Property taxes up as house prices fall

USA Today reports:

Property taxes will keep rising nearly everywhere for homeowners even as house prices are falling in many parts of the country, according to a USA TODAY analysis of government data.

A key reason: Despite the downturn, the market value of millions of homes still exceeds their assessed value used for tax purposes.

"Some people are irritated to learn the news," says Jim Todora, a property tax assessor in Sarasota County, Fla. "Their home's value may have gone down, but their property tax is still going up."

Fresh evidence of the slumping real estate market came Tuesday when the National Association of Realtors reported that sales of existing homes dropped in March at the highest rate in 18 years.

Property tax limits were passed to prevent big increases during times of soaring home values. Those laws let assessments rise, slowly but steadily, until they reach market value.

Property taxes from homeowners and businesses go mostly to local governments, paying for schools, roads, police and other services. Collections rose 7% last year to a record $377 billion, although the median home price climbed just 1% nationwide and fell in many places. The disconnect is likely to continue.

Look who has a vested interest in higher and higher prices.Some municipalities are going to have to adjust their spending plans if they are counting on forever higher prices.