Under current law, as created in 2007 Wisconsin Act 20, the biennial budget
bill, local levy limits are applied to the property tax levies that are imposed in
December 2007 and 2008. Current law prohibits a political subdivision (any city,
village, town, or county) from increasing its levy by a percentage that exceeds its
"valuation factor," which is defined as the greater of either 2 percent or the
percentage change in the political subdivision's equalized value due to new
construction, less improvements removed, except that for 2007 the levy limit is 3.86
percent. In addition, the calculation of a political subdivision's levy may include any
tax increment that is generated by a tax incremental district.

Current law contains a number of exceptions to the levy limit. These exceptions
include amounts which may be levied for the following purposes or because of the
following situations: political subdivisions that transfer the provision of services to
another governmental unit; cities or villages that annex town territory; political
subdivisions that levy to pay debt service on debt authorized on or after July 1, 2005;
a levy for charges assessed by a joint fire department; a county levy that relates to
a county children with disabilities education board, bridge and culvert repairs,
payments to public libraries, and a countywide emergency medical system; and the
amount a village levies to pay for police services, but only for the year after the year
in which a town, which did not have a police force, changed to village status.

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This bill creates another exception to the levy limit for amounts levied by a city,
village, or town for the costs of fire protection services that are contracted out to
another person.