Property Tax Increase Research Articles

Full Disclosure: Controlling Property Tax Increases During Periods of Increasing Housing Values

This paper examines the outcome of a non-binding full disclosure process to control increases in the property tax. The data used in the study cover a 20-plus-year period in five MS As in Utah. During the period of our analysis, metro areas in Utah experienced rapid increases in the market value of residential housing. The results of our analysis suggest that local assessors in Utah captured this increased value in their appraisal and reappraisal processes. However, our results also demonstrate that the effective property tax rate did not keep pace with increases in assessed property values, implying that a non-binding full disclosure law did limit growth in the property tax. Furthermore, it limited the property tax while avoiding some of the unintended consequences imposed by binding property tax limitations.

Localism and the Creation of a State Police in Arkansas

EFFORTS TO CREATE STATE POLICE FORCES in the United States during the first four decades of the twentieth century faced a number of practical and ideological obstacles. This proved especially true in the South where state governments tended to be poorer than their northern counterparts and thus less able to afford the cost of such a force. A more important factor working against the creation of state police forces was the South's traditional preference for local control. This preference for localism, or, as Edward Ayers more precisely described it, republicanism, opposed any attempts, no matter how noble minded, to invest an outside entity with authority over community affairs.1 The clearest expression of Arkansans' longstanding desire for local control can be seen in the 1874 state constitution, which has been described by one scholar of Arkansas politics as specifically designed to protect citizens from possible oppression by their own state government. Pervasive distrust of Diane Blair said, expressed in almost every section of the 1874 document.2 The document, for example, sharply limited the governor's power to appoint officials and allowed his vetoes to be overridden by a simple majority, while rendering the legislature a part-time institution with strictly limited taxing authority. With a constitution that marginalized state government, power and influence fell to local elites who wielded a significant amount of control over elected officials at the local and state levels.3 That Arkansans proved particularly stubborn in their adherence to localistic republicanism is suggested by the fact that Arkansas remained one of the few states without a statewide law enforcement agency in January 1935. Tracing the repeated efforts to create a state police force shows just how deep this ideology ran, even though such a body, like many other Progressive-era agencies, had the potential to provide numerous benefits for the state's residents. The ultimate success of the state police movement, therefore, represented a significant turning point, both symbolic and actual, in Arkansans' understanding of state government and its role in their daily lives. As 1935 dawned, few obvious signs existed that Arkansans' suspicion of a statewide police force would be overcome, especially considering the dire financial straits in which many of the state's residents found themselves. Arkansas had never been a rich state and the decline of cotton prices in the 192Os coupled with the advent of the Great Depression in 1929 led to economic and social disaster by the early 1930s. The outlook for impoverished Arkansans darkened even further in late 1934 when the Federal Emergency Relief Administration threatened to cut off all federal assistance to more than 400,000 people within the state unless the legislature committed $1.5 million in matching funds by March 1935.4 While resolving the state's financial crisis and locating matching funds were the most pressing issues facing the governor and the legislature as the fiftieth session of the General Assembly gathered in January 1935, another matter promised to generate a tremendous amount of statewide interest and debate: the attempt to repeal prohibition within the state. For Gov. J. M. Futrell, the issues of state finance, liquor, and the creation of a state police force were tightly intertwined. Legalizing the consumption, manufacturing, and transportation of alcohol had the potential to provide a tremendous inflow of new revenue through the levying of excise taxes, avoiding the political damage that a property tax increase could inflict. Yet Futrell clearly doubted the state had the means to adequately regulate such a system. He also recognized the current legal system's deficiencies in adequately and impartially enforcing state laws and argued that the best way to correct them was through the creation of a state police force. He told one supporter, There are some sheriffs who are trustworthy-some of them are not. …

The Coalition for Healthy Communities

In the spring of 2002 the Los Angeles (LA) County Department of Health Services anticipated that in 2005 they would face an eight hundred million dollar deficit, and so they presented plans to "re design" and dismantle the public health care system that serves nearly three million uninsured residents of LA. The county pro posed three possible scenarios that would close clinics and hospi tals, and reduce immunization, emergency, and trauma services. Our paper presents the LA Coalition for Healthy Communities' fight-back campaign, which was spearheaded by our sister union, Service Employees International Union (SEIU) Local 660. Over fifty stakeholders joined the coalition, including our union, the Committee of Interns and Residents, united under the principle that the LA County public health care system must be adequately funded, and community participation is critical to shaping the public health system. We discuss the activism of the coalition member ship, its mobilization around different stages of the campaign, and its failures and successes, including the 2002 November ballot- initiative victory, Measure B, the first property tax increase in California in over twenty years, which will generate $168 million a year for LA County trauma and emergency services.

