened.

The Department moved to dismiss this claim and the circuit court granted the motion. They found (1) the Town lacked standing to challenge the Department’s decision, (2) the Department’s interpretation of the statute was entitled to deference, and  (3) the Town lacked standing to challenge constitutionality of § 77.89(1).

The Town then appealed to the Wisconsin Court of Appeals who finds that the circuit court was correct in dismissing the Town’s petition. Wis. Stat. § 77.89(1) requires the Department to pay “100 percent of each withdrawal tax payment received under 77.88(7) to the treasurer of each municipality in which is located the land to which the payment applies.” The present tense of the statute indicated that the payment should be made to where the property is located currently. The Town claims the statute is ambiguous because the statute states, “each municipality.”  The Court of Appeals did not consider this argument to be reasonable because it again ignores the present tense of the statute. The language “each municipality” simply directs the payment in cases where the land is presently located in more than one municipality.

Finally, the court concluded that municipalities do not generally have standing to challenge the constitutionality of statutes. The only exception to this is if the issue is of great public concern. However this exception only applies “to cases where a private litigant and a creature of the state are involved, and not to suits limited to creatures of the state.” No private litigants are present here and it involves a state agency and two municipalities. Because of this the great public concern exception cannot be applied. The decision of the circuit court was affirmed.

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