The real estate crisis has affected nearly every aspect of American life from consumer spending to health care costs to alcohol consumption. The full results are only now being completely felt on the county and city levels as the deficit from declining property taxes reveals a considerable hole in city budgets across the nation.
Property taxes have traditionally played the primary role of cash generator for many counties and cities. In New Jersey, a state notorious for its high property taxes, they fund education and municipal projects. The current crisis, however, has forced many local New Jersey governments to crunch numbers and cut back. This means, among other things, less funding for schools.
In California, which was pummeled by the real estate collapse, and where foreclosures continue to rise, the issue of property taxes is a particularly pressing one. Solano County is a prime example of the lack of money flow due to a $9 million to $12 million loss of property taxes. The county ranks among one of the nation’s highest in foreclosure rates.
Solano County’s home prices dropped by 19 percent in 2009; at the same time 4 percent of all residential loans were in the foreclosure process. This means 11 homes for every 1,000 were in foreclosure.
According to Solano County Treasure-Tax Collector, Charles Lomeli,” The tax base from property value is a significant source of revenue. With that revenue loss, government has to be smaller.”
While the federal government has been generous in providing subsidies and federal funds to support local governments, the deficit still remains great. The Department of Housing and Urban Development’s Neighborhood Stabilization Program, has provided enormous relief to areas like Solano County.
Still, the loss in property taxes means downsizing will be a reality. Funding for education, transportation, infrastructure repairs, etc. will have to be decreased as local governments face the challenge of creatively building the next year’s budget. This, in turn, actually affects non-profit organizations’ ability to help families in need. The money just isn’t there.
Recovery in the hardest hit real estate markets is expected to be slow. With dwindling budgets and significant job losses, there remains many hurdles to overcome. If property taxes cannot generate enough revenue, new avenues most be explored.
Written by Lani Shadduck
HULIQ.com
Source:thereporter.com
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