Advocates Hope Tax on Rich Will Fund MH Treatment

Back to table of contents Next article Health Care EconomicsFull AccessAdvocates Hope Tax on Rich Will Fund MH TreatmentKate MulliganKate MulliganSearch for more papers by this authorPublished Online:2 Jan 2004https://doi.org/10.1176/pn.39.1.0001aBallot initiatives typically are a favorite tool for those trying to keep taxes low.The famed Proposition 13, passed in California in 1978, restricted increases in property taxes and required that all state tax increases be approved by a two-thirds vote of the state legislature.Now, however, California mental health advocates hope to use a ballot initiative to raise taxes—on the very rich.The Campaign for Mental Health is proposing a tax surcharge of 1 percent on the taxable personal income above $1 million. State officials have estimated that the new tax would generate $680 million in 2005-06, the first year in which the program would be fully operational.The funds, channeled through the state’s existing mental health system, would be directed to a wide range of services, including training and educational programs, but would be targeted primarily to those with severe mental illness or likely to develop it.The effort has two major antecedents. In 2000, California voters passed Proposition 36, which stipulated that anyone convicted of simple drug use would be offered drug treatment, rather than incarceration. Money saved on incarceration—an estimated $120 million a year—is slated to be spent on rehabilitation.The previous year, the state legislature passed AB 34, a pilot program providing funds for services to adults with mental illness who are homeless or at risk of becoming homeless or incarcerated. The New Freedom Commission on Mental Health cited it as a model program.Both Assembly member Darrell Steinberg (D), who introduced AB 34, and organizers of the Proposition 36 campaign are key advocates in the Campaign for Mental Health effort.Members of a coalition supporting the initiative include the California Psychiatric Association (CPA), NAMI-California, California Academy of Child and Adolescent Psychiatry, Mental Health Association in California, Service Employees International Union, American Federation of State, County, and Municipal Employees, and other advocacy organizations.The California Council of Community Mental Health Agencies, which represents nonprofit organizations that provide mental health services under contract with county governments, is a key member of the coalition.As described in the attorney general’s official description of the Mental Health Services Act, the initiative would fund outreach activities encouraging prevention; promote reduction in stigma and discrimination; and emphasize strategies that would reduce suicide, unemployment, removal of children from their homes, and other negative outcomes of mental illness.It would provide funds to counties for services for children, adults, and seniors who have severe mental illness or are likely to develop it.County mental health programs would be required to submit needs assessments identifying shortages in relevant professional and occupational categories to the Department of Mental Health, which would develop and fund a five-year education and training development plan.The act would establish the Mental Health Services Oversight and Accountability Commission, which would review plans submitted by county mental health programs and their expendituresThe campaign has 150 days from the time the initiative was authorized by the state’s attorney general to collect 378,000 legal signatures for the initiative to appear on the ballot in November. Authorization occurred October 16, 2003.Andrea Jackson, Steinberg’s chief of staff, said members of the campaign are confident of passage if the initiative makes it to the ballot stage and funding is available to get the campaign’s messages to the public.Randall Hager, CPA’s legislative director, told Psychiatric News that CPA was encouraging members to host fundraising and petition-signing parties. He has developed materials that can be used at various levels of involvementIn February and March 2003, an opinion research firm conducted polls and focus groups to determine likely support for the initiative and to identify messages and themes that would promote passage.The poll found that “when presented with a potential ballot title and summary along with a fiscal impact statement for an initiative that would provide comprehensive mental health care services to children and adults who suffer from a disabling mental illness, nearly two-thirds of voters (63 percent) support such a measure.” (Original article: See box for themes and messages that appealed to voters.)Information about the initiative is posted on the Web at www.campaignformentalhealth.org. ▪ ISSUES NewArchived

