Average people have taken a lot of well-deserved grief these past couple of years about the housing crisis. People bought houses they couldn't afford with money they didn't have or they used the artificially high value of their homes to borrow money for stuff they didn't need. Blah, blah, blah.
People assumed that housing prices would just climb and climb and climb.
In most of the country, probably all of the country, state, school and local taxes are levied on the value of real estate. So while real estate value soared, so did local tax collections. State and local governments did what they always do when tax collections are high, they found new and improved ways to spend it on stuff. There is never a shortage of needs, when it comes to government.
Governments assumed that housing prices would just climb and climb and climb.
But, you know what they say about assume, it makes an ASS of U and ME. One day the money train breaks down.
We got our 2011 tax assessment today. It is 11% lower than this year, meaning the tax man thinks our house is worth 11% less than it was in 2009. There is some kind of two-year lag in valuations.
The various governments in our area, each set a tax rate for each $1000 of assessed value of a house. Then they multiple the number of thousands by that rate to set a tax bill. Our rate last year was $11.77 per thousand.
While houses prices rose the past few years, our taxes also rose. In fact, we pay 25% more in property taxes than we did five years ago, so an 11% drop next year will be quite a relief.
But of course we will never see any of that 11% drop in taxes because our local governments and our school district are broke. Just like governments all over the country.
Once government spends money on programs or operating expenses, there is really no way to lower that spending next year.
Just look at what happened to Social Security this year. Inflation was basically non-existent according to the CPI, so SS recipients got no annual increase. All hell broke loose. Imagine what would happen if people had to take a real decease.
In fact, only in government can reducing annual increases in spending from a 10% increase to a 7% increase be called a cut in spending.
So, our tax bill next year will no doubt be higher. Our rate will likely rise at least 11%, just to keep things as they are. Which you might recall is broke.
Things in this blog represented to be fact, may or may not actually be true. The writer is frequently wrong, sometimes just full of it, but always judgmental and cranky