Wisconsin Department of Revenue v. Master's Gallery Foods, Inc.

2024 WI App 21
COURT OF APPEALS OF WISCONSIN
PUBLISHED OPINION

Case No.: 2022AP1909

† Petition for Review filed

Complete Title of Case:

WISCONSIN DEPARTMENT OF REVENUE,

PETITIONER-RESPONDENT,

CITY OF PLYMOUTH,

INTERVENOR-RESPONDENT,

V.

MASTER'S GALLERY FOODS, INC.,

RESPONDENT-APPELLANT.†

Opinion Filed: March 20, 2024
Submitted on Briefs: August 28, 2023
Oral Argument:

JUDGES: Gundrum, P.J., Neubauer and Grogan, JJ.
Concurred:
Dissented: Grogan, J.

Appellant
ATTORNEYS: On behalf of the respondent-appellant, the cause was submitted on the
briefs of Don M. Millis, Sara Stellpflug Rapkin, and Olivia Schwartz of
Reinhart Boerner Van Deuren s.c., Madison.

Respondent
ATTORNEYS: On behalf of the petitioner-respondent, the cause was submitted on the
brief of Brian P. Keenan, assistant attorney general, and Joshua L.
Kaul, attorney general.
On behalf of the intervenor-respondent, the cause was submitted on the
brief of Amy R. Seibel of Seibel Law Office, LLC., Mequon.

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2024 WI App 21

COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
March 20, 2024
A party may file with the Supreme Court a
Samuel A. Christensen petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10 and
RULE 809.62.

Appeal No. 2022AP1909 Cir. Ct. No. 2022CV99

STATE OF WISCONSIN IN COURT OF APPEALS

WISCONSIN DEPARTMENT OF REVENUE,

PETITIONER-RESPONDENT,

CITY OF PLYMOUTH,

INTERVENOR-RESPONDENT,

V.

MASTER’S GALLERY FOODS, INC.,

RESPONDENT-APPELLANT.

APPEAL from an order of the circuit court for Sheboygan County:
REBECCA L. PERSICK, Judge. Affirmed.

Before Gundrum, P.J., Neubauer and Grogan, JJ.
No. 2022AP1909

¶1 NEUBAUER, J. Master’s Gallery Foods, Inc. appeals from a circuit
court order reversing a decision of the Wisconsin Tax Appeals Commission (the
“Commission”). The Commission concluded certain equipment located at Master’s
Gallery’s food production facility was exempt from taxation under WIS. STAT.
§ 70.111(27)(b) (2021-22),1 which exempts “machinery, tools, and patterns, not
including such items used in manufacturing.” The Commission concluded that the
statute was not ambiguous and exempted machinery, tools, and patterns so long as
they are not used in any way in a manufacturer’s production process. Based on its
reading of the statute, the Commission determined that some of Master’s Gallery’s
property was exempt.

¶2 The Wisconsin Department of Revenue (the “Department”)
challenged the Commission’s decision in the circuit court, which disagreed with the
Commission’s interpretation of the statute. The court concluded that WIS. STAT.
§ 70.111(27) is ambiguous and looked to legislative history surrounding the
statute’s enactment to ascertain its meaning. The court concluded that the legislative
history showed the exemption applies only to machinery, tools, and patterns that are
not “manufacturing property” under WIS. STAT. § 70.995(1)(a), which is assessed
for taxation purposes by the Department rather than municipal assessors. Because
the property of Master’s Gallery at issue was “manufacturing property” under
§ 70.995(1)(a), and thus had been assessed by the Department, the court concluded
that none of it was exempt under § 70.111(27). For the reasons explained below,
we agree with the court’s conclusion that § 70.111(27) is ambiguous and with its
reading of the legislative history. Therefore, we affirm the court’s order.

1
All references to the Wisconsin Statutes are to the 2021-22 version unless otherwise
noted.

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No. 2022AP1909

BACKGROUND

¶3 To provide context for the underlying facts and procedural history of
this case, we begin with an overview of the relevant statutes.

I. Relevant Statutory Framework

¶4 Chapter 70 of the Wisconsin Statutes governs the taxation of general
property in this state. All general property, which includes real property and
personal property, is taxable unless it qualifies for a statutory exemption. WIS.
STAT. §§ 70.01, 70.02.

