State Net Capitol Journal: Property Tax Revenues on Decline

State Net Capitol Journal: Property Tax Revenues on Decline

Cities, counties and school districts collected $436 billion in property taxes in 2011, about 20 percent more than in 2006. But last year's total was just 1.2 percent more than the year before - and actually .9 percent less after adjusting for inflation - according to data from the U.S. Bureau of Economic Analysis. 

Property tax collections haven't fallen below the rate of inflation since 1995. And they haven't dropped below inflation-adjusted, prior-year levels - which could conceivably happen if the current downward trend continues - since the Great Depression. 

What is happening is that the devaluation of housing prices is only now beginning to be reflected in American homeowners' property tax bills because of complex laws in most states forestalling property tax declines during economic downturns. 

"People say, 'Hey, my house value went down. How about my tax bill going down?' But it doesn't work that way," said Robert Ross, chief assessment officer in McHenry County, Illinois, part of the metropolitan area of Chicago. 

Property tax assessments in that state are based on a formula that takes into account home values going back as far as seven years. Public schools in the state, which have had to cut 3.3 percent of their workforce - 270,000 employees - since July 2008, are going to be hit particularly hard. 

"We're doing everything we can to save classroom teachers," said Alexandra Nicholson, superintendent of West Northfield School District 31, which gets almost all of its revenue from property taxes. (USA TODAY) 

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