Michael Lewis' editorial in Miami Today begins: "Miami-Dade is playing a perilous game of hot potato with a 13% tax increase plan, exacerbating the worst recession in 70 years." I think I know what Mr. Lewis' point of view is: that government must cut, cut, and cut to bring expenditures in line with revenues. He should come out and say it. But Mr. Lewis needs to recalibrate his facts.
The problem is deeper than Mr. Lewis acknowledges. He writes, "... Newly elected Property Appraiser Pedro Garcia... had to set a ceiling high enough to cover county spending a year ago, called the rollback rate. That, coupled with the 9.5% fall in countywide appraisals, required a 13% rate hike ceiling." Problem number one: the facts are wrong. Real property appraisals in Miami-Dade exclude or limit inclusions of foreclosures under Department of Revenue rules. Since the majority of real estate sales are occurring under some form of property in distress, and since those figures are substantially EXCLUDED from the tax base, revenues will be much, much lower than predicted. That means that to balance the budget, the tax increase would have to be substantially higher than 13 percent.
I think your government knows this perfectly well, and so should Mr. Lewis. Eyeonmiami detailed the confusion in posts late last week: I am continuing to try to untangle the data sources and facts-- but clearly, the mainstream media is part of the problem. Mr. Lewis is right: we are "in the worst recession in 70 years". But our current circumstances require accurate data. The profound lack of public confidence-- showing up in statistics-- is because people feel that we are not being told the truth. Fixing that problem starts with getting the facts straight.
10 comments:
"...and since those figures are substantially EXCLUDED from the tax base, revenues will be much, much lower than predicted. That means that to balance the budget, the tax increase would have to be substantially higher than 13 percent"
I don't understand this at all--what am I missing? Since the foreclosures are excluded from the tax base calculation it means to me that only straight sales between buyers and sellers are included in the calculation. Thus the decline in countywide appraisals understates the decline in value in the real estate stock of the county. We have eliminated the properties with the most dramatic decline sales. This would seem to lead us to an opposite conclusion: appraisals are overstated thus tax revenues should be higher, not lower than would be expected if the actual decline in value of the properties is considered. Furthermore, if appraisals are going down and tax RATES are going up, aren't we likely to be paying about the same amount in total?
What am I not understanding here?
But appraisals aren't going down. Has your property be assessed downward 30-50 percent?
I have a headache trying to figure out that first comment.
See - all this confusion...that is because we are getting bad data and no one knows what to do with it!
county rollback means that the county will collect the same as last year, which was $200 million less than the year before.
That's the most that can be collected. Seems pretty simple.
In all likelihood, all the wannabe mayors on the commission won't want to "raise taxes" which will lead to as many or more than the 1700 layoffs the Mayor proposed.
Anonymous said...
But appraisals aren't going down.
For houses being bought and sold, they absolutely are. It's a buyers market, and if you break even on selling your home, you've done pretty well.
And since homes are selling for less, the assessments will have to come down: lower assessments means less revenue.
My point was that appraisals are going down but not as far down as they should go because they do not fully reflect all the sales (transfers of title)--it doesn't reflect short sales and REO sales. It is these sales that are likely to be the ones that have had the greatest decline in price as they are "distressed" sales.
My other point is that if appraisals are going down and millage is going up than it is likely that people will on average not be paying much more than they have in the past.
I remember a surreal conversation I had with a guy a few years ago who was saying the "silver lining" to the real estate collapse was that his RE taxes would be going down. I was like "huh?" Appraisals go down, rates go up to compensate. The issue we have had was that when appraisals went up, we didn't get a lowering of rates to compensate, we got an increase in spending.
There was an article today in the Miami Herald that said values didn't go down as much as expected. When you don't count the low priced home sales, what would you expect?
Assessed values are much higher than they should be.
Vacant lots are worth up to 80% less now than 2 years ago but the Miami-Dade County Property Appraiser has not caught up with reality.
Steve,
In their defense, I'm pretty sure the County Commission did actually decrease the millage rate 9 out of the last 10 years. Last year, they increased it with an 11-1 vote, and no one complained.
m
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