¶5 Most property in Wisconsin is assessed for tax purposes by local
assessors, see WIS. STAT. § 70.05, but certain property involved in manufacturing
activities is treated differently. If a business engages in manufacturing activity as
defined in WIS. STAT. § 70.995(1)-(2), it reports its “manufacturing property” used
in that activity to the Department for assessment. Sec. 70.995(5). At the time of
the assessment at issue here, “manufacturing property” was principally defined to
include

all lands, buildings, structures and other real property used
in manufacturing, assembling, processing, fabricating,
making or milling tangible personal property for profit.
Manufacturing property also includes warehouses, storage
facilities and office structures when the predominant use of
the warehouses, storage facilities or offices is in support of
the manufacturing property, and all personal property owned
or used by any person engaged in this state in any of the
activities mentioned, and used in the activity, including raw
materials, supplies, machinery, equipment, work in process
and finished inventory when located at the site of the
activity.

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No. 2022AP1909

Sec. 70.995(1)(a).2 Property that is not “manufacturing property” under § 70.995,
whether owned by manufacturers or nonmanufacturers, is reported to local
assessors.

¶6 In addition to requiring the Department to assess “manufacturing
property,” Chapter 70 exempts certain property used in manufacturing activities
from taxation. Specifically, WIS. STAT. § 70.11(27)(b) exempts “[m]achinery and
specific processing equipment; and repair parts, replacement machines, safety
attachments and special foundations for that machinery and equipment; that are used
exclusively and directly in the production process in manufacturing tangible
personal property, regardless of their attachment to real property, but not including
buildings.” Id. (emphasis added). This exemption does not apply to all
manufacturer machinery; rather, as the italicized language indicates, it is limited to
items that are used “exclusively” and “directly” in the manufacturer’s “production
process.”3 Id.

2
In June 2023, the Wisconsin legislature amended the definition of “manufacturing
property” in WIS. STAT. § 70.995(1)(a) by deleting the words “and all personal property owned or
used by any person engaged in this state in any of the activities mentioned, and used in the activity,
including raw materials, supplies, machinery, equipment, work in process and finished inventory
when located at the site of the activity.” See 2023 Wis. Act 12, § 129.
3
“Production process” is defined in WIS. STAT. § 70.11(27)(a)5. as:

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No. 2022AP1909

¶7 This appeal focuses on a different statutory exemption, WIS. STAT.
§ 70.111(27), which was enacted in 2017. See 2017 Wis. Act 59, § 997J.4 The
exemption, which applies to machines, tools and patterns (MTP), states as follows:

70.111 Personal property exempted from taxation. The
property described in this section is exempted from general
property taxes:

….

(27) MACHINERY, TOOLS, AND PATTERNS.

(a) In this subsection, “machinery” means a structure or
assemblage of parts that transmits force, motion, or
energy from one part to another in a predetermined way
by electrical, mechanical, or chemical means.
“Machinery” does not include a building.

(b) Beginning with the property tax assessments as of
January 1, 2018, machinery, tools, and patterns, not
including such items used in manufacturing.

(c) A taxing jurisdiction may include the most recent
valuation of personal property described under par. (b)
that is located in the taxing jurisdiction for purposes of

the manufacturing activities beginning with conveyance of raw
materials from plant inventory to a work point of the same plant
and ending with conveyance of the finished product to the place
of first storage on the plant premises, including conveyance of
work in process directly from one manufacturing operation to
another in the same plant, including the holding for 3 days or less
of work in process to ensure the uninterrupted flow of all or part
of the production process and including quality control activities
during the time period specified in this subdivision but excluding
storage, machine repair and maintenance, research and
development, plant communication, advertising, marketing, plant
engineering, plant housekeeping and employee safety and fire
prevention activities; and excluding generating, transmitting,
transforming and furnishing electric current for light or heat;
generating and furnishing steam; supplying hot water for heat,
power or manufacturing; and generating and furnishing gas for
lighting or fuel or both.
4
2017 Wisconsin Act 59 is referred to herein as “Act 59.”

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No. 2022AP1909

complying with debt limitations applicable to the
jurisdiction.

Sec. 70.111(27). For the purpose of this case, the key language appears in
subsection (b), which states the exemption applies to “machinery, tools, and
patterns,” but not if they are “used in manufacturing.” Sec. 70.111(27)(b) (emphasis
added).

