As property values plummet around the country, homeowners are doing what they can to find positives in what is, for many, a sea of negativity. The result? A plethora of property tax appeals that threatens to drown many small towns and depress community revenues at a time when most city and county budgets can ill afford the additional income loss. At a time when the average U.S. home is valued at about 30 percent below its peak value – which likely occurred sometime in 2006 – tax assessors and tribunals are “getting swamped,” reports Michigan’s chair of the Tax Tribunal, Patty Halm. “We’re constantly buying new file cabinets to hold all the cases,” she said.
While it is only reasonable that property owners pay lower property taxes on properties that are now worth less than they used to be, the real problem is funding community services that many view to be necessary. Cities stand to lose millions of dollars over these disputes and reassessments. This could create problems with fire and police protection, as well as difficulties with funding public schools. And because municipal budgets “tend to lag economic conditions by 18 months to several years” according to dean of the College of Urban Planning and Public Affairs at the University of Illinois at Chicago, Michael Pagano, “the full weight of the decline in housing values has yet to hit the budget of many cities.”
If you are a homeowner filing a property tax dispute, however, the outlook for your case is good – though you are likely going to have to wait a while to get any type of resolution. Robert Daddow, a deputy county executive in Detroit, predicts that settlements will increase – at least in his state and other state officials elsewhere say likewise – through 2013 “as the backlog is worked through.” However, officials everywhere warn that the financial impact of these property tax disputes could be serious, and will impact more levels of city and county government services.
Some cities are opting simply to raise property tax rates to try and compensate for the lost revenue due to falling values. Do you think that this is an acceptable solution, or is this financial crisis ultimately necessary to diminish the size of government in our municipalities?
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