Marketing people extend
control
Property tax 'crisis' is hype, figures show
By David BradleyWashington,
D.C. — Some observers suggest that a property tax “crisis” is brewing
across the country because property tax collections nationwide as a share of income have
risen somewhat over the last few years, and imply that a new round of property tax revolts
might be the appropriate response.
The data show, however, that there is no crisis. At most,
there is a cyclical uptick in property tax collections relative to income that
historically occurs in the aftermath of a recession and fiscal crisis. If the historical
trend holds, property taxes will stabilize or decline over the next several years —
without the need for tax revolt-type limitations.
Facts that the shrill claims of crisis ignore:
Property tax collections, as a share of national income, are still low by
historical standards of the last half century. In 2004, property taxes averaged 3.12
percent of national income, compared to 3.5 percent in the late 1970s. Property taxes are
below average compared to the 1960s, 1970s, and 1990s and only slightly above the average
level of the 1980s.
The recent bump upwards in
property tax collections as a share of income does not reflect a long-term trend, but
rather a typical response to a recession. Property tax collections as a share of income
are cyclical and tend to rise during and following economic recessions and remain
relatively flat or fall during expansions.
Property values are rising in
many parts of the country, which also contributes to the uptick in property tax
collections. Property tax rates, by contrast, have not risen much.
Local policymakers have not
been able to lower property tax rates as much as they might have desired as property
values rose and incomes declined during the economic downturn because they faced
underfunded mandates from the federal government and decreased state aid. For example, the
cost to states and localities of underfunded federal mandates (such as the No Child Left
Behind education law) exceeds the total amount of property tax increases over the past
four years. Total property tax collections increased by $67 billion from 2000 to 2004,
while unfunded mandates to state and local governments cost $73 billion from fiscal year
2002 through fiscal year 2005.
David Bradley is a policy analyst with the Washington,
D.C.-based Center on Budget and Policy Priorities. The center conducts research and
informs the public and policymakers on proposed budget and tax policies, with an eye
toward recognizing the needs of low-income families and individuals and alleviating
poverty, particularly among working families.
For a full copy of Bradley's report, look here: http://www.cbpp.org/3-17-05sfp.htm
TABOR: Bad for our (economic) health
A "surging anti-tax sentiment" is
one of the top threats to the credit worthiness of local government in Wisconsin, Moody's
Investor Services says in a new report. The other threats the bond-rating agency
cited in a report for the bond-buying industry were potential cuts in shared revenues and
vulnerability to the economic cycle.
"TABOR supporters say it would rein in spending and strengthen the
state's business climate by ensuring low taxes. But the Moody's analysis -- a
politics-free assessment of economic reality -- makes clear that TABOR would be bad for
business," Jack Norman, research director of the Institute for Wisconsin's Future,
wrote in a guest column in the Milwaukee Business Journal.
Guest column:
http://milwaukee.bizjournals.com/milwaukee/stories/2005/01/31/editorial3.html
Colorado: headed downhill
"Colorado has gone further than any
state in limiting government growth to the point of putting basic needs at risk, according
to a survey released Monday by Governing magazine that gives the state a C-plus in
managing its fiscal affairs," was the way the Associated Press in the Rocky Mountain
State characterized the latest evidence of decline under TABOR.
The evidence was compiled by the Government
Performance Project headquartered at the University of Richmond, financed by the Pew
Charitable Trust and overseen by one Prof. Donald F. Kettl, by the way, but those are
details a stressed-out wire service reporter could well have missed.
The good ole' AP didn't miss the
precipitating factor behind Colorado's decline, though.
"The survey singled out heavy borrowing from one-time funds and the tax- and
spending-limitation amendment known as the Taxpayer's Bill of Rights, or TABOR," the
AP noted.
"This problem has generated a decline in capital infrastructure, an increase in
long-term debt obligations, a demoralized workforce and a budget that can be balanced each
year only through a plethora of one-time measures," the analysts said.
Story from the Summit (Colo.)
Daily News here:
http://www.summitdaily.com/article/20050130/NEWS/101300011
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