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After the huge run up in real estate values, governments got greedy and spent the new found tax money rolling into their coffers as fast as they could. They can not help it, they are politicians and spending money is how you get re-elected. But now that housing prices are stabilizing or coming back off their peaks, how are local governments planning on retrenching.

For a homeowner, property taxes are a huge issue. Where I live, they have nearly doubled on my home in the past 5 years. While I love the appreciation, I am not pleased that the local government has raised my millage rate and my assessment in lockstep. Spread out over the city we are in, that is a huge bump in revenue.

The city of San Diego, also broke, is having to deal with the issue of property value actually going down. So that means re-assessments and lower revenue for the city. Here is an excerpt on how they are deaing with it.

For a good example, look at the city of Chula Vista. According to the county’s records and the city’s budget, the city of Chula Vista will collect nearly double the amount of property taxes this year than it did just five years ago. The county of San Diego, which collects the taxes for all local agencies, will this year dole out 31 percent more to the city of San Diego than it did three years ago.

It’s very sobering to note that the city has found itself in such a paralyzing financial crisis at the same time it experienced such an impressive increase in property tax revenue. What, one wonders, might be the situation had property values not gone through the roof?

But the boom is over. In putting together their five-year financial forecast, Mayor Jerry Sanders’ staff recognized the housing market slowdown underway and expressly worried about the possibility that next year, in 2007, the median price of a single-family home in San Diego County could drop to as low as $550,000. That, again, he worried could happen by next year.

Unfortunately for the mayor’s projections, we’re already there. There are two major local surveyors of home prices: the firm DataQuick Information Systems and the San Diego Association of Realtors. DataQuick puts the median price of a single-family home in San Diego County at $535,000. The Realtors put it at $550,000.

But the mayor, at least, has tried to imagine the less-luxurious times in store for the housing market and, therefore, the potential revenues the city may rake in. In his much-publicized five-year financial plan, the mayor projects a modest 2 percent growth in property taxes each year until 2012. via voiceofsandiego.org

Related posts:

1. Some Examples of How Local Governments Are Trying To Replace Real Estate Tax Revenue
2. Greedy Local Governments Starting To Pay Price
3. How Will Governments Deal With Slowing Real Estate Tax Revenue?
4. Local Government and their Lust For Property Taxes
5. When Property Values Go Down Chicago Just Bumps Up Transfer Taxes