¶8 After the enactment of WIS. STAT. § 70.111(27), the Department
issued interpretive guidance expressing its view that this exemption “applies only
to locally assessed personal property,” not to “DOR assessed manufacturing
personal property.”

II. The Department’s Assessment of Master’s Gallery’s Property

¶9 Master’s Gallery is a Wisconsin corporation that manufactures and
distributes cheese and cheese-related products from its facility in Plymouth,
Wisconsin. Master’s Gallery engages in a manufacturing activity, see WIS. STAT.
§ 70.995(2)(c), and its Plymouth facility is a “manufacturing establishment” for the
purpose of § 70.995. Thus, the property at issue in this case was reported by
Master’s Gallery to the Department for assessment. See § 70.995(5).

¶10 In July 2018, the Department issued a notice to Master’s Gallery
assessing the value of machinery, equipment, furniture, fixtures, and other personal
property at the Plymouth facility at approximately $2.8 million. Master’s Gallery
filed an objection with the Wisconsin State Board of Assessors, claiming an
assessment value of approximately $1.3 million. Much of the difference between
these assessments was due to Master’s Gallery’s contention that the Department had
incorrectly interpreted WIS. STAT. § 70.111(27). The Board of Assessors disagreed
with Master’s Gallery and sustained the Department’s assessment.

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No. 2022AP1909

III. Tax Appeals Commission Proceedings

¶11 Master’s Gallery filed a petition for review of the Board of Assessors’
decision with the Wisconsin Tax Appeals Commission. The Department and
Master’s Gallery filed cross motions for summary judgment based on a set of
stipulated facts which included two exhibits describing the property in dispute as
follows:

 Exhibit D: machines or tools at the Plymouth facility that were used
directly but not exclusively in Master’s Gallery’s manufacturing
process; and

 Exhibit E: machines or tools at the Plymouth facility that were not
used directly or exclusively in the manufacturing process.

¶12 Several Wisconsin cities filed amicus briefs with the Commission in
support of the Department’s position that none of this property was exempt under
WIS. STAT. § 70.111(27). In their briefs, the cities discussed other provisions in Act
59 related to § 70.111(27) as well as several items of legislative history and other
materials related to § 70.111(27)’s enactment. The cities argued that this evidence
showed the legislature’s intent that the exemption not apply to manufacturer-owned
MTP reported to the Department for assessment.

¶13 The Commission issued an initial decision in September 2020 which
steered a middle course between the parties’ interpretations of WIS. STAT.
§ 70.111(27). Initially, the Commission wrote that the statute “is not ambiguous
and has one clear and reasonable meaning” and thus declined to consider the
legislative history evidence presented by the cities. The Commission then rejected
the Department’s contention that § 70.111(27) does not exempt any MTP that

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No. 2022AP1909

qualifies as “manufacturing property” under WIS. STAT. § 70.995. The Commission
also rejected Master’s Gallery’s interpretation of the exemption as applicable to all
manufacturer MTP not exempt under WIS. STAT. § 70.11(27). Instead, the
Commission concluded that the word “manufacturing” in § 70.111(27) had the same
meaning given to that word in § 70.11(27)(a)3.—“an activity classified as
manufacturing under s. 70.995.” To determine “the borders of ‘the activity,’” the
Commission looked to “the beginning and end points defined in the production
process.” Using those parameters, the Commission concluded that “[a]ny MTP used
in relation to work in progress at any time after manufacturing has commenced and
prior to completion is … used in manufacturing.” Based on this conclusion, the
Commission interpreted § 70.111(27) to exempt “any [MTP] that are used in any
way in manufacturing, which here means used at all in the production of cheese and
cheese-related products.”

¶14 Based on its interpretation of WIS. STAT. § 70.111(27), the
Commission ruled that the machinery and tools listed on Exhibit D to the parties’
stipulation were not exempt because those items were used (albeit not exclusively)
in Master’s Gallery’s manufacturing process. As for the machinery and tools listed
on Exhibit E to the stipulation, which were not used directly or exclusively in the
manufacturing process, the Commission required the parties to winnow the list
down to those items “not used, even indirectly or non-exclusively, in manufacturing
cheese products.” Only those items would qualify for the § 70.111(27) exemption.
After additional follow-up work by the parties, the Commission issued a final order
which incorporated its analysis of the statute and identified those items on Exhibit
E that were exempt.

