Between a Rock and a Hard Spot

How many times in life have we found ourselves ground to bits between rocks on the one hand and hard places on the other?
This is where our local governments are finding themselves right now with decreasing property-tax revenue from residential and commercial real estate.
With the drop off in the economy, real estate values have plummeted, creating migraines for our tax assessors who are charged with bringing home the bacon to pay the cost of local government.
Given the fact that most people in the community have to make do with reduced household income, and businesses are likewise struggling, it is appropriate that taxes go down so the pain is born across the board.
But here is the rub for residents and businesses: when property increases in value, our tax assessors increase our assessments. Unfortunately in practice, this is usually a one-way street. Even though we have been living with decreasing property values for years, our assessors have not reevaluated our property as they would have done had it gone up in value.
This is creating an inequity. New properties are going on the tax rolls at current, lower, evaluations, while old properties are still being taxed at their former, higher, values. Likewise, those who file tax appeals are having their assessments, and thus their tax bills significantly lowered, while those who sit still are being overtaxed.
If you have not appealed, it is not simply a matter of snapping your fingers to get your taxes reduced; it is a process. And if one’s business is in a business name, one is not allowed to proceed on his own, he must spend thousands of dollars for an attorney and an appraiser. These hurdles work to unfairly maintain the status quo.
A tax assessor’s reluctance to undertake a general re-evaluation (reval) might be because to do so would be costly. Nonetheless, fair is fair, and since such is done with increased value, it is only fair it be done with decreased value.
According to the Feb. 22, 2011 Dow Jones Newswires, US commercial real estate “prices at the end of last year were 42 pecent below their October 2007 peak.” Likewise, average home values in the US, per the Wall Street Journal, Feb. 9 have fallen 26.7 percent from their peak. (http://online.wsj.com/public/resources/documents/st_HOMECOST0208_20110209.html)
To save the cost of a reval, a logical way to address the issue would be to apply an appropriate average rate of decrease to all property assessments. It would be a lot fairer than sticking with an artificially high number, and simpler than our current “scurrying to fill ever more holes in the dike” approach.
This problem is not going to go away soon. Property values may take years to return to their former heights, and the longer our tax assessors continue to dally, the more damage they stand to do to a general perception that government is growing apart from the people they serve.
ART HALL, publisher