New Financial Problems Hit Towns and Cities

The Washington Post has a story this week about the next financial crisis in the U. S. The states have already gone through – and are still enduring – serious financial problems due to the slow economy and the resulting slow down in sales tax revenues in particular but also income tax revenues. Income taxes have been strained in part due to lower levels of employment meaning fewer people are paying income taxes right now.

But property taxes are a bulwark of local financing and until recently, due to the reduction in housing values that only slowly works its way through the property tax valuation system, they remained fairly steady. But now, the recession has been going on for several years and property tax valuations that set tax collection levels are dropping. Poolesville’s property values are down as well but so far, the total property tax levels have not been affected much. Income tax returns last year were higher than the budget anticipated. And the Town has an adequate rainy day fund. But we should all be watching this year to see if property tax valuation levels finally begin to affect our Town’s revenues. This could be the year that happens.

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