As mayors and county councils fret and wring their hands over declining property values, property taxpayers anxiously wait for the bad news that elected officials will raise property tax rates.
While it is true that raising the average rate for residential property at the same percentage that the average value of residential property has declined in the past year will produce the same amount of income as last year, it does not mean that everyone’s tax bill will be the same as last year. The operative word here is “average.” Some properties may have experienced a greater decline than the “average” while others may not have gone down in value at all.
For those property owners who had a smaller decline in value than the “average,” the amount they will pay in property taxes will be more than last year. Those homeowners with bigger drops in value will pay less than they did last year under the increased property tax rate because the decline was greater than the “average” decline in value.
Although some elected officials have suggested that the county just send everyone a property tax bill in the amount of what was paid last year, that suggestion is indicative of a lack of understanding and appreciation for the real property tax. The value of property merely forms the base against which taxpayers can then measure the elected official’s actions. Setting the real property tax rate is the means by which the taxpayers/voter can then judge whether or not the elected official is doing a “good” job.
Raising the property tax rate and therefore property tax bills does not necessarily mean that the elected official is NOT doing a good job. On the contrary, if the elected official can justify the expenditures that need to be paid for with higher taxes, taxpayers would support that elected official. On the other hand, if taxpayers are not satisfied that good use is being made of their hard earned tax dollars, any increase in the property tax rate will probably elicit outcries of protest.
Setting the real property tax rate is the way taxpayers can evaluate how good a job the county elected official is doing. If taxpayers are willing to pay for the services being provided with property tax revenues then an increase in the property tax rate to generate the needed revenues to pay for something like police or fire protection will be supported.
With all of the anxious squirming going on in the county buildings across the state, it appears that county officials are not as confident about how they spent those real property tax dollars as in the past. If they were, then raising the real property tax rate to compensate for lower property values would not be a dilemma. That being the case, then it appears that elected officials have but one alternative to consider before leaping at the opportunity to raise the real property tax rate — cut spending.
So the howls will go up, and again the hand wringing will become intense as elected officials weigh the ramifications of eliminating programs or services and possibly laying off employees. It seems like a no-win situation, elected officials can either raise tax rates and incur the wrath of taxpayers or reduce or eliminate programs and employees and incur the wrath of public employees.
But the fact of the matter is that elected officials can only speculate about the public’s reaction to cutting spending, for it is a practice that has rarely crossed the desks of most public officials in the past decade. While real property tax rates have not been raised in most counties, elected officials enjoyed the windfall produced by ever- increasing values of property which in turn produced the tax dollars which elected officials spent so freely.
Now that hard reality has hit the books of the counties, county officials should look upon this as an opportunity rather than a challenge. Now is the perfect time to test the waters on what the priorities are for real property taxpayers. Are taxpayers willing to do with less public services or less convenient services in return for lower property taxes?
In the coming weeks, county officials will be soliciting the input of constituents. Will taxpayer/voters be willing to give up certain county services in return for holding the line on the real property tax rate?