PrintGet ready for record property tax rate increases next year as cities and counties across the nation cut their budgets to the bone and scramble for every tax dollar they can find.
So you thought lower property values meant lower property taxes? Welcome to the world of local government where property value declines take three years or more to show up in the tax bill and when they do your local government must raise tax rates to make up for its lost revenue.
The huge 20 or 30 percent declines in property values that took place in 2006 and 2007 took a long time to make an impact on homeowners’ bills because of the way local governments assess properties. But those big drops are finally being felt and local governments are screaming.
It stands to reason that those local governments that can raise property taxes are quietly preparing boosts in their property tax rates to make up some of the difference. Many cities are precluded from raising rates by local and state laws like California’s Prop 13 that make it difficult to increase property tax rates. However, this year 20 percent of cities increased their property taxes, according to the NLC survey, which will be felt in next year’s tax bills. Next year the outlook is that another 20 percent will raise tax rates
According to a survey released last month by the National League of Cities, city revenues are continuing to fall 2.3 percent by the end of this year, making 2011 the fifth straight year of declines in revenue with probable further declines in 2012. The revenue decline is mainly due to the fall off in property tax revenues, which are expected to decline by 3.7 percent with further declines likely in 2012 and 2013.
Cities are responding by cutting personnel (72 percent), delaying infrastructure projects (60 percent) and increasing service fees (41 percent). One in three (36 percent) cities report modifications to employee health care benefits.
“The cuts in personnel and the delaying of infrastructure projects are prudent and responsible actions by local officials,” said Donald J. Borut, Executive Director of NLC. He continued, “City officials are a making difficult decisions and are working hard to find innovative solutions to reenergize their communities. But without more resources and more cooperation, the outlook will continue to be challenging.
February 17th, 2012 at 3:45 pm
Its like you read my thoughts! You seem to grasp a lot approximately this, such as you wrote the e-book in it or something. I believe that you just could do with some p.c. to pressure the message house a bit, but instead of that, this is great blog. A great read. I’ll certainly be back.