IV. The Circuit Court Reverses the Commission’s Decision.

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No. 2022AP1909

¶15 The Department sought certiorari review of the Commission’s
decision in the circuit court. See WIS. STAT. §§ 73.015, 227.52, 227.53. Pursuant
to a stipulation between the Department and Master’s Gallery, the circuit court
granted the City of Plymouth leave to intervene as a party in the case.

¶16 Following the submission of briefs, the circuit court concluded that
the Commission had erroneously interpreted WIS. STAT. § 70.111(27)(b). The court
concluded that the phrase “used in manufacturing” in § 70.111(27)(b) is ambiguous
and looked to the legislative history surrounding its enactment to determine the
statute’s meaning. After reviewing the legislative history, the court concluded that
the Department’s interpretation of § 70.111(27) was correct. Based upon its
conclusion, the court granted the Department’s petition and reversed the
Commission’s decision.

DISCUSSION

I. Standard of Review

¶17 Though this case comes to us from the circuit court, “[w]e review the
Commission’s decision rather than the circuit court’s.” Citation Partners, LLC v.
DOR, 2023 WI 16, ¶8, 406 Wis. 2d 36, 985 N.W.2d 761. Master’s Gallery and the
Department premised their arguments before the Commission on a stipulated set of
facts. Neither party argues there are any disputes of fact relevant to our analysis.
Thus, our focus is the Commission’s interpretation of WIS. STAT. § 70.111(27). We
construe the statute de novo and without deference to the Commission’s

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No. 2022AP1909

interpretation.5 See WIS. STAT. § 227.57(11); Citation Partners, 406 Wis. 2d 36,
¶8. Though we do not review the circuit court’s decision, we may benefit from its
analysis. See Sausen v. Town of Black Creek Bd. of Rev., 2014 WI 9, ¶5, 352
Wis. 2d 576, 843 N.W.2d 39.

II. Principles of Statutory Interpretation

¶18 When interpreting statutory language, our aim “is to determine what
the statute means so that it may be given its full, proper, and intended effect.” State
ex rel. Kalal v. Circuit Ct. for Dane Cnty., 2004 WI 58, ¶44, 271 Wis. 2d 633, 681
N.W.2d 110. To do so, we give the language “its common, ordinary, and accepted
meaning, except that technical or specially-defined words or phrases are given their
technical or special definitional meaning.” Id., ¶45. We interpret statutory language
“in the context in which it is used; not in isolation but as part of a whole; in relation
to the language of surrounding or closely-related statutes; and reasonably, to avoid
absurd or unreasonable results.” Id., ¶46.

¶19 “If this process of analysis yields a plain, clear statutory meaning, then
there is no ambiguity, and the statute is applied according to this ascertainment of
its meaning.” Id. (citation omitted). If, on the other hand, statutory language “is
capable of being understood by reasonably well-informed persons in two or more
senses,” then it is ambiguous. Id., ¶47. To resolve ambiguity, we may consult
“‘extrinsic sources’ … outside the statutory text—typically items of legislative
history.” Id., ¶50 (citation omitted).

5
The parties argue about whether we should give “due weight” to the Commission’s
interpretation of WIS. STAT. § 70.111(27) under Tetra Tech EC, Inc. v. DOR, 2018 WI 75, 382
Wis. 2d 496, 914 N.W.2d 21. In light of our conclusion that the statute is ambiguous and that the
extrinsic materials presented to the Commission persuade us that § 70.111(27) does not apply to
manufacturing property assessed by the Department, we need not resolve that issue.

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No. 2022AP1909

¶20 Exemptions from taxation are “strictly construed in every instance
with a presumption that the property in question is taxable, and the burden of proof
is on the person who claims the exemption.” WIS. STAT. § 70.109. Master’s Gallery
must show that its property clearly falls within the terms of the exemption. See
Southwest Airlines Co. v. DOR, 2021 WI 54, ¶26, 397 Wis. 2d 431, 960 N.W.2d
384. Exemptions “must be clear and express, and not extended by implication.”
United Rentals, Inc. v. City of Madison, 2007 WI App 131, ¶13, 302 Wis. 2d 245,
733 N.W.2d 322. Doubts regarding the applicability of an exemption are resolved
“in favor of taxability.” Id.

