According to Census Bureau data, property tax revenues have declined for two consecutive quarters this year. This is the first time on record that this has occurred. And as a result, not only are local government infrastructures and school systems suffering, but some local governments are having difficulties selling off their debts. For example, one wealth management adviser is recommending that his clients buy debt from sewer districts and power utilities instead of local government bonds because sewage and power are “essential services” and more likely to maintain value.
Although governments should be able to garner the same amount of tax revenue from property taxes from year to year by adjusting tax rates, many politicians and other government officials are reluctant to take the steps necessary to maintain property tax income in today’s economy. Many local governments are also prevented from raising tax rates by statutory tax caps. Do you think that the answer is just to raise rates? Is there a better solution?
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