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Falling home values mean budget crunches for cities
Washington Post ^ | Brady Dennis

Posted on 12/26/2011 6:49:41 PM PST by DeaconBenjamin

The bust that began in 2007 has just begun to ravage tax revenues in communities from coast to coast. The problem is unlikely to subside soon.

For instance, Baltimore collected $815 million in property taxes during the most recent fiscal year. Next year, the figure is predicted to shrink to $803.5 million. The following year, $773 million. The year after that, $735.7 million. The year after that, $729.4 million.

“I don’t see any quick fixes over the next four or five years, to be honest.” Baltimore already faces a budget deficit of more than $50 million next year. “Obviously, it means we have much lower revenues than we had in past. It’s creating gaps in our budget.”

Communities generally see a lag before property taxes reflect the true value of a home. That’s good news for homeowners during boom times, when their tax bills don’t immediately reflect skyrocketing values. It’s not so great during the bust of recent years, when many homeowners protest that their taxes haven’t fallen as rapidly as their property values. But in many places, the assessments have fallen.

Many local governments weathered the early years of the financial crisis in part because the property tax revenues they rely upon so heavily held steady or actually increased as a result of assessments that reflected inflated prices. Municipalities must now recognize the collapse in home prices and the shrinking tax base that comes with it. At the same time, state and federal aid dries up.

Local governments have lost more than half a million employees since the financial crisis hit in September 2008. Through November, local governments had shed an average of 9,300 jobs each month this year, offsetting some of the job growth generated by the private sector.

(Excerpt) Read more at washingtonpost.com ...


TOPICS: Business/Economy; Government
KEYWORDS: babyboomers; cheers; croakingfordecades; economy; housingbubble

1 posted on 12/26/2011 6:49:44 PM PST by DeaconBenjamin
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To: DeaconBenjamin

Good news.

Let the bastard politicians starve.


2 posted on 12/26/2011 6:51:37 PM PST by Larry Lucido
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To: AdmSmith; AnonymousConservative; Berosus; bigheadfred; Bockscar; ColdOne; Convert from ECUSA; ...

In that case, better raise taxes. /s

Thanks DeaconBenjamin.


3 posted on 12/26/2011 6:54:00 PM PST by SunkenCiv (Merry Christmas, Happy New Year! May 2013 be even Happier!)
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To: Larry Lucido

Drop in home values have nothing to do with budget shortfalls. How stupid is this reporter


4 posted on 12/26/2011 6:54:52 PM PST by UB355 (Slower traffic keep right)
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To: SunkenCiv

That’s exactly what they do.

When the assessment goes down the tax rate goes up.

They will adjust it until they get what they need.


5 posted on 12/26/2011 6:55:43 PM PST by Venturer
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To: DeaconBenjamin
Look for code enforcement to hire.

/johnny

6 posted on 12/26/2011 6:56:08 PM PST by JRandomFreeper (Gone Galt)
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To: DeaconBenjamin

Austerity: the immovable object.
Entitlement mentality: the irresistible force.

Epic clash coming in 5 ... 4 ... 3 ...

7 posted on 12/26/2011 6:58:14 PM PST by ClearCase_guy (Nothing will change until after the war. It's coming.)
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To: DeaconBenjamin

Many Pennsylvania Counties (assessments are done by County government) have voted to delay countywide reassessment indefinitely.

There is nothing to gain by spending money to determine that the real estate tax base has contracted.


8 posted on 12/26/2011 6:58:57 PM PST by lightman (Adjutorium nostrum (+) in nomine Domini)
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To: Venturer

Exactly, like I said this journalist is ignorant or stupid.


9 posted on 12/26/2011 6:59:46 PM PST by UB355 (Slower traffic keep right)
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To: Venturer

vacant foreclosed homes return no taxes, and there are record #’s in foreclosure today


10 posted on 12/26/2011 7:00:50 PM PST by stickywillie
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To: DeaconBenjamin

Falling property values means nothing to the taxing authorities where I live. They just keep jacking the rates up to offset the value base it’s calculated on. They don’t give a rip.


11 posted on 12/26/2011 7:01:17 PM PST by MachIV
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To: UB355
Well I hate to have to say that a girbilist is smarter than a Freeper, but in this case one is.

Millages and property tax index off of real estate values, and abandoned homes are a drag on municipal revenues. Lower real estate values cause less income.

Guess what?

An abandoned home still has water lines and power lines running across the property in easements, and those line still have to be maintained even when there is no tax paying occupant.

We are ten years over built and this will not ease any time soon.

Did you never bother to read the housing bubble threads in years gone by? Where this was going to go was accurately explained, and now we are there.

12 posted on 12/26/2011 7:05:34 PM PST by MrEdd (Heck? Geewhiz Cripes, thats the place where people who don't believe in Gosh think they aint going.)
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To: MachIV

Move someplace where they are hamstrung in their power to raise rates.
:D


13 posted on 12/26/2011 7:07:02 PM PST by MrEdd (Heck? Geewhiz Cripes, thats the place where people who don't believe in Gosh think they aint going.)
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To: UB355

“I don’t see any quick fixes over the next four or five years, to be honest.”.....Reduce spending. Took me all of 5 seconds to realize that. They can figure how to reduce spending; they just DON”T want to.


