John Bull and Carol Scott with the Daily Press have written a perceptive article, “Awash in Cash, But Who Gets Soaked?”, detailing the surge in property taxes on the Virginia Peninsula: 58 percent on average since 2001. Soaring real estate assessments have allowed local governments to reduce nominal tax rates even while collecting record revenue and spending it all.
The danger is that local governments aren’t treating the revenues as a windfall. Rather, they’re hiring more employees and offering generous raises, decisions that will be hard to reverse if favorable economic conditions change.
Those financial decisions lay the foundation for a problem when the housing bubble deflates and local tax revenues grow stagnant.”The worst part will be when property values fall – and they will,” said Pete Sepp, spokesman for the National Taxpayers Union in Alexandria, a national anti-tax organization. “Governments will scream they don’t have enough money and there will be tax increases.”
The Bacon’s Rebellion blog has been issuing the same warning for more than a year now, though mainly with an eye toward Northern Virginia where real estate prices have been the strongest. Clearly, the danger is not limited to one part of the state. It’s gonna get ugly, folks, real ugly.