In the current edition of Realtor magazine, there is an article written by John E. Grippa. He says as home prices drop, so should property taxes.
After reading the article, all I kept thinking was that there seems to be something wrong with this concept. I don't mean that John E. Grippa is wrong; I mean there has to be something wrong with the way taxing jurisdictions create their budgets.
I was always under the impression that a taxing jurisdiction had a certain budget, a somewhat known and fixed obligation to its area. For example, they would add up all the costs of the services provided (schools, police, town, emergency, roads, water/sewer, etc) then they would tax according to those needs.
It seems to be just the opposite. It seems like most taxing jurisdictions throughout the US assess residential property based on market value. This means that they create their budget based on how much taxes they can collect. So if property values go up, they collect more. John E. Grippa said that as property values go down, we can appeal those taxes and have them reduced.
But if our taxes are reduced, are the services also reduced? Will garbage collection stop? Will the roads not be plowed in the winter? Will some other service stop or be reduced?
So my question is if taxes are reduced, will services be reduced? I can't imagine that the somewhat fixed services will be reduced. But in thinking this, what happened to the extra income when taxes were higher?
Going back to the time when home prices were increasing and taxes were increasing. Why were our taxes increased to begin with if the services provided were already being paid for? What did these tax jurisdictions do with all that extra money?
Besides the possibility of these tax jurisdictions having more money than they need, this becomes our burden in many ways. First, as property values increase, so do our taxes with no effort or control from us. But as property values decrease, we have to spend time and money to appeal those taxes. Secondly, higher taxes make homes less appealing and affordable to potential buyers which force us to appeal.
This doesn't seem fair to me; what are your thoughts?