Property taxes on the rise
A yellow house sits on top of a tax form
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Kai Ryssdal: It's telling that the president-elect's first official piece of business in Washington was a visit with Speaker of the House Nancy Pelosi. He's going to be hearing from a lot of members of Congress over the coming days as he pitches his economic program. And one of them may well take the opportunity to tell him about an odd tax phenomenon happening around the country. Even though home values are plummeting, property taxes in a lot of places are going up this year. And your bill may already be in the mail. Marketplace's Jeremy Hobson has that story.
Jeremy Hobson: It's a convergence of events years in the making: A massive housing boom followed by a major housing bust. A weak economy. And cash-strapped cities and towns that get as much as 70 percent of their revenues from property taxes, and need that income to pay for services. So while property values drop, property taxes jump.
Bert Waisanen: This happens in tax policy when you have volatility in the economy.
Bert Waisanen is a fiscal analyst with the National Conference of State Legislatures. He says in many cases, it's not that cities and towns want to raise taxes. It's just that taxes are a lagging indicator; they lag the ups and they lag the downs.
Waisanen: All things being equal this would settle out eventually, and things would return to equilibrium as they say, but equilibrium really doesn't sell at the kitchen table.
In other words, even though taxes may dip next year based on this year's home values, people are mad. Some are calling for property tax caps. Clark County, Nevada, home of Las Vegas and all of its foreclosures, has a cap. It shielded homeowners from hugh tax increases during the housing boom. But this year, despite the cap, most residents will still face a tax boost of up to three percent. Jeff Payson is Clark County's property appraisal manager.
Jeff Payson: Probably well into the 90 percent of our properties in Clark county have dropped, and some significantly. But until it reaches a certain level of an increase of three percent in tax dollars, they're not going to see a decline in their tax amount.
In fact, he says, only about 20 percent will. The rest will pay higher property taxes to make up for years of sky-rocketing home values.
In New York, I'm Jeremy Hobson for Marketplace.