Property tax reassessments are going to reduce county income. Post 77

Coach Mitch’s REFLECTIONS

Imagine being a county treasurer

Fact 1: These days much of the country is facing declining home prices.

Fact 2: A large percentage of the counties budget’s come from property taxes.

Fact 3: As home prices fall, homeowners will seek to have their property reassessed and try to pay lower property taxes.

Fact 4: The County will generate fewer funds for its programs.

Not a pretty site

If you are in a housing market that is being heavily hit with declining property values, then your county government is in trouble. Much of your county’s budget is derived from property taxes.

The country is facing a record number of mortgage foreclosures. If your county is being swamped with foreclosures, that is a major factor in assessing the resale value of your home and the taxes that will be collected.

Beware

The downward trend in prices in some areas is terrible and is definitely affecting the county’s income and tax base.

Headlines are telling

Hardest hit are areas in Southern Florida, Detroit, Las Vegas, Phoenix and Riverside, Sacramento and San Bernardino counties in California. Some are wondering if local governments can bear the storm or if they will go bankrupt?

It’s not so simple

Towns and counties are like businesses. A certain amount of income must be raised to pay the bills or they have to borrow to meet the expenses. Cutbacks can be made however a certain level of services is necessary for a civil society and to maintain the level of comity to which we have become accustomed.

Another problem

As foreclosures increase, neighborhoods decay. As decay sets in, crime rates drastically increase in that neighborhood. Statistics show a negative 2:1 ratio for every additional foreclosure. The pressure for greater budgets, not less, is foisted upon our county sheriffs, the courts, our jails and probation departments. Our social services need more monies as do the counties services that manage abandoned property.

Another problem

Often, the top revenue generators are sales taxes, property taxes and fees.  major generator of fees is some sort of mortgage tax and or recording fee. Since the mortgage credit crunch is reducing the number of mortgages, the fee income is also being reduced.

As we slide into recession, the sales taxes will be much reduced. Reassessments will be the big hit to a county budget. Adding it up, the counties are going to have to cut back, borrow, use saving accounts and raise taxes.

Reassessments are up – income is down

Since the value of a property is lower, taxpayers are seeking to reassess their property. In a taxpayers mind, a lower property tax assessment should lead to a lower property tax bill. This is a very big deal as the county property taxes are based on the assessments. If the value of a town or county goes down, then the tax assessment should / must follow.

After all, wouldn’t you think, “If my property is currently worth $30K to $100K less than before, then my tax assessment should be reduced and my property taxes should also be reduced? I should not be forced to pay higher taxes based on wrong information!”

What I think will happen

Tax payers believe that if their tax assessment goes down then their tax bill will go down. It’s not necessarily so! The town / county must raise capital to pay for its’ obligations. Therefore the Tax Rate per Thousand could be increased to make up for the shortfall.

The tax assessment will be lowered but the Tax Rate may be raised. We could be paying the same amount of property taxes. Not less.

I tend to doubt that local governments will significantly reduce services. That would mean cutting patronage, oops, I mean workers. It will not happen. A hiring freeze or an employee buyout may be implemented, but you will not see layoffs, especially in an election year.

We will borrow our way out of the mess

Since we have a fiat currency, we will simply print more money. This will create greater inflation and it will further reduce the value of the dollar and worse – but legislators in the future will face those problems as will the citizenry.

The opportunity

The foreclosure mess is a reality. With higher taxes and falling prices, the number of properties that will be tax delinquent will also rise dramatically. Tax lien delinquencies are already up 20% or more.

Coach Mitch’s “Ridiculously Simple System…” is ideally suited to help you take advantage of this situation.

Think about this seriously, because it is serious

See Coach Mitch’s “Ridiculously Simple System…” ™ for details.

Be careful out there,