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Some of you, perhaps many of you, are about to learn
yet another lesson in the vagaries of municipal
finance. Our current housing bust, fuelled by
rapacious mortgagors and total idiot home buyers, may
be coming around to bite you in the rear. The decline
in housing values may well cause a number of
homeowners to line up at City Hall to appeal their
assessments in an attempt to lower their property
taxes and hold on yet another year. By the way, they
will be in the right – given the rationale of property
taxation - and a few successful court cases will only
make that line longer and more boisterous. If this
happens, it will be a painful lesson for a number of
you.
Even if this prediction doesn’t come quite true, the
lack of growth in your ratable base, and maybe even
it’s actual decline, is not going to make your bond
holders very happy. Do you remember when you issued
you last set of bonds and the prospectus predicted
that rosy future for ratables in your town? Everyone
knows bond prospectuses have a high BS factor, but
everyone ignores this knowing you can always squeeze a
few more millions from tax payers in non-election
years. It has been a kind of Emperor’s new Clothes
game where municipalities have been able to slip by
because time increases home values – or that, at
least, used to be the case. Bond holder agitation will
give you, and your council, indigestion.
So who will appeal their assessments? It won’t be
those families who were either suckered into variable
rate mortgages or who deliberately kept their eyes
closed who join the appeal lines and, of course, the
mortgage brokers who sold billons of mortgages without
even checking on income won’t say a word or even be
around. They will be busy refinancing mortgages at
even higher fixed rates, skinning the same crowd once
again. No, it will be the sharpest property owners who
will fill the line; the crowd you are least able to,
shall we say, tell less than perfectly reliable
stories to. If assessment appeals do grow, it is you,
my dear mayors, who will be left holding the
proverbial bag.
Why only you? State level property tax relief is a
joke but at least those jokers can claim they did
something. Counties, as always, will hide; Freeholders
never point out that part of the property tax dilemma
is totally unconstrained county level spending. Why
should they; you are the ones who bill homeowners.
School boards, who hold parents hostage, will just
continue their smarmy ways and let you take the blame.
They may even have an extra holiday pageant or two to
let the folks know they are doing their job and it’s
the politicians at City Hall who are the really bad
guys.
If appeals actually cut municipal revenue streams
there’s nothing you can do right now. You can’t lay
off police officers unless you’re Camden or Newark or
some other rotten place. You can’t stop picking up
garbage and, heaven forbid, you can’t lay off your
wife’s brother-in-law’s second cousin. That will cause
too much trouble at home. In the long run, property
values won’t constrain municipal spending, property
taxes will just go up. You run a big risk there –
political opposition, worse than the Black Death to
cozy and highly incestuous City Halls.
So, once again, you will take it on the chin and keep
quiet? Let’s hope not. |