III. Analysis of WIS. STAT. § 70.111(27)

¶21 The Department begins its analysis of WIS. STAT. § 70.111(27) by
noting that because Master’s Gallery submitted the MTP at issue to the Department
for assessment, it necessarily fell within WIS. STAT. § 70.995(1)(a)’s definition of
“manufacturing property.” Thus, in the language of that definition, the MTP was
“personal property owned or used by any person engaged in this state in any of the
[manufacturing] activities mentioned” (here, Master’s Gallery is engaged in food
production) and was “used in the activity.” See id. And because the MTP was used
in Master’s Gallery’s manufacturing activity, the Department argues, it could not be
exempt under WIS. STAT. § 70.111(27) because that provision is not limited to MTP
used in the production process.6 The Department urges us to reject the

6
The Department asserts that it is not arguing that “property owned by a manufacturer can
never” be exempt under WIS. STAT. § 70.111(27). Instead, it contends “that property assessed by
the Department under WIS. STAT. § 70.995 … is not eligible because it is ‘manufacturing property’
that must be used in a manufacturing activity to qualify as such.” The Department acknowledges
that “locally assessed property,” whether owned by a manufacturer or a nonmanufacturer, “is
potentially eligible for the exemption because it is not ‘manufacturing property’ and [is] not used
in a manufacturing activity.” This case, however, involves only property that was submitted to the
Department for assessment.

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No. 2022AP1909

Commission’s interpretation of “used in manufacturing,” claiming the
Commission’s limitation of “manufacturing” to a “subset of manufacturing
[activity],” the “production process” as defined in WIS. STAT. § 70.11(27)(a)5.,
ignores that § 70.995(1)(a) necessarily defines property more broadly as property
owned or used by a person engaged in manufacturing activity and used in that
activity.

¶22 Master’s Gallery does not argue the position it took before the
Commission—that WIS. STAT. § 70.111(27) exempts all manufacturer MTP that is
not exempt under WIS. STAT. § 70.11(27). Rather, Master’s Gallery asks us to adopt
the Commission’s interpretation of § 70.111(27). It argues that the Commission
correctly determined that § 70.111(27) could apply to MTP owned or used by a
manufacturer or located at a manufacturing establishment that is not used in the
production process. It contends that other provisions in Chapter 70 are more
relevant to determine the meaning of the exemption than WIS. STAT. § 70.995(1)(a).
As to the terms of § 70.111(27), Master’s Gallery emphasizes that they exclude
MTP from its scope based on use, not the identity of the owner or user. In other
words, the exemption does not say that MTP owned or used by manufacturers is not
exempt; it says rather that MTP “used in manufacturing” is not exempt. Master’s
Gallery contrasts the wording of § 70.111(27)(b) with other exemptions in Chapter
70 that expressly define their scope by the identity of the owner or user. See, e.g.,
§ 70.111(9) (exempting “garden machines and implements and farm, orchard and
garden tools if those machines, implements and tools are owned and used by any
person in the business of farming”); § 70.111(14) (exempting “[m]ilkhouse
equipment used by a farmer”). It argues the Commission correctly concluded that
§ 70.111(27) exempts MTP regardless of who owns or uses it, so long as it is not
used in manufacturing.

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No. 2022AP1909

¶23 After careful consideration of the parties’ arguments, we conclude
that WIS. STAT. § 70.111(27) is ambiguous because it does not define the phrase
“used in manufacturing.” Though not all undefined statutory language is
ambiguous, the absence of a definition here leaves § 70.111(27) “capable of being
understood by reasonably well-informed persons in two or more senses.” See Kalal,
271 Wis. 2d 633, ¶47. On one hand, Master’s Gallery is correct that § 70.111(27)
does not say that MTP owned or used by a manufacturer is outside the scope of the
exemption; it provides that MTP is not exempt if it is “used in manufacturing.” Sec.
70.111(27)(b). Master’s Gallery suggests that we follow the Commission’s lead in
looking to the definition of “manufacturing” in WIS. STAT. § 70.11(27) for
guidance. As we previously explained, § 70.11(27)(a)3. defines “[m]anufacturing”
as “engaging in an activity classified as manufacturing under
s. 70.995.” The Commission then defined “the borders” of manufacturing activity
by “the beginning and end points defined in the production process” and concluded
that Master’s Gallery’s MTP was exempt under § 70.111(27) so long as it was not
used in any way in the production process to manufacture cheese and cheese-related
products.

