PMC Mortgage Lender's Blog

All across the U.S., from Florida to Washington, many communities have experienced falling home values, but real estate tax rates are increasing.

As the effects of the recession grind on, municipal officials are under pressure to find additional revenue as declining sales taxes and property values put pressure on town tax bases.

Most homeowners will see lower home values. But the pain will be exacerbated for those homeowners whose assessments rise along with their tax rates.

New home buyers may need to reassess their monthly housing budget as real estate tax increases consume more of their available buying power.

Paul Hampel, writer for the Post-Dispatch reports that in the St. Louis metro "the overall value of residential, commercial and agricultural property has dropped 8 percent compared with the preliminary assessed values in 2009."

"Property tax rates are once again being adjusted upward to make up for the potential lost tax revenue," Hampel says, "and a leading driver for the rate hikes is to pay for salary increases for teachers and administrators."

St. Louis area "school districts account for more than 60 percent of the average tax bill, and, like most governmental entities, they are able to roll up their tax rates and bring in more money while remaining below their tax ceilings."

Michael Podgursky, an economist with the University of Missouri-Columbia said salaries are creating just part of the financial pressure for districts. "Pensions have also risen dramatically."

Districts "have to get the revenue somewhere. And they've found a dependable source in property taxes," states Podgursky.

Florida voters will have a chance at fighting back against their higher tax bills in November of 2012, reports Carl Orth, of The Suncoast News in New Port Richey, Florida.

"Voters will decide the fate of a rule under the state property tax law that can cause property owners to get higher tax bills even though the value of their property has decreased."

Florida's Save Our Homes constitutional amendment capped the amount a property's assessed value could be raised each year at 3 percent or the percentage rise in the Consumer Price Index, whichever is lower.

Orth reports, "some officials, however, interpret the rule to mean the assessments must rise up to 3 percent, no matter what the value of the home."

On the west coast, Keith Ervin, Seattle Times staff reporter writes, "Washington's 'budget-based' tax system allows cities and other taxing districts to boost tax collections without voter approval by 1 percent a year plus tax on the value of new construction. New construction has declined dramatically."

Homeowners within the 2,134 square-mile King County will see tax collections on average "increase 3.3 percent after a year in which total assessed value dropped 3.4 percent," reports Ervin.

Seattle voters last year approved two school levies and construction bonds. Home values there rose slightly pushing an average homeowner's tax bill up by $324 to $4,379, or 8 percent on a typical $453,300 house.

To combat rising real estate tax rates, many homeowners will be taking their battle directly to their taxing authorities as they file formal appeals for tax relief.