The Coalition for Healthy Communities: Fighting to Save LA County Hospitals, Union Jobs, and Patient Care

In the spring of 2002 the Los Angeles (LA) County Department of Health Services anticipated that in 2005 they would face an eight hundred million dollar deficit, and so they presented plans to "redesign" and dismantle the public health care system that serves nearly three million uninsured residents of LA. The county proposed three possible scenarios that would close clinics and hospitals, and reduce immunization, emergency, and trauma services. Our paper presents the LA Coalition for Healthy Communities' fight-back campaign, which was spearheaded by our sister union, Service Employees International Union (SEIU) Local 660. Over fifty stakeholders joined the coalition, including our union, the Committee of Interns and Residents, united under the principle that the LA County public health care system must be adequately funded, and community participation is critical to shaping the public health system. We discuss the activism of the coalition membership, its mobilization around different stages of the campaign, and its failures and successes, including the 2002 November ballot-initiative victory, Measure B, the first property tax increase in California in over twenty years, which will generate $168 million a year for LA County trauma and emergency services.

Who Pays? Who Decides?

(2001). Who Pays? Who Decides? Public Performance & Management Review: Vol. 25, No. 2, pp. 229-230.

The value of open spaces in residential land use

The preservation of open spaces has become an important policy topic in many regions. Policy tools that have been used include: cluster zoning; transferable development rights; proposed land taxes to fund purchases of remaining open spaces; and private organizations that buy land. This paper develops a theoretical model of how different types of open spaces are valued by residential land owners living near these open spaces, and then, using a hedonic pricing model, tests hypotheses concerning the extent to which these different types of open spaces are capitalized into housing prices. The empirical results from Howard County, a rapidly developing county in Maryland, USA, show that “permanent” open space increases near-by residential land values over three times as much as an equivalent amount of “developable” open space. This methodology can be used to help inform policy decisions concerning open space preservation, such as effectively targeting certain areas for preservation, or as a means of creative financing of the purchase of conservation easements, through the increase in property taxes, resulting from the associated increase in property values.

Host Residents' Perceived Social Costs and Benefits Toward a Staged Tourist Attraction

The purpose of this study was to determine residents' perceived social costs and benefits toward an international tourist event, and their willingness to financially support the development of a permanent event facility. A telephone survey using a random sample (n = 600) of Albuquerque residents was conducted two weeks after the 1993 Kodak Albuquerque International Balloon Fiesta (AIBF). The 23rd Annual AIBF was the largest hot-air balloon event in the world, with over 900 pilots competing in various races and contests. The nine-day event attracted over 1.6 million spectators to a 70-acre site leased to organizers by city government. Few social costs were experienced by residents, while a majority of residents experienced multiple social benefits from the event. Although residents' attitudes toward the event were mostly positive, few residents were likely to finance a stadium development proposal through property tax increases. Before taxpayer approval for permanent event facility construction is sought, tourist event officials should assess residents' social benefits and costs, and their willingness to pay. Failure to do so may increase risk of bond referendum failure or bond default.

The Local Impact of School Finance Reform in Four Texas School Districts

This article describes how four Texas school districts responded to changed fiscal conditions following the implementation of reforms designed to bring greater equity to Texas school finance. Case studies in two poor districts revealed that although there were substantial increases in funding available, very little of this new money was spent on improvements to the core curriculum. In the two wealthy districts, one struggled to maintain current spending levels, with very few changes in priorities, while the other was able to pass a substantial property tax increase for school improvement. However, a substantial portion of the increased funds was used to replace lost state money.

IS THE PROPERTY TAX A BENEFIT TAX? THE CASE OF RENTAL HOUSING

Is the property tax a benefit tax? This paper tests the benefit-tax hypothesis for rental housing. In the case most favorable to this hypothesis, namely with mobile tenants, relatively high property taxes cannot be directly reflected in rents but can be indirectly reflected to the extent that they lead to relatively high-quality public services. This indirect shining equals tenants' willingness to pay for the public service increment. Even in this case, however, the property tax is not a benefit tax unless the tax rate is set so indirect shining equals a landlord's tax increase. This second condition is not met in the Boston area in 1980; on average, indirect shining covers only about $0.11 of a $1.00 increase in property taxes.