¶24 On the other hand, a reasonably well-informed person could also
construe the phrase “used in manufacturing” in WIS. STAT. § 70.111(27)(b) not to
exempt the property at issue in this case. That property was assessed by the
Department, which means that it was determined to be “manufacturing property”
under § 70.995(1)(a)—that is, property “owned or used by” Master’s Gallery, a
manufacturer engaged in the manufacturing activity of food production, “and used
in” that food production activity. See id. Thus, MTP that is submitted to the
Department for assessment is necessarily “used in manufacturing” and thus not
exempt under § 70.111(27). Construing § 70.111(27) not to exempt MTP that is

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No. 2022AP1909

assessed by the Department is consistent with the strict construction we are to afford
exemptions under Chapter 70. See WIS. STAT. § 70.109. It is an “equally sensible
interpretation[]” of the statute. See Bruno v. Milwaukee County, 2003 WI 28, ¶21,
260 Wis. 2d 633, 660 N.W.2d 656 (citation omitted).

¶25 Because we conclude that WIS. STAT. § 70.111(27) is ambiguous, we
may look to extrinsic sources to ascertain its meaning, including “materials
pertaining to the passage of a statute, historical events that occurred at the time of
enactment, and information generated after the statute’s passage.” See Seider v.
O’Connell, 2000 WI 76, ¶53, 236 Wis. 2d 211, 612 N.W.2d 659. An ambiguous
statute “must be interpreted and applied so it is consistent with the statutory scheme
in which it appears.” Hoague v. Kraft Foods Glob., Inc., 2012 WI App 130, ¶10,
344 Wis. 2d 749, 824 N.W.2d 892.

¶26 Before we examine the extrinsic evidence in the record, we note that
the legislature included three provisions in Act 59 that relate to WIS. STAT.
§ 70.111(27). First, Act 59 created WIS. STAT. § 79.096, which states in part:

Beginning in 2019, and in each year thereafter, the
department of administration shall pay to each taxing
jurisdiction … an amount equal to the property taxes levied
on the items of personal property described under
s. 70.111(27)(b) for the property tax assessments as of
January 1, 2017.

2017 Wis. Act 59, § 1210P. To fund these payments, the legislature also enacted
WIS. STAT. § 20.835(1)(f), which directs the appropriation of “[a] sum sufficient to
make the state aid payments under s. 79.096.” 2017 Wis. Act 59, § 480D. Finally,
for the 2018-19 fiscal year, the legislature allocated $74.4 million to make the
payments required under § 79.096(1). See 2017 Wis. Act 59, § 183. In determining

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what § 70.111(27) means, we must endeavor to harmonize it with these related
provisions. See Kalal, 271 Wis. 2d 633, ¶46.

¶27 The extrinsic evidence presented by the cities to the Commission
consists of two affidavits from Rick Olin, a fiscal analyst with the Legislative Fiscal
Bureau (LFB). The LFB is a nonpartisan agency that “provides fiscal and program
information and analyses to the Wisconsin Legislature, its committees, and
individual legislators.” City of Menasha v. WERC, 2011 WI App 108, ¶16 n.10,
335 Wis. 2d 250, 802 N.W.2d 531. Attached to one of the affidavits are four
exhibits: (1) a table prepared by LFB displaying the amount of property taxes paid
on certain categories of personal property in 2017; (2) a copy of an omnibus motion
presented to the legislature concerning “Shared Revenue, Tax Relief, Local
Government and Budget Management” which addresses the enactment of WIS.
STAT. § 70.111(27); (3) excerpts from a Comparative Summary of Provisions
related to the 2019-2021 Wisconsin State Budget prepared by LFB and dated
August 2019; and (4) a Memorandum from LFB Director Bob Lang to the Joint
Committee on Finance dated February 14, 2020.

