I just received the latest assessment on our home from the city of Lansing.
It is down another 15%, reducing my property taxes by about $220/year. The knee-jerk reaction is "damn, that's great!". Of course it means my home is worth less than it was a year ago but, since we have no plans to move, the value shouldn't matter (unless we want to refinance or get a home-improvement loan).
Then I started thinking about the real-world implications of my little tax bonanza.
We bought our home 4 years ago, paying about 30% below SEV. Within days, I had called the city assessor and immediately had my SEV lowered by 30% (without argument).
A year later my appraised value went down another 12%. A year later, another 10% or so. And this week, it dropped another 15%.
The cumulative decline in my home's tax value from closing until now is nearly 60%, meaning my property taxes are 40% of what they would have been had the housing market not collapsed.
Good news? No way. That $1,500 or so I'm saving on taxes means significantly less money for the services I expect from local governments: police/fire, road maintenance, parks, LCC, CATA, the library, the airport, the county health department and Lansing schools.
Their costs haven't gone down 60%+. Even with major pay concessions by public workers, there's no way the various government agencies can absorb this kind of hit without significantly reducing the services I expect from them.
On top of that, our Governor has decided that he's pulling the plug on revenue sharing which takes even more money out of local government budgets.
Lansing City Council has proposed a four-mill increase in city property tax rates. Some of my conservative friends call this a tax increase. I see it as a small tax restoration. Even with the new four mills, my net property taxes are down about $1,000/year from where they started four years ago. This won't help the other governmental units that rely on property taxes, but it is a start towards protecting our quality of life.
Like the good people in East Lansing (who have already restore a portion of their property tax), I want services maintained. I don't like the idea of driving on rural Ingham County roads with no road patrols. I want snow plowed so I can get to work safely. I want potholes repaired. I want Hawk Island Park to continue as a safe, low-cost place to spend a summer afternoon. I want decent schools for our kids which means smaller class sizes, and teacher salaries that will attract the best teachers. I want the cops to show up when I call them, and I want to know that an ambulance is just minutes away if I need help.
I'd also like the downward spiral in my home to value to stop. If Lansing has to cut basic services to balance the budget, it will accelerate or extend the loss of value in our homes.
Falling home prices make us prisoners. We lose the option of moving. In my condo complex, units that once sold for up to $125,000 now go for as little as $29,000. We can't move unless we are able to absorb a huge loss.
One way to fight back is to support a modest millage that will help stop the bleeding away of our quality of life. I'll vote 'yes' on the millage, and I'll campaign for the millage.
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