Inquiring minds are reading a Reuters article on the devastating effects that the housing market is having on local governments and their tax revenues:
The bust in the housing market that began nearly three years ago has hit them like a slow-moving avalanche, first striking with abandoned properties and rising homelessness. Some also saw drops in sales tax revenue as people, feeling poorer after the slide in home values, pared back on shopping trips.
Now, property taxes are falling. The housing slump pushed down property values but that has only recently affected property tax collections, as there can be as much as a three-year lag in assessing properties. Cities, counties and school districts chiefly rely on property tax revenues to fund services such as police and fireman and teacher salaries.
A case in California:
California’s San Bernardino County, the largest county in the continental United States, closed a budget gap of $84.9 million for the fiscal year that started on July 1. Already it is foresees a $48 million deficit for the next fiscal year.
According to budget documents, the number of mortgage delinquencies and defaults have dropped in the county, which means the number of people paying taxes may be stabilizing. But the values of real estate have fallen, keeping revenues down.
“Even if the housing market were going to turn around tomorrow it would take several years for the county to see an increase in property tax revenue,” said David Wert, public information officer for the county’s administrative office.
This is devastating data. This is an admission by a politician…of what is really going on and not just what the politicians say in public. Another:
In May nearly half of 800 counties surveyed by the National Association of Counties said the decline in income from property taxes was a major reason for revenue shortfalls.
“I’m not looking for a real improvement, or just a beginning of a comeback, until our 2013 budget year,” said Glen Whitley, president of NACo and County Judge of Tarrant County, Texas, a role akin to head of the county commission.
July 2013…just to begin a comeback!!!
Somebody tell the President because apparently he didn’t get the memo when he said last Friday in the press conference that the economy was healing.
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