¶28 Beyond its general contention that the Commission properly declined
to consider this evidence because WIS. STAT. § 70.111(27) is not ambiguous,
Master’s Gallery does not argue that the affidavits and exhibits are not relevant in
determining § 70.111(27)’s meaning. Moreover, Wisconsin courts have previously
considered affidavits, summaries, and other materials from LFB in determining the
meaning of statutes. See, e.g., Juneau County v. Courthouse Emps., Loc. 1312,
221 Wis. 2d 630, 645-48, 585 N.W.2d 587 (1998); City of Menasha, 335 Wis. 2d
250, ¶¶16-17; Rychnovsky v. Village of Fall River, 146 Wis. 2d 417, 421-22, 431
N.W.2d 681 (Ct. App. 1988). Based on Master’s Gallery’s lack of objection and
this prior practice, we will consider these materials.

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No. 2022AP1909

¶29 The Olin affidavits and attached exhibits provide a compelling
explanation of WIS. STAT. § 70.111(27)’s intended meaning. According to Olin,
before Act 59 was passed, “LFB was asked to estimate the fiscal effect of:
(1) exempting personal property from the property tax; and (2) creating a state aid
program to compensate local governments for, and hold taxpayers harmless from,
the annual loss of tax base resulting from such an exemption.” In response to this
request, LFB created a table containing its estimates of the tax base attributable to
certain categories of personal property, including MTP. The table indicated an
estimate of $74.4 million in personal property taxes paid in 2017 on MTP of
“property owners who were not manufacturers and who had reported such items to
municipal assessors.” LFB also examined the tax base resulting from taxation of
manufacturer-owned (and Department assessed) MTP and estimated that value at
$41.3 million. Thus, if the legislature were to enact an exemption that applied only
to nonmanufacturer (i.e., locally assessed) MTP, LFB estimated that $74.4 million
in state aid would be required to make up for the resulting loss of tax base. But if
the legislature decided to exempt MTP owned by manufacturers and
nonmanufacturers, LFB estimated a total of $115.7 million in state aid would be
required to offset the exemption.

¶30 The omnibus motion submitted to the legislature after the bureau’s
analysis recommended that the legislature “[e]xempt [MTP], not including such
items considered manufacturing property under current law, from the property tax”
and offset this exemption by paying local taxing jurisdictions a total of $74.4 million
annually. The legislature followed through on this suggestion in Act 59 by creating
the state aid program in WIS. STAT. § 79.096(1), enacting an appropriation to fund

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the program in WIS. STAT. § 20.835(1)(f), and appropriating $74.4 million for the
aid payments. See 2017 Wis. Act 59, § 183.7

¶31 Together, these interrelated statutory provisions and the extrinsic
evidence clearly establish the meaning of WIS. STAT. § 70.111(27).8 These
materials clarify that § 70.111(27) was enacted to exempt from taxation only MTP
that is reported to local assessors. Construing the exemption to apply only to locally
assessed property harmonizes it with its related statutes, gives the exemption a strict
but not unreasonable reading as required under WIS. STAT. § 70.109, and prevents
overlap with the exemption in WIS. STAT. § 70.11(27) for MTP that is assessed by
the Department.

¶32 Master’s Gallery’s response to the legislative history is not
convincing. It points to deposition testimony given by Olin which, in its view,
shows that the legislature did not intend the aid program created by WIS. STAT.
§ 79.096(1) to fully compensate municipalities for the loss of tax base resulting from
WIS. STAT. § 70.111(27)’s enactment. Master’s Gallery argues that Olin conceded
the aid program is “at best [an] approximated reimbursement for a portion of the tax
base” lost due to the new exemption. Even if we credit Master’s Gallery’s reading

7
The Comparative Summary of Provisions prepared by LFB shows the $74.4 million in
state aid doubled to $148.8 million for the two-year period 2018-19, which Olin confirms is “the
amount allocated by the Legislature as the amount of state aid to compensate for the lost tax base
due to the exemption of non-manufacturing machinery, tools and patterns.”

Because the LFB table, the omnibus motion, and the comparative summary are, in our
view, sufficiently persuasive of the meaning of WIS. STAT. § 70.111(27), we need not consider the
parties’ arguments concerning the other item of legislative history attached to Olin’s affidavit—the
February 2020 memorandum from LFB director Lang to the Joint Committee on Finance.
8
The dissent contends that our analysis is limited to “extrinsic sources,” Dissent, ¶35, but
fails to acknowledge that our reading of WIS. STAT. § 70.111(27)(b) is, as it must be, based on the
interrelated statutory provisions enacted with that statute that established the state aid payments
(WIS. STAT. § 79.096) and directed the allocation of funds to make them (WIS. STAT.
§ 20.835(1)(f)). See supra ¶26.

