74 Op. Att'y Gen. 84 (1985)
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Wisconsin Attorney General Opinions

Opinion # OAG 18-85,

20 May 1985

Municipalities; Schools And School Districts;
Taxation; School districts may not invoke the
damage and interest provisions of section
74.22, Stats., to penalize a township for
failing to settle tax payments within the
time required by law.

THOMAS LOFTUS, Chairperson
Assembly Organization Committee

You request an opinion on the rights and
responsibilities of town, city and village
treasurers relative to the settlement of
taxes with other governmental units under
Section 74.22, Stats.

Your request is on behalf of a local attorney
who is concerned about a township's practice
of delaying tax payments while earning
additional interest and thereby "floating"
funds due local school districts.

The delay which results from this type of
investment practice prompts you to present
four questions regarding a school district's
right to compel timely tax settlements: can a
school district impose penalties under
section 74.22 for late payments; do any
statutory duties exist for immediate payment
by towns to school districts; when is a delay
of payment unreasonable; and finally, can
delays from county units of government be

1. Can a school district employ all or a
   portion of Section 74.22 to impose
   penalties on a town, city or village
   treasurer who fails to settle tax
   payments within the time required
   by law?

Section 74.22 provides that:

If any town, city or village treasurer
shall fail to make settlement of the
taxes included in the tax roll within
the time required by law the county
treasurer shall charge such town, city
or village treasurer 5% damages and 12%
interest per year from the day payment
should have been made on the balance of
unsettled taxes due; and if any town,
city or village treasurer shall withhold
the payment of any public moneys
collected or received, after the same
should be paid and shall have been
demanded, such treasurer shall pay 10%
damages and 12% interest, as above
specified, on such moneys; which moneys,
damages and interests may be collected
by action upon such town, city or
village treasurer's bond.

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Damage and interest provisions of this
statutory Section represent penalties which
are to be imposed on the local treasurer for
failing to settle tax payments within the
time required by law.

Rinder v. Madison,
163 Wis. 525,
158 N.W. 302 (1916).

The right to impose these penalties, however,
rests solely with the county treasurer.

State ex rel. Sheboygan County v. Telgener,
199 Wis. 523, 526,
227 N.W. 35 (1929),
states that ordinarily

   "Section 74.22 . . gives the county
   treasurer the right to bring an action
   against the local . . treasurer on his
   official bond, to recover the funds . .
   . . . . . withheld."

The right to impose penalties under Section
74.22 cannot be extended to other local units
of government, such as a school district,
unless this right is expressly granted
by the Legislature.

Forfeitures and penalties are not favored in
the law and statutes imposing them are
subject to the rule of strict construction.

State v. James,
47 Wis.2d 600, 602,
177 N.W.2d 864 (1970).

Under the rule of strict construction,
statutory interpretation will not stray
beyond the express language of the statute.

A close examination of chapter 74 in its
entirety reveals that the Legislature has not
expressly granted to a school district, a
school board or a school board treasurer the
right to impose penalties for late tax

Furthermore, this right does not appear in
any of the language constituting chapter 120
which defines the scope of authority for
school district governments.

Section 120.16(2) permits the
school district
treasurer to

   apply for, receive and sue for all money
   appropriated to or collected for the
   school district . . .,

but there is no mention of the right to
impose penalties or a forfeiture.

An express statutory right to impose
penalties for late tax settlement exists in
Wisconsin in three situations: where a town,
city or village is liable to a county
treasurer, Section 74.22; where an individual
taxpayer is liable to a county, Section
74.32; and finally, where a county shall be
liable to the state treasurer, Section 74.27.

Given the strict construction applied to
penal statutes, I conclude that Section
74.22, as a penal statute, grants exclusive
power to the county treasurer.

Section 74.22 must be read in its entirety
and it mentions only the right of the county
treasurer to impose penalties under that
Section in the event of late tax settlements.

74 OAG 84  85  86  87  88  89  END

Therefore, a school district cannot employ
Section 74.22 in whole or in part to impose
penalties on a town, city or village
treasurer for delayed payments.

While a school district is not entitled to
the damages and twelve percent interest
allowed under Section 74.22, a school
district may be entitled to interest on
monies withheld at the legal rate of five
percent under Sections 120.16(2) and 138.04.

Milwaukee v. Firemen Relief Asso.,
42 Wis.2d 23, 39,
165 N.W.2d 384 (1969),
the court ruled that rates of interest set
forth in Section 138.04

should be construed as being declaratory
of the common law as it now exists and
as applicable to all legal entities,
including all branches of government,
unless specifically exempted by
legislative enactment.

This language was recently upheld in
Boldt v. State,
101 Wis.2d 566, 583,
305 N.W.2d 133 (1981).

I construe the phrase in Section 74.03(8)(g),
"settlements for all other taxes and special
assessments shall be made without interest,"
as referring solely to payments made by
the county treasurer to a town.

It is not applicable to late payments by
towns to school districts and therefore does
not prohibit the imposition of a five percent
legal interest rate on late payments made by
towns to school districts.

2. Are there any statutory provisions other
   than section 74.22 which impose a duty
   of immediate payment by a town to a
   school district?

Despite recent, substantial changes in
Wisconsin town law, local treasurers are
still clearly required to promptly settle
monies owed to school districts. Several
statutory Sections untouched by legislative
revisions state that payments must be made by
local treasurers within certain dates.

