Alarming Fall In Property Taxes Slamming Budget Of Cities
Alarming fall in property taxes is slamming budget of cities
. After growing for many years, from 2010 the decline in tax revenue has become noticeable according to National League of Cities. The cities are apprehending that the fall will be by 1.8% during 2010 after increasing by 4.2% last year.
The fall has been expected - it has been lagging behind the housing crisis because the bills on property are founded on assessments and the latter do not adjust with market changes fast and quick. It takes time.
The worst has not come as yet - as per the report. The full force of the housing crisis on property taxes will not be experienced till 2011 and also 2012. During this time there will be more assessments of properties. In 2012 the value of commercial properties will dive down worsening the problem.
The director of the centre Christopher Hoene said, "Cities are now in the eye of the storm. The pain is intensifying".
Income tax is expected to increase by 1.8% this year but only a handful of cities have income levies. The revenue mainly comes from sale of properties and taxes levied on it. It will amount to a double blow. Sales taxes are expected to fall by 5% in 2010.
From a total view the league forecasts that there will be a drop of 3.2% in revenue collection of the cities - the largest since 25 years. It is the fourth consecutive year that total amount of revenue has fallen.
The condition of the cities are the worst since the time of the Great Depression observed Micahel A. Pagano, who has co-authored the report. He is the dean of College of Urban Planning and Public Affairs (University of Illinois) at Chicago.
This fall in revenue means the cities will have no alternative but to cut down services and retrench employees. The cutbacks are going to be staggering. In the past 25 years the cities have reduced spending only five times.
About 8 or 10 cities will reduce their staff in this year over and above of 480,000 jobs that have already been lost. 67% of the cities had handed out the pink slips in 2009. 75% of the cities will resort to freezing hiring. 54% will be ordering either freezing of salaries or reduction of the same. 22% will cut down on hours of work.
by: Kevin Simpson
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