Cities Revenue Falling : Time to Raise Mill Rates

Okay, cities are losing money as the total economy is heading down the drain - what to do to make up for the fall in property values? Some cities have a built in safety device that was implemented years ago and approved by citizens, which raised the values of property very high but taxed at a mill rate at a lower existing tax evaluation. The current taxed mill rate will be on the real value of the property, but the assessed values was tripled for future use. 

Why? This reason was explained that if the county or city needed more money all they needed to do was step up the value assessment with no need for a new valuation by the assessor. The evaluation done years ago had built in values that the assessor could use to raise the mill rate at any time and without notice.

This article hits home on pensions and healthcare cost that are rising and will continue to strangle most cities and states. Now all they have to do is raise taxes and make the situation worse. Neat.


Cities' Revenue Keeps Shrinking
Source: Vauhini Vara, "Cities' Revenue Keeps Shrinking," Wall Street Journal, September 13, 2012.

September 19, 2012
U.S. cities' revenue keeps falling because of the delayed effect of weaker property values now weighing on municipal finances, says the Wall Street Journal.

It typically takes cities 18 months to feel the effects of the broader economy, which means that many cities are now starting to feel the impact of the recession.

•Cities expect revenues to decline an average of 3.9 percent in 2012, the sixth straight year of revenue declines.
•As a result, many cities have had to reduce the number of workers, slash spending and delay infrastructure projects.
•But sales tax revenues rose 2.4 percent in 2012.
•However, it was not enough to offset the 2.1 percent drop in property taxes and the 0.8 percent fall in income taxes.

Most importantly, the rising costs of pensions and health care are making it increasingly difficult for states to maintain their budgets without making any cuts.

•Out of 324 cities that were surveyed, 77 percent said pension costs increased in 2012 from the previous year.
•Eighty-one percent said the same of health care costs.

In San Jose, California, Mayor Chuck Reed has attempted a solution to the city's pension problem by requiring workers to either contribute more to their pension or face fewer benefits. His measure was approved by the public and as a result the city's revenues are on the rise.