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While as consumers and real estate professionals we participate in the open market. If money is tight, we go from steak to macaroni and cheese as we say in our household. But when you are the government, very, very rarely do you ever lower your spending. And with the real estate boom these same governments ramped up their spending of the increased transfer taxes, higher property taxes, and all of the new revenue that was pouring in to the local coffers.

But  these same governmental agencies who have created these programs in the wake of a boom now will have to retrench. Here are some questions to think about when looking at your local government:

• If property values drop 10 percent in a town, will the assessor quickly catch that and lower the assessment, or will he through up a complicated and difficult appeals process? Who are they serving?
• Will the government slow spending and cut programs in the face of lower transfer tax reciepts? Or will they find new avenues to raise taxes to cover their percieved shortfall?
• Will state income taxes take it in the arm when construction payrolls get cut? And how will they “make up” that money.

Government is a beast that rarely goes backwards when it comes to spending. As a taxpayer, pay close attention in the coming weeks to your local government as budgets roll over. If your community has been impacted by the slowdown, odds are the folks at city hall are going to play games with your taxes and local fees. And that could adversely impact you if they do not think the taxpayers are paying attention.

Plus, it could make your community look bad in comparison to other areas if the taxes are much higher.

Update: Lenny Gurvich sent a comment about Hillsborough County in Florida that is looking to enact spending caps and variable taxes to take these issues into account. Excellent stuff.

Related posts:

1. How Local Governments Will Not Lower Property Taxes When Property Values Drop
2. Local Municipalities Losing Millions in Property Tax Revenue
3. Washington Programs That Are Destroying The Real Estate Market
4. How Washington’s Housing Rescue Plan is Hurting Housing Sales