Does Wisconsin's Smart Growth planning law affect city or village land use regulation power?

Yes.

While the Smart Growth law does not directly compel a city or village to adopt a comprehensive plan, it defines “comprehensive plan” to include a master plan adopted or amended by a city or village under 62.23(2) or (3). Wis. Stat. sec. 66.1001(1)(a)2. Such a master plan must contain at least all of the nine comprehensive plan elements specified in the Smart Growth law if a city or village engages in official mapping, local subdivision regulation or zoning. Wis. Stat. sec. 62.23(3)(b). And, these comprehensive plan elements must be adopted in accordance with the land use planning procedures set forth in Wis. Stat. sec. 66.1001(4). 

In addition, city or village official mapping, local subdivision regulation and zoning must be consistent with the municipality’s comprehensive plan (i.e., master plan). Wis. Stat. sec. 66.1001(3). “Consistent with” means “furthers or does not contradict the objectives, goals, and policies contained in the comprehensive plan.” Wis. Stat. sec. 66.1001(1)(am).