- NEW YORK - Lehigh County
is building a new 36-bed juvenile detention facility. The county prison
is full, and the courts are so backed up that this eastern Pennsylvania
community will add a 10th judge.
- Faced with such increased expenses, which have led to
a $30 million shortfall, County Executive Jane Ervin has proposed raising
property taxes by 70 percent - hardly a popular move with residents. "If
I had proposed no tax increase in the budget, there would have been just
as many angry people since services would have been cut," says the
- Lehigh's situation is far from unique. Around the country,
counties and local communities are turning to property taxes to bridge
budget gaps. New York Mayor Michael Bloomberg is proposing a 25 percent
hike, which he says is needed to bridge a projected $6.5 billion budget
gap next year. In Westwood Hills, an upscale suburb of Kansas City, residents
are facing a 19.2 percent property-tax hike. And in Philadelphia, hundreds
of homeowners are appealing recent recent property tax increases as high
as 100 percent.
- The hikes are the result of less funding by states, which
are financially strapped as well. Without state or federal help, counties
and towns have to either trim services or spend more of their own budgets
for them. In many cases, property taxes are their only way to raise revenues
for schools, nursing homes, or even the sheriff. The rising taxes are especially
hard on the poor and elderly, leaving open the prospect that they may have
to abandon their homes because they are unable to pay.
- The hikes come at a time when many properties are appreciating
in price. This means that even in some areas where rates aren't going up,
residents may still end up paying higher real-estate taxes if they're assessed
- In fact, in Texas, a formula taking into account skyrocketing
housing prices has resulted in lower state contributions for education.
"Local property taxes rose so much the state had to contribute less,"
says Arturo Perez of the National Conference of State Legislatures.
- According to US Census data, property-tax collections,
adjusted for inflation, rose from $235 billion to $265 billion between
1998 and 2001, or about 13 percent. "This was before the reassessment
boom, so I wouldn't be surprised if collections went up in the past year
as much as they did in that time period," says Pete Sepp, a spokesman
for the National Taxpayers Union, an antitax group in Washington.
- It has certainly become a political hot potato. In New
Hampshire, the Republican candidate for governor, Craig Benson, ran on
a platform that he would not increase property taxes. He beat out a Democratic
candidate who said he would reduce property taxes but replace it with some
form of income tax.
- "Property taxes are lightening-rod words around
here," says Doug Morris, a professor of resource economics at the
University of New Hampshire (UNH).
- One of the issues is that the state decided to "equalize"
taxes collected for education. If a town collects more taxes than it needs,
that town becomes a "donor" town with its excess funds going
to "receiver" communities that don't have as much for education.
- "The towns that are donor towns are raising the
roof," says Ed Jansen, another UNH professor and a selectman in Rollinsford
- a receiver town.
- Not surprisingly, it's hard to get voters to approve
property-tax increases. On Election Day, the San Francisco Bay area voted
down a proposal to increase property taxes to strengthen the Bay Area Rapid
Transit (BART) against earthquakes.
- Meanwhile in New Jersey, the mayor of Millburn Township,
an upscale community, is trying to secede from the more urban Essex County
in part because of property taxes, which recently rose.
- By moving to adjoining Morris County - which also includes
Millburn's US representative, thanks to a recent redistricting - each household
would save about $2,700 to $3,000 in taxes. "We had a nonbinding referendum,
and 88 percent said they wanted to move to another county," says Thomas
McDermott, the mayor. "I'm a third-generation Essex County resident,
and I've heard these cries of overtaxation for years from my grandparents
- On Nov. 6, Morris County voted to accept the New Jersey
community, and it's now up to the state Legislature to approve the shift.
Essex County Executive James Treffinger says he respects Millburn's right
to decide its own future, but he wants the residents to remain a part of
- Politicians are more than aware of the effect of headlines
announcing higher property taxes. For example, in Lehigh County, Ms. Ervin
says the 70 percent increase caused a stir. She notes, however, that a
comparable dollar increase - but not percent increase - in Allentown, the
county seat, did not make as many headlines.
- "There was an overreaction by a lot of residents
exacerbated by the 70 percent tag," she says.
- Carol Koenig, an interior decorator in Allentown, says
her first thought was that of a "huge" increase. She wondered
what the county is going to do with the money. "I understand they
want to do more fire protection and pay the police better," she says.
"I am sure we were probably due for this, but it's just that everyone
has their hand out."
- To try to calm the political waters, Ms. Ervin decided
to go on the offensive, explaining to voters why the county had to hike
the property tax for the first time in 12 years. No, the hike is not going
to pay the police, she told residents (that's paid for by municipal taxes).
Instead, she points to other services, such as the two nursing homes run
by the county.
- "We have no mandate to provide them, but it adds
to the quality of life here," she says. "But the state regulates
them, and they are constantly increasing the standards without providing
- She has tried to explain to voters that the county, by
state law, has no other way to raise money. "Is the system correct?"
she asks, answering, "No, we need more flexibility to address changes
- Earlier this month, the Lehigh County commissioners began
looking at the budget. They made some cuts in services and proposed scaling
back Ervin's property tax hike. But once the budget is finalized, a tax
hike is still likely to be there.