For a couple of years now, I’ve been predicting the following course of events: (1) a collapse of the housing bubble, followed by (2) a collapse of real estate assessments, (3) higher tax rates to make up the revenue loss, and (4) a revolt of the taxpayers against city councils and boards of supervisors.
There’s no denying the collapse of the housing bubble — it was one of the biggest national stories 0f 2007. I don’t mind patting myself on the back for calling it back in November 2003. It’s taken longer than I thought it would, but it looks like we’re moving to phase 2, the collapse of real estate assessments and increase in tax rates. Peter Galuszka wrote about the budgetary impact of the real estate downturn in Prince William County earlier this month in “Boxed In.”
Now, it seems, trouble is brewing in Loudoun County. Danilo Bogdanovic, a Loudoun County Realtor, blogs in Loudoun Stats how citizens are getting agitated about real estate assessments. Wrote Bogdanovic on December 12:
Everyone we’ve talked to in Loudoun County is upset about their assessed value and most are worried that their 2008 tax assessments will not be in line with their fair market value. The people who are even more upset are those who appealed their tax assessments earlier this year and were completely shot down without a good, if any explanation.
Yes, they’re upset because they’ve lost market value. But why are they really upset? Because 2007 assessed values are up to 30 percent higher than current market values (non-foreclosures or short-sales) and they think that the Tax Assessor doesn’t care. That means that Loudoun County residents are paying up to 30 percent more in taxes than they should.
(At the risk of being picky, I don’t think Bagdanovic has it quite right in that last sentence. One way or the other, Loudoun taxpayers are going to pay close to what they’re paying now — the cost of running the municipal government. If real estate values were properly assessed, revenues would fall so dramatically that the Loudoun Board of Supervisors would have no choice but to raise tax rates to make up the shortfall. But no matter. In either case, homeowners feel like they’re getting hosed.)
If Bagdanovic’s original post was interesting, a follow-up post, dated December 29, was even more so. Todd Kauffman, Loudoun County Assessor, contacted a senior member of the Loudoun Realtor association to object that Bagdanovic has posted misleading information on his blog that constituted a violation of the Realtor Code Of Ethics. Needless to say, Bagdanovic had no intention of backing off.
I have no idea whether Kauffman is right or wrong about the Realtor Code of Ethics, but it clearly looks like local governance practitioners in Loudoun County are getting really worried if one of them is trying to bring a local blogger to heel.
Voters have already thrown out Loudoun’s previous Board of Supervisors, leaving the new Board to clean up the mess. But the incoming Board still needs to run the government, and it needs revenue to do so, and it would seem to have precious few options. Inevitably, the next front in the battle over the size, scope and funding of Loudoun municipal government undoubtedly will focus on the justice or injustice of real estate assessments.
(Hat tip: Ben Martin.)