Changes in Federal Aid and City Finances: A Case Study of Oregon Cities

Federal aid was not found to stimulate spending for cities in Oregon during 1984-1989. Oregon cities relied primarily on their own-source revenues to finance spending increases. The exception was capital spending, where receipt offederal aid in 1989positively influenced the rate ofspending change. This most likely reflected lower spending by those cities that did not receive competitivefederal grants. The amount offederal aid received is greatly influenced by the grants skill available to the community. Growth in total direct current spending was significantly associated with increases in user fees and charges. A closer look at specific spending categories revealed a hierarchy of reliance on cities' ownsource revenues. Cities increased user fees and other benefit charges where possible, and seemingly only resorted to property-tax increases when these other revenues were inappropriate.

Evaluating fire protection investment decisions for homeowners

This paper examines the use of the Analytic Hierarchy Process (AHP) for evaluating fire protection systems for homeowners. It explores how to include in the decision-making process information on an individual's risk exposure and risk attitude. The AHP is applied to the choice of purchasing smoke detectors, a sprinkler system, or a combination of the two. Two hypothetical cases are assumed, one in which the homeowner is risk-taking and has lower-than-average risk exposure, and one in which the homeowner is risk-averse and has higher-than-average risk exposure. Probabilities of fire, death, injury, and property loss, subjectively derived from national fire statistics, are used in combination with more easily quantifiable benefit and cost criteria such as system price, property tax increase, and insurance savings. The study focuses on the decision making of homeowners, but the results are also of interest to builders of residential homes, fire chiefs, policy makers, and others who make decisions about fire protection investments.

“Mad” About Mandates: The Issue of Who Should Pay for What Resurfaces in the 1990s

In 1990, constitutional amendment proposals were put before the voters in Florida and Wisconsin (nonbinding) to limit unfunded state mandates. This brought the number of states with constitutionally based mandate-reimbursement requirements tofifteen. Voter support was garnered by attributing local property-tax increases and loss of local control over spending priorities to unfunded state mandates. The Florida and Wisconsin efforts came close on the heels of state mandate studies by the U.S. General Accounting Office, National Conference of State Legislatures, Urban Institute, and U.S. Advisory Commission on Intergovernmental Relations. Fifty-two hypotheses are generatedfrom these studies and the Florida and Wisconsin cases to help structurefuture research. As the mandate limitation movement spreads, larger data bases will be available with which to test these propositions. In the states that already have limits on unfunded state mandates, research will shift to the policy consequences of these restrictions.

The Fiscal Consequences of Changing Federal and State Revenue Policies: The Case of Small Oregon Cities

This article examines the fiscal consequences for twelve, small Oregon cities of recent changes in federal and state intergovernmental revenue policies. Many small local governments have experienced double revenue reverses in recent years-reductions in own-source revenues because of economic decline as well as decreases in intergovernmental revenues, especially federal aid. The twelve small cities are compared with all 241 cities in Oregon and the 136 Oregon cities in the 1,000 to 49,999 population range. Using aggregate and interview data, a majorfuinding is that although stabilization and/or decline in federal-state revenue sharing and entitlement program funds have accentuated difficult local revenue situations, economic decline has been the more important contributor to the fscal stress of the twelve small municipalities. Most of the twelve cities had limited fscal capacity-as indicated by low assessed property valuationsmaking it difficult to produce sufficient revenue to meet basic public service needs. These cities were also unable to get citizen approval of increases in property taxes

DYNAMICS IN THE STRUCTURAL FORM OF PROPERTY TAXES∗

Because the property tax is structurally tied to market values of dwellings through the assessment function, rapidly increasing market values may beget rapid increases in property taxes. Public awareness of this process was instrumental in California's 1978 passage of the Jarvis-Gann Amendment. Millage rates should be indexed to counterbalance changes in market values.

TAXATION AND THE CONSUMPTION THEORY OF LAND RENT∗

Assume an ideal two-sector city composed of households and a local government. Following an increase in property, sales, or income taxes, the magnitude and direction of the change in welfare, total population and density, rent, and urban radius depend upon the type of tax levied and the ability of households to migrate out of the city. The graphical consumption theory of land rent is used as the medium to explain the change in the geography of the city following an increase in taxation within open and closed settings.

