Foreclosures Leading To Low Tax Collection
Monday, December 3rd, 2007Foreclosures have devastated house owners together with entire neighbourhoods. Now it is time for the tax department to feel the hard pinch. The treasury offices across the country are getting ready for the river of taxes to run dry.
Innumerable houses in Cleveland have been damaged by vandalism, fires and the weather to a point of no return. The lenders will now just walk away. Treasurer Rokakis of Cuyahoga County apprehends that the day is not far when the lenders will call on them saying that they just can’t fund demolition of the units and are going away. This trend will pick up in other places where foreclosures have teamed up with job losses to make the situation murkier.
The figures about vanishing taxes are already rolling in. Sun belt cities are top rankers in the foreclosure crisis. Here a conference of mayors forecast that there would be a reduction of $3 billion in property taxes in 2008. Cities had begun to count their dollars in advance relying on a continued growth. Now there is going to be a scramble to close the yawning gaps in revenue collection and expenditure.
The situation will not improve even if lenders manage to sell off some estates. The new owners will demand a revision of valuation of these damaged houses. Taxes will have to be lowered. Even the house owners not caught in the foreclosure net will demand re-assessment because of changed circumstances affecting the entire neighbourhood.
Rokakis claimed that already 14,000 requests for re-valuation have been noted in 2007. Next year the number is sure to rise to anything between 20,000 and 25,000.
The money coming from fees charged from property sale transactions is also going to slow down. The number of sale deeds has dropped by 40%. This has negatively impacted on state transfer fees as well as deed, mortgage and registration charges. All this will tell on the city governments. Anything touching the state trickles down to the local levels.
On the other hand cost of communal services continue to rise with the increase in demand for help. The small town of Shaker Heights in Ohio will spend $500,000 in the current year to maintain abandoned houses. Cleveland Heights will fund $75,000 only to keep gardens trimmed. Three years ago $6,000 had been sufficient. All the thanks for this topsy-turvy picture goes to the foreclosure crisis.
