Thursday
Feb122009
Declining Assessments
Justin Bathon on Thursday, February 12, 2009 at 8:08PM Here's a problem that is coming down the pike ... declining assessment values on homes. I have been meeting with a lot of superintendents lately with a colleague and a topic that has come up is the potential for declining home values to blow up school budgets. Typically assessment cycles occur over a period of years, but it is going to be hard for local governments to hold assessment values high as the few homes that do sell, sell for much less than surrounding homes.
So, as you are pondering the current problem of declining legislative appropriations, keep in mind the bigger problem may still be coming if this doesn't turn around in a couple years.
Reader Comments (1)
Good point, Justin. And of course, in every state except Hawaii (which has 100% state funding), this is all cyclical. That is, when the assessments do decline (and most have already started), then due to the requirement for wealth-neutral funding in most states, state tax revenues will have to make up the difference (at least in the hardest-hit counties). That means either reducing of "recapturing" funding for property-wealthy districts with more stable values (good luck with that one) or an even bigger potential shortfall in state-level funding caused by the lack of local revenue. This may further negatively impact the overall adequacy of education spending, which may negatively impact housing values, leading to a decline in assessed valuations, and so on . . .