Foreclosures lead to city budget shortfall from property tax revenues- Freedom News

Foreclosures are bad for business- city budget business, that is

Freedom News, Property Taxes, Foreclosures, Business News, Economy, Politics

from http://money.cnn.com/2010/10/06/news/economy/cities_property_taxes/index.htm?section=money_latest

NEW YORK (CNNMoney.com) — The housing crisis is finally catching up with cities — and the impact isn’t going to be pretty.

Property tax revenues started to decline in 2010 after years of growth, according to a report released by the National League of Cities on Wednesday. Cities expect property tax revenues to fall by 1.8% in 2010, after rising by 4.2% in 2009.

This drop lagged the housing market collapse because property tax bills are based on assessments, which are slow to adjust to market value changes.

But the worst is yet to come, according to the league’s report. The full brunt of the housing bust won’t be felt until 2011 and 2012 as more property values are reassessed. And commercial real estate values may dive in 2012, exacerbating the problem.

“Cities are now in the eye of the storm,” said Christopher Hoene, the center’s director for research and innovation. “The pain is intensifying.”