Falling Property Values Could Mean Tax Hikes

by Rodney Forbes on June 1, 2009

Just when you thought it was difficult enough to deal with falling real estate property values for the last couple of years, now the local governments are having to figure what to do about the fall in tax revenues from property taxes.

Palm Beach County’s property values plummeted about 13.5 percent this year, creating a tighter budget squeeze for local governments already considering tax increases to cover costs.

New estimates released Friday likely translate to layoffs for government employees, cuts to services and potential increases in property taxes and fees to head off budget shortfalls.

The still-struggling real estate market took the blame for taxable property values dropping more than the 12 percent anticipated just a month ago, according to Property Appraiser Gary Nikolits.

It was the biggest drop in taxable property value since the Great Depression in 1929, Nikolits said. After back-to-back years of countywide property value declines, Nikolits expects the numbers to continue spiraling down in 2010.

“It’s the collapse of the housing market. That is the driving force here,” Nikolits said. “I’m hoping we are not going to see much more of a slide.”

He estimates the countywide 2009 taxable property value will be about $138 billion, down from about $160 billion last year.

For Palm Beach County, the declines could mean an even larger property tax rate increase than what the county proposed on Thursday.

“We don’t have a lot of resources to bring to a lot of problems,” County Commission Chairman Jeff Koons said. “It is just really frustrating.”

Cities saw property value declines from about 2 percent to 24 percent.

Boynton Beach’s taxable property values would go down about 19 percent, to $5 billion. Delray Beach can expect a 15 percent decline, down to about $7 billion, while Boca Raton would drop about 10 percent to $18 billion, according to the estimates.

Local governments this summer will use Nikolits’ projections to craft budgets and set property tax rates. Nikolits provides an updated estimate in July.

Budget problems are worsened by local governments failing to control spending during South Florida’s housing boom, Nikolits said.

“Their job is exacerbated by the fact that they went on a spending spree when times were good,” Nikolits said. “This is what happens when the market turns south.”

Source: Sun Sentinel

You don’t think the officials at the city, county and state level could think of spending less instead of raising taxes at the worst possible time, do you?

I don’t either.

If you are interested in buying or selling a home in the Palm Beach County area, specifically Palm Beach Gardens, Jupiter and West Palm Beach, please visit my Forbes Realty website. For frequently updated information on foreclosures, short sales, real estate news and market conditions visit my South Florida Real Estate Report blog. There are many free reports as well as free access to MLS listed properties. You can also call 561-337-4810.

 

Rodney Forbes is a licensed Realtor®, certified short sale/REO specialist and broker for Forbes Realty of South Florida Inc.

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