Drop In Local Property Tax Receipts Crunching Local Governments And School Districts

Local government bodies and school districts are facing serious fiscal challenges as local property tax receipts fell in both nominal and real terms during the first quarter of 2012, according to data collected by the Rockefeller Institute of Government in Albany, N.Y. Much of the drop in receipts is a result of lower property assessments following the housing collapse.

Local property-tax revenues declined 0.9% in nominal dollars during the period and 2.8% after adjusting for inflation. When inflation is factored out, local property-tax collections now have been negative for six consecutive quarters.

In a separate report, the Rockefeller Institute noted that state tax receipts rose 4.8% in current dollars in the first quarter, the ninth consecutive quarter of gains since the Great Recession. Most state monies are generated by income and sales taxes, unlike local governments, which usually rely heavily on property taxes.

“Prolonged weakness in the property tax, combined with soaring employee benefits, continued budget stress at the state level and the prospect of deep spending cuts in Washington, raise the prospect of serious budget problems and service cutbacks in local governments in many parts of the country,” wrote Lucy Dadayan, a senior policy analyst at the Institute.

The full reports on local and state tax trends, including details on individual states, are available at rockinst.org.

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