Sunday, June 26, 2011
Tuesday, June 7, 2011
In terms of numbers, the impact of the decade long economic depression in Michigan and resulting downturn in the housing market will result in nearly $350,000 of lost property tax collection over the next 10 years. The chart above shows theVillage tax collection in blue, and starting in 2009 takes that number and increases it by 4% annually. This represents how the world would have looked with a healthy and strong economy.
The line in red represents our long term forecast. Based on the data reviewed for this year's budget we see it as being highly unlikely that the economy, and more so housing market/values, will rebound until at least 2015. Property taxes usually lag behind the economic by about 12 months, so we will not see a rebound until the summer of 2016.
What stayed the start of the decline was the gap that many propeties had between the equalized and taxable values. Under Proposal A, the amount of taxable increase was capped to a maximum of 5% annually. During the late 90s property values increased well above 5% annually. This built a bubble between the market value and taxable value. Over the past few years that bubble is all but gone for most properties.
With the prolonged struggles in the housing market, a gap between what will actually be collected and what would have been collected under past economic conditions now exists. Lake Isabella is actually fairly well off when looking at this versus other municipal locations in the state. We have not seen anywhere near the worse of the economic downturn, nor has local property values dropped near the pace of those in the major metro areas.
Additionally, Lake Isabella only levies under 1 Mill. The larger the millage levy, the larger the hit in terms of actual dollars. For us, we are projecting about the same property tax collection in the upcoming year as we saw in 2007.
But, what are your thoughts. When is the economy and housing market going to rebound? Or, what are your thoughts on Proposal A?