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The greed of local governments as the tax money was rolling in knew no bounds. While professing to keep taxes down, the rising property values filled the coffers of local governments and their spending increased proportionally. Now as property values are not increasing and sales slow further reducing the transfer tax revenue, these same city governments warn of cutting “essential services”.

Of course these government officials will not cut back on the pork ridden programs they have created. Instead they will raise taxes putting a further burden on the homeowners who face a market that has very little upward pressure.

”Are we worried about whether we’re going to have to raise taxes?” Pembroke Pines Commissioner Angelo Castillo said. “You betcha.”

The amounts of new construction and commercial development are the biggest predictors of future city budgets, experts say, along with leaders’ decisions during the boom years.

A rising real estate market basically allows officials to take in tons of money without having to increase the tax rate. ”That’s the cheapest way to grow a government,” said Robert Lang, director of the Metropolitan Institute at Virginia Tech in Alexandria, Va., which studies metropolitan growth and development. “It’s like found money.”

The trouble is, some cities made financial commitments during boom times that they may be hard-pressed to keep when times get tough.

PLANNING FOR FUTURE

In South Florida, many cities have decided to spend their surplus on, among other things, more generous pension programs for employees, especially the police and firefighters whose influential unions help keep city commissioners in office.

In Pembroke Pines, for instance, the city borrowed a total of more than $90 million in 2003 and 2004 to pay for improved pensions, which will allow uniformed employees to retire after 20 years on 80 percent of their working salaries.

By 2007, the annual debt payments for the loans were expected to reach $6.7 million, according to the city finance department. Pensions also were a major issue in Hollywood’s budget talks this year, with the city expecting to spend about $17 million in interest on its unfunded liability for pensions in 2007. via the Miami Herald

Related posts:

1. Local Governments and Real Estate Taxes
2. Some Examples of How Local Governments Are Trying To Replace Real Estate Tax Revenue
3. How Will Governments Deal With Slowing Real Estate Tax Revenue?
4. Local Government and their Lust For Property Taxes
5. Governments Look To Suck Money Out of Foreclosured Properties