Dorothy Schneider, writing for the Lafayette Journal & Courier has an article entitled New mayors expect to face steadier conditions which features Everybody’s Favorite Economist, Larry DeBoer.
New mayors won’t, apparently, have rosy financial circumstances under which to begin their terms, but conditions seem to have plateaued. He makes an important point about local finances:
“In this day and age, you’ve got to watch everyone else’s budget as well as your own. Where tax caps are in effect, your city could be being frugal and keeping its tax rate down, but then if the schools or the county go above (the limit), you lose money.”
And then there is this:
Given that tax caps now are in the state constitution, DeBoer said local leaders shouldn’t expect any relief on property tax revenues coming down the line. The only hope for mayors is to add to the property tax base through new developments in the community.
DeBoer expects more municipalities and counties will have to adopt Local Option Income Taxes in the next decade to help offset revenue losses.
“They’ll probably also be looking at user fees,” DeBoer said. “I expect once the economy gets going again … we’ll see more of that.”
I think what we’ll find is not so much a reduction in the tax burden from property tax caps but a shift in the burden from property owners to income earners. (Obviously, there is a lot of overlap in those categories.)