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 ...
Except for the fact that it crushes homeowners and drives them from the state.
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.
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.
“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.
The foreclosing bank has to pay the taxes.
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.
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.
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.
Good. Starve the beast. Local governments are at least as socialist and corrupt as federal.
And if local governments can’t get their money, ultimately they will get it from Uncle Sugar.
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 :)
Thanks!
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!
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.
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.”
Rinse and repeat.
And don’t expect the assessment rates to go down when (if) property values rebound.
Why were they jacking up the tax rates during a boom? Shouldn’t they lower the tax rates during a bust?
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