Section 74.03(5)(a) requires the town, city
or village treasurer to settle for all local
collections "[o]n or before March 15 and on
or before the 15th day of each month . . ."

For the first settlements made by counties
pursuant to Section 74.03(8)(a), the county
treasurer is to settle for all collections of
delinquent, postponed taxes and special
assessments "on or before August 20."

There is no provision for delay in either
Section 74.03(5)(a) or 74.03(8)(a).

Before its repeal in 1983 Wisconsin Act 532,
Section 60.49(6)(a) expressly required town
treasurers to make proportional settlements
of school monies under Section 74.03(8)(f)
whenever the same had been paid to the
treasurer or whenever credit had been
received from the county treasurer.

Section 60.49(6)(a), Stats. (1981-82).

74 OAG 84  85  86  87  88  89  END

This statutory command for expediency remains
despite the repeal of Section 60.49(6)(a).

Section 60.34(4) and (5), effective
January 1, 1985, retains the substantive
aspects of Section 60.49(6)(a) and (b).

The drafter's note to 1983 Wisconsin Act 532
refers to the repeal of Section 60.49(6)(a)
as an effort either to avoid duplication of
treasurer's duties already found under
Section 74.03, or an effort to remove
outdated, obsolete portions of that statute.

There is no evidence that the Legislature
considered requirements for timely tax
settlements to be outdated or obsolete.

Thus, a local treasurer's duty to settle
payments whenever credit is available remains
within the language of Sections 60.34(5)(a)
and 60.34(5)(b) and 74.03.

Legislative intent to compel prompt
settlement is further evidenced by the recent
revision of Section 74.03(8)(f).

Under the amended Section, county treasurers
may pay proportional settlements directly,
and more expediently, to school districts
without having to first send these monies to
town, village or city treasurers.

Section 74.03(8)(f) as amended by 1983
Wisconsin Act 395.

Finally, Section 60.34(5)(a) limits delays
in payment to a five-day grace period for
town treasurers making preliminary
settlements of available monies.

Section 60.34(5)(a) requires
town treasurers to

   make partial apportionment of levies by
   school districts and vocational,
   technical and adult education districts
   out of any funds available in the town
   treasury prior to the tax apportionment
   provided by Section 74.03(5) within 5
   days after the filing of a written
   request by the district board.

3. When is a delay of payment unreasonable?

As noted above, Section 60.34(5)(a) requires
a town treasurer to respond to a school
district's request for partial levy
payments within five days.

The Legislature specifically amended Section
60.49(6)(b) in 1981, replacing the phrase

  "respond to a school district . . .
   promptly" with the phrase "respond to a
   school district . . within five days."

Chapter 196, Section 1m, Laws of 1981,
effective April 21, 1982.

This is evidence of express legislative
intent to prevent any delay lasting more than
five days from the time that a school
district submits its request for payment.

Note also that legislative changes in 1981
included a provision that "the town board may
not deny such a request."

Chapter 196. Section 1m, Laws of 1981.

74 OAG 84  85  86  87  88  89  END

These changes survived the Legislature's
recent revision of chapter 60 and remain part
of Section 60.34(5)(a).

Thus, the clear intent of existing statutory
Sections is to compel prompt settlement.

"Prompt" settlements will be construed fairly
narrowly by the courts and untimely payments
will not be permitted without substantial

It will be unreasonable for a local treasurer
to withhold school district funds to pay town
government operating expenses,
21 Op. Att'y Gen. 407 (1932);
and a town treasurer may not delay such
payments to await approval or authorization
from the town board,
First Nat. Bank v. Town of York,
212 Wis. 264,
249 N.W. 513 (1933);
Section 60.34(5)(b).

Ultimately, when town officials delay
settlement to make interest on the "float"
of loans they are acting unreasonably
and are not complying with the law.

Wisconsin statutes allow local governmental
units to invest only those funds "not
immediately needed."

Section 66.042(1), Stats. Funds owing to
local units, such as a school district, would
be ineligible for investment by local
officials because they do not constitute
monies "not immediately needed."

Wisconsin statutes further direct that it is

  "the duty of the [town] clerk to draw and
   deliver to the [town] treasurer an order . .
   . . before or at the time when such payment
   is required to be made by the treasurer."

Section 66.042(1), Stats.

4. Can anything be done by a town to
   prevent an apparent delay of payment
   by the county treasurer?

Recent legislative revisions of chapter 60
included the repeal of Section 60.49(9) which
specifically allowed town treasurers to sue
for monies that county treasurers neglected
or refused to settle.

Currently, town treasurers may rely on
Section 74.28 to bring mandamus and compel
prompt settlement.

Section 74.28 provides that "[e]ach county
treasurer shall pay to the several towns,
cities or villages on demand, all money
collected or received by him and belonging
to them; but he may retain in the county
treasury all amounts due from any town,
city or village to the county.

A county treasurer who is investing monies
immediately owing will also be in violation
of Section 66.04(2), as discussed in response
to your third question.

74 OAG 84  85  86  87  88  89  END

Finally, in those extreme cases where county
treasurers willfully neglect to settle
payments promptly, such treasurers
may be subject to criminal sanctions
under Section 946.12(1).


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