The government needs money and fast. Since it doesn’t create anything, the only way it attains money in its coffers is to use force and take it from the citizenry. For the past several years since the economic collapse and Great Recession, government has been ramping up efforts to get its piece of the pie.
An example of this is the increase in property tax collection, which has been at its fastest pace since the crash of the housing market in the United States. Local budgets were plundered because of declining revenues from property taxes – some towns have actually filed for bankruptcy – and only now are they beginning to be restored, but only because of excessive rate increases.
During the first three months of 2013, property tax collections jumped to nearly $200 billion, the U.S. Census Bureau said. According to some reports, several localities are raising rates by as much as five percent in one fiscal year. And the data indicates they’re really cashing in.
Nashville, Tennessee, for instance, saw its property tax revenue rise by 13 percent, while Houston, Texas has reported property tax collections are up by $100 million since 2011. Washington, D.C., meanwhile, has been gaining five percent from its property tax collections.
With many finance experts and contrarian investors presenting the case that the housing market is in yet another bubble, what will happen to the local budgets again in the future? Will politicians increase property tax rates to offset the lost revenues? Will they slash their own budgets?
Numerous city governments are using the additional revenue to put into schools, healthcare and libraries, but the real question is: shouldn’t they be maintaining a modest budget to avoid another collapse if/when the housing bubble bursts for the second time in about a decade?
Whether it’s through a booming economy or a downturn, government at all levels must live within their means.