17
No. 2022AP1909

of Olin’s testimony, it does not completely sever the link between the exemption
and the aid program. It remains the case that: (1) LFB was directed to estimate the
amount of money that would be necessary to compensate for the loss of tax base
resulting from a personal property exemption; (2) LFB provided estimates of the
loss of tax base that would result from the exemption of various categories of
personal property, one of which was MTP reported to municipal assessors; and
(3) the legislature appropriated the exact amount LFB estimated to be the loss that
would result from exempting locally assessed MTP to fund the aid payments
intended to compensate for the enactment of § 70.111(27). That LFB might have
been able to provide a more precise measure of the exemption’s fiscal impact does
not diminish the significance of its analysis in determining the exemption’s scope.

CONCLUSION

¶33 For the reasons stated above, the Commission erred in concluding that
WIS. STAT. § 70.111(27) is unambiguous and can exempt MTP submitted to the
Department for assessment so long as the MTP is not used in any way in a
manufacturing production process. Like the circuit court, we conclude that
§ 70.111(27) is ambiguous, but that the legislative history surrounding its enactment
demonstrates that the exemption does not apply to MTP that is assessed by the
Department under WIS. STAT. § 70.995. Because the property of Master’s Gallery
at issue here was submitted to the Department for assessment, it does not qualify for
the § 70.111(27) exemption.

By the Court.—Order affirmed.

18
No. 2022AP1909(D)

¶34 GROGAN, J. (dissenting). Having reviewed the Record, the parties’
briefs, and relevant statutory language, I conclude that the phrase “machinery, tools,
and patterns, not including such items used in manufacturing” in WIS. STAT.
§ 70.111(27)(b) (2021-22)1 is unambiguous.2 Where no ambiguity exists, we
simply apply the statute’s plain meaning. State ex rel. Kalal v. Circuit Ct. for Dane
Cnty., 2004 WI 58, ¶¶47-48, 271 Wis. 2d 633, 681 N.W.2d 110. “Statutory
language is given its common, ordinary, and accepted meaning, except that
technical or specially-defined words or phrases are given their technical or special
definitional meaning.” Id., ¶45. The plain meaning of “such items used in
manufacturing” in the context of § 70.111(27)(b) means those items—here,
“machinery, tools, and patterns”—that are actually used in manufacturing the
product. This, in essence, is consistent with the Commission’s determination—
although the Commission relied on the definition of “manufacturing” in WIS. STAT.
§ 70.11(27)(a)3—which provides: “‘Manufacturing’ means engaging in an activity
classified as manufacturing under s. 70.995.” (Emphases added.)

¶35 The Majority concludes that the text of this statute is ambiguous, and
it therefore turns to extrinsic sources to determine what it thinks the legislature
meant by the words “machinery, tools, and patterns, not including such items used

1
All references to the Wisconsin Statutes are to the 2021-22 version unless otherwise
noted.
2
This statute provides, as material: “The property described in this section is exempted
from general property taxes: … (27)(b) … machinery, tools, and patterns, not including such items
used in manufacturing.” WIS. STAT. § 70.111(27)(b). In other words, “machinery, tools, and
patterns” are not exempt if they are “used in manufacturing.”
No. 2022AP1909(D)

in manufacturing.” According to the Majority, the legislature intended these words
to mean all property that is “owned or used by” a manufacturer—any property that
is submitted to the Department for assessment. See Majority,
¶¶21-25, 33. It dismisses the Commission’s interpretation of the statutory words
based on the Majority’s review of affidavits from a fiscal analyst, a table displaying
2017 property taxes, items presented to the legislature, and a memorandum to the
joint finance committee from 2020. The Majority says these materials support its
interpretation. Majority, ¶31. I disagree with the Majority.

¶36 Kalal directs us that: “[i]t is the enacted law, not the unenacted intent,
that is binding on the public.” Kalal, 271 Wis. 2d 633, ¶44. The enacted law does
not say “owned by and used in.” It does not say “all property used in the
manufacturing industry” or “all manufacturing property.” Nor does it say “any
property that a manufacturer submits to the Department for assessment.”

¶37 I would apply the plain meaning of the text actually enacted and stop
there. Accordingly, I respectfully dissent.

2