14 posted on 12/26/2011 7:08:41 PM PST by rustyboots
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To: DeaconBenjamin

My County Assessor has doubled tax rates each of the past 3 years and is on record stating he will continue to do such until the County is solvent.


15 posted on 12/26/2011 7:08:41 PM PST by Carthego delenda est
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To: stickywillie

Not sure you are right. The foreclosured home still exists, and the property tax bill exists. Maybe the bank pays it, I don’t know, but I would bet somebody does.


16 posted on 12/26/2011 7:09:59 PM PST by Venturer
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To: MrEdd

Buy your own county.


17 posted on 12/26/2011 7:12:14 PM PST by Paladin2
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To: DeaconBenjamin
When home values were increasing, they loved the additional Property Tax Revenue flowing in and spent it as fast as they got it.

Instead of investing their new found wealth in a rainy day fund, they spent money on inflated Pensions and Salaries to the Public Employees who are primarily funded from Property Tax Revenue, Fire, Police and Teachers.

Then the dam burst and they realized they forgot to buy Life-jackets.

18 posted on 12/26/2011 7:25:26 PM PST by Kickass Conservative (Liberals, Useful Idiots Voting for Useless Idiots...)
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To: SunkenCiv
In that case, better raise taxes. /s

My city is following your advice. In 2004 it instituted a city income tax. This year it doubled the income subject to it (while claiming they weren't "raising our taxes").
All the while the local liberal rag ran piece after piece demanding those of us still hanging onto our jobs "pay our fair share". Every time I hear some dimwit say that I want to make a non verbal response resulting in painful outcome for the speaker.

19 posted on 12/26/2011 7:31:25 PM PST by ChildOfThe60s ( If you can remember the 60s....you weren't really there)
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To: SunkenCiv

Our city and county just raised property tax rates to offset declining home values.
I’m pretty sure the rates won’t go down when property values rise.


20 posted on 12/26/2011 7:36:12 PM PST by tbw2
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To: lightman

Except for the fact that it crushes homeowners and drives them from the state.


21 posted on 12/26/2011 7:38:59 PM PST by BenKenobi (You know, you really need to break free of that Catholic mindset.- metmom)
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To: SunkenCiv

In that case, better raise taxes. /s


They are doing just that! Taxable values going up. Cash value going down. 5 years ago my parents house was worth 300K.. Now.. mid-upper 100’s.. Taxable value. 345K!!!

They do live in the peoples republic of Minneapolis.


22 posted on 12/26/2011 7:52:10 PM PST by cableguymn
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To: stickywillie

vacant foreclosed homes return no taxes, and there are record #’s in foreclosure today


Yes they do. Someone still has to pay them (the bank holding the bad paper) or the taxing authority ends up owning them.


23 posted on 12/26/2011 7:53:41 PM PST by cableguymn
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To: Venturer

“The foreclosured home still exists, and the property tax bill exists. Maybe the bank pays it, I don’t know, but I would bet somebody does.”

The municipality seizes the property because of the tax lien, then ends up having to maintain or demolish it when there are no buyers. Many “crackhouses” are in fact owned by their municipalities - and they devour rather than generate tax revenue.


24 posted on 12/26/2011 7:59:21 PM PST by kearnyirish2
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To: stickywillie
vacant foreclosed homes return no taxes

The foreclosing bank has to pay the taxes.

25 posted on 12/26/2011 8:09:29 PM PST by PAR35
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To: PAR35

But do they? Is this enforced?


26 posted on 12/26/2011 8:14:27 PM PST by DeaconBenjamin (A trillion here, a trillion there, soon you're NOT talking real money)
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To: DeaconBenjamin
But do they? Is this enforced?

Yes, unless they simply charge off the debt, release their lien and walk away - which is happening more and more.

27 posted on 12/26/2011 8:18:22 PM PST by elkfersupper
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To: Venturer

If the taxes aren’t paid, a tax lien is put on it...and after a period of time it is sold off by the county, for at least the amount of the tax lien. For this reason, most banks will pay taxes. However, the process takes around two years...so a bank or insolvent developer can essentially borrow money at very low interest by delaying tax payments. When I look at the past due tax rolls, I see that many started this game in 2009...so here in 2011 they will pay the ‘09 tax, but not ‘10, and the actual ‘11 taxes won’t get paid until ‘13. I look at the late tax rolls as what should be the first predictor that real estate is getting better. So far, however, the late rolls just are getting longer, and commercial property is really starting to show up.


28 posted on 12/26/2011 8:27:48 PM PST by lacrew (Mr. Soetoro, we regret to inform you that your race card is over the credit limit.)
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To: DeaconBenjamin

Some cities are adding backdoor taxes by increasing ‘franchise fees’, which are charged to non-municipal utilities, for use of the ROW. One hundred percent of this fee is passed along to the consumer.