Property Taxes and Community Political Structures

Survey findings from three American communities on citizens' willingness to support public programs through local property tax increases are examined to shed further light on the contemporary "taxpayers' revolt." The analysis discovers that distinctly different dynamics characterize the politics of local property tax proposals. Discrete proposals generate different patterns of community cleavage, which may or may not preclude passage; however, a structural bias in favor of tax revolters is discovered in all three of the study sites.

School Finance Reform and Rural Land Use Policy Incentives

The market economy operates by individuals or firms responding to various price signals. These signals become incentives that guide individual behavior and determine output of private sector. Decisionmakers in public sector also respond to signals and incentives, although of a different nature. For example, there are major incentives for local elected officials to avoid property tax increases, while at same time maintaining at least existing levels of public services. A local official's public support, his effectiveness in implementing his programs, and ultimately his reelection chances are influenced by his success in avoiding property tax increases. Traditionally, local officials believe that increasing local property tax base will stabilize or reduce property tax rate. Increased tax base thus becomes a major policy objective of many local governments [Wadsworth 1974] .' The fiscal impact of tax base changes and incentives faced by local government officials are subtly but critically changed by drive for equal educational opportunity. In early 1970s, constitutionality of school finance systems which rely heavily on property tax was challenged in courts throughout nation [Wynkoop 1974]. Plaintiffs argued that such sysoperates by ini s es o ding to various . s si als beco e inceni i i i ual behavior and tems deny equal educational opportunity to children in property-poor districts, since quality of education (defined as expenditures per pupil) is a function of school district wealth.2 It was shown that in spite of fact that property-poor districts tend to tax at higher rates, their expenditures per pupil are considerably less than in wealthy districts which tax at lower rates. In several states, courts ordered educational finance reform, insisting, in words of a Minnesota court, that the level of

Real Property Taxes, Local Public Services, and Residential Property Values

Recent empirical work on the effects of property taxes on residential property values has suggested that much of the tax is capitalized. Oates [6], in a cross-sectional analysis of fifty-three residential communities in north-eastern New Jersey, concluded that a substantial portion of the residential property tax is capitalized in the form of depressed property values. Orr [8], in studying thirty-one communities in the Boston area, reached a similar conclusion for the effects on property values of property tax differentials among communities. This evidence supports the hypothesis that property taxes are not shifted but are borne largely by property owners at the time the tax is levied. The theory of tax incidence suggests that taxes on land cannot be shifted. Under competitive conditions, shifting occurs only if the quantity of land supplied is decreased when the tax is imposed.' If the supply of land is perfectly inelastic as typically assumed, the property tax will be capitalized and the value of the land will decrease. If existing landowners attempt to maintain the pre-tax price of land (assuming the supply of land is perfectly inelastic), the result will be excess land supplied and consequent downward pressure on land prices until the tax is fully capitalized. Even if the tax on land is fully capitalized, however, an increase in property taxes will not necessarily *The authors thank Dale M. Hoover and an anonymous referee of this journal for some helpful suggestions. Paper No. 3753 of the Journal Series of the North Carolina State University Agricultural Experiment Station, N.C. 'For a discussion of the theory of incidence of the property tax, see Netzer [4]. decrease land values. The proceeds of the tax may be used for public services, which may serve to increase land values and offset the tax capitalization. Property taxes on land improvements such as residential housing may be shifted forward. The taxes will increase costs causing capital to flow to alternative uses until the return to capital in housing in the long run rises to that available on other investments. If the supply of capital to construction is responsive to the lower return, the tax will, in the long run, reduce the supply of housing, thereby bidding up its price. For owner-occupied housing structures, however, the annual increment to the supply is usually a small fraction of the total housing stock. In the case of residential housing, therefore, structures might be considered to be inelastically supplied in the short run. Hence, one might argue that it is less likely that shifting will occur in the short-run and consequently the tax will tend to be capitalized into lower property values. However, the actual short-run elasticity of supply of residential construction remains a parameter to be determined empirically. The incidence of the residential property tax in the long run depends on the long-run elasticity of supply of housing which is dependent on both the supply of land and the supply of structures.