Will Decreased Home Values Lead to Lower Taxes?

The St. Louis Post-Dispatch has an article today on how the decline in home values may or may not result in a decrease in assessments and taxes. It seems almost certain that the 2009 reassessment SHOULD see a decline in assessed valuations throughout Missouri. The same thing that is hitting homeowners hard now could help them next year. That is, the fact that assessed valuation is dated from January 1 of the assessment year, so people’s homes are currently set at their (supposed) value as of Jan. 1, 2007, before much of the real estate market had seen the dramatic decline of the past year. The good side of that, though, is that the next reassessment will be based on Jan. 1, 2009, less than a year away, and likely well before any recovery in the real estate market. So even if home values rebound next year, most people should still see a decline in their assessments. Now, we’ll see if assessors across Missouri actually lower the values like they should …

As the article points out, however, declining assessment may not lead to declining taxes, though, as local taxing districts could then raise rates to keep the levels the same. Isn’t it funny how increasing assessment led to higher taxes but declining assessments probably won’t lead to lower taxes? I don’t know about you, but I am just stunned at that possibility. Local government officials failing to lower taxes? Impossible, thought I.

Anyway, we’ll see what happens next year. At the very least, if local bodies raise taxes to make up for declining assessments that will at least be a front-door move, as opposed to the back-door tax increases that assessments usually lead to. Then voters can more accurately hold officials responsible for the taxing levels, which is a good thing.

Another blog recently posted that you should not call for lowering taxes without clearly stating what services you would like to see cut. His or her point was that local government services are important and that if people were forced to choose what to cut, they would be more likely to support higher tax rates. I, not surprisingly, disagree immensely with that idea, but the request for actual examples in these discussions seems fair enough. So, here goes nothing:

• For school districts, start by cutting the total number of people in administrative positions, and then cut their salaries and benefits packages. It is a little-known fact that most superintendents in Missouri are able to hide their total compensation packages from the public. In all honesty, though, education policy is not my area — so keep that in mind as you read this. (The following statements are in my area, or (well-faked) expertise.)
• For larger cities, significantly decrease or eliminate most of the urban planning department. Urban planning in a bureaucratic system, as practiced in a let’s-all-design-something-together-for-the-people-type way is usually a failure. How many dusty plans sit on shelves in St. Louis City Hall? Individual entrepreneurs and the free market should dictate what gets built here and developed there, not planners with advanced degrees who have no experience in business. Please note that this is not an attack on zoning, or on planning departments like St. Louis County that focus on re-zoning issues rather than grandiose plans. Nor is it an attack on urban design advocates who operate out of the government sphere. Now that I have appropriately caveated myself, I’ll move on.
• For smaller cities, radical increases in shared services with other cities and whatever county they are in. We have way too many duplicated services in the county. Clayton, Richmond Heights, and Maplewood have led the way in showing how cities can share services; much more of that needs to be done. St. Louis County also does an excellent job of providing certain services within municipalities that contract for them. Smaller cities should consolidate services as much as possible to save on tax money, which often improves the service at the same time.

Well, that’s it for now. I think I at least answered the challenge to be specific in my diatribes.