Homeowners, beware.
State and local governments scrambling to raise money during the economic crisis caused by the coronavirus pandemic are looking to increased property taxes — as well as wealth taxes and more — to fill budget holes.
The proposals