29 posted on 12/26/2011 8:36:17 PM PST by lacrew (Mr. Soetoro, we regret to inform you that your race card is over the credit limit.)
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To: DeaconBenjamin

Good. Starve the beast. Local governments are at least as socialist and corrupt as federal.


30 posted on 12/26/2011 8:39:48 PM PST by familyop ("Wanna cigarette? You're never too young to start." --Deacon, "Waterworld")
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To: MrEdd

And if local governments can’t get their money, ultimately they will get it from Uncle Sugar.


31 posted on 12/26/2011 8:41:26 PM PST by dfwgator
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To: DeaconBenjamin

Another trick tax is PILOT, payment in lieu of taxes. Essentially if the city owns a parking garage, income generated from the garage is used to make a payment to the general fund, as if property taxes were being paid on the garage. That is a good thing - keeps the city garage from having an unfair advantage over private garages. However, this concept is now being applied to city functions which have no private competition - water treatment and supply, as well as sewer collection and treatment. This raises your sewer and water bill...but your mil levy didn’t go up :)


32 posted on 12/26/2011 8:42:09 PM PST by lacrew (Mr. Soetoro, we regret to inform you that your race card is over the credit limit.)
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To: Larry Lucido
maryland democrat politicians don’t starve, they eat the taxpayers
33 posted on 12/26/2011 8:53:05 PM PST by silverleaf (common sense is not so common- voltaire)
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To: Venturer; ChildOfThe60s; tbw2; cableguymn

Thanks!


34 posted on 12/26/2011 9:07:44 PM PST by SunkenCiv (Merry Christmas, Happy New Year! May 2013 be even Happier!)
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To: DeaconBenjamin; lacrew
Obviously, it means we have much lower revenues than we had in past. It’s creating gaps in our budget.”

Wait until they tell the tens of hundreds of thousands of county and city government retirees, they have to cut their lottery style retirement pensions in half...

The screams will be heard coast to coast.

Oh yeah!

35 posted on 12/26/2011 9:19:08 PM PST by dragnet2 (Diversion and evasion are tools of deceit)
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To: lacrew
so a bank or insolvent developer can essentially borrow money at very low interest by delaying tax payments

Not in Kentucky. The state mandates 12% annual interest, accruing at 1% per month. If you can buy the tax bill on a property with a clean title, and can afford to wait, it's a great return.

36 posted on 12/26/2011 9:30:09 PM PST by ChildOfThe60s ( If you can remember the 60s....you weren't really there)
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To: DeaconBenjamin
Real Estate taxes in our area (and I'm guessing most areas) are a lagging indicator, as they are paid in arrears.
We are paying 2010 taxes in 2011, that were assessed in 2009.

our tax rates went down, but specific areas went up ( library\parks),they mucked with the multiplier, so they essentially will stay the same for next year. Which means they actually increased in relation to assessed value, which was reduced approx. 400 bucks.

figures lie, liars figure...
37 posted on 12/26/2011 9:30:09 PM PST by stylin19a (obama - "FREDO" smart)
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To: ChildOfThe60s

Wow. Reminds of something a co-worker once told me: “There is no such thing as private property in this country...and if you don’t believe me, try not paying your taxes.”


38 posted on 12/26/2011 9:42:38 PM PST by lacrew (Mr. Soetoro, we regret to inform you that your race card is over the credit limit.)
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To: Venturer

Rinse and repeat.

And don’t expect the assessment rates to go down when (if) property values rebound.


39 posted on 12/26/2011 10:35:44 PM PST by Catmom
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To: DeaconBenjamin

Why were they jacking up the tax rates during a boom? Shouldn’t they lower the tax rates during a bust?


40 posted on 12/26/2011 11:38:22 PM PST by Razzz42
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To: lightman

“Many Pennsylvania Counties (assessments are done by County government) have voted to delay countywide reassessment indefinitely.”

In my neck of the woods in NJ they had revaluations a few years ago, not so much to increase taxes as to root out the illegal apartments where all of our “guest workers” were living. They didn’t even want to remove the illegal apartments; they wanted the American property owners to pay pay taxes as 2- or 3-family homes rather than the 1-family units they were built and taxed as. Nobody cared until the children of the “guest workers” (remember that name for them, when we pretended they were temporary?) showed up in the public schools. Towns that are officially 80% “white” have student bodies that are 50% Hispanic.


41 posted on 12/27/2011 3:41:12 AM PST by kearnyirish2
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To: Catmom

Exactly, the old double dip.

These people in Congress who want to sock it to us on tax’s forget that States and County are already hosing us down.

They lower our tax’s by cutting payments to states, States cut tax’s by cutting the portion they return to County and County has to nail us to the cross.All the time taking highway funds and adding them to the General Fund and crying they cant fix the roads.

We are at the bottom of the tax food chain, and getting the shaft.


42 posted on 12/27/2011 5:47:10 AM PST by Venturer
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