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Appraisal Growth… The next Ripple in the Ripple Effect.

By
Industry Observer

When I began writing about all things real estate, I mentioned that there are ripple effects.  Home and property values can have far reaching effects and clearly the next ripple is about to become a big tidal wave... Property Tax Appraisal Growth.

I was reading the newspaper a week or two ago and a made a few mental notes that I wanted to write about here.  The news story was about how the slowdown in real estate price appreciation is this year affecting the growth of property tax revenues at a time when the cost for delivery of existing services is rising and there is public demand for increased services.

This year's growth rate (largely due to commercial property increases) is expected to be a mere 5% once objection challenges to the proposed property values are completed.  This is of high concern in states like Texas where there is no state or local income taxes.  This leaves property taxes as the primary source for revenue to provide services... when property tax growth does not allow adequate growth to support the services necessary there are 2 options... service/program reductions or raising the property tax rates to a level that will fund services.

This development comes at a horrible time.  With costs rising for such basic services as gasoline to fuel police cars, fire trucks, school buses and trash collection vehicles, more money will be needed for these basic level budget items, making expansion of services and funding for new programs seemingly unlikely.  Then add in electricity costs, maintenance of facilities, etc. and you can see where the need for greater tax revenues to merely maintain what we already receive (which by many people is considered inadequate) will be requirement in order to avoid service and program reductions.

I gearing up for a tax rate increase... hold on tight and sound the warning sirens!  I doubt this will be the last ripple that becomes a potential tidal wave!

Comments(6)

South Austin Real Estate Blog
Sky Realty South Austin - Austin, TX

Steve, this is an interesting post, I have often thought the taxing of the property owners for state income is highly unfair and keeps some folks out of the homeownership ... I have wondered just how much revenue a state, city, county could raise with just 1cent of sales tax increase... where everyone would pay to their ability to purchase... I don't mean eliminating the property tax but take the burden off of the homeowner and make it fair to all...  maybe I'm just a dreamer. :)

Jun 08, 2008 11:09 PM
Steve Shatsky
Dallas, TX

Hi Gail... Thanks for stopping by and leaving a comment.  I actually like your thought... many great ideas for all of time started with a dream, so don't ever stop dreaming!

Jun 11, 2008 05:17 PM
Debra Kukulski, Broker Associate
RE/MAX Suburban - Cary, IL
SRES;SFR,CDPE;GRI;ABR;e-PRO Realtor, Northern IL

Hi Steve, that is so interesting that in Texas there is no state or local income taxes.  I am curious...what is the tax rate there for most residential areas?

Jun 14, 2008 02:55 AM
Susan McQuaide
Keller Williams - Simpsonville, SC

One of the reasons we moved from PA to SC was taxes! Property tax, sales tax, income tax, wage tax - they even came up with a drink tax!! No matter how much they take, they always want more.

Jun 14, 2008 03:23 AM
Steve Shatsky
Dallas, TX

Hi Debra... for most areas around DFW we are at between .02% and .03% of appraised value.

Hi Susan... I could deal with it all except for the drink tax!  That's going too far!  Our Sales Tax here is 8.25%, so it makes up for some of the loss of state and local income taxes. 

Jun 14, 2008 11:40 AM
Debra Kukulski, Broker Associate
RE/MAX Suburban - Cary, IL
SRES;SFR,CDPE;GRI;ABR;e-PRO Realtor, Northern IL

Steve....thanks for the answer...that is so interesting:-)   Have a great weekend!

Jun 20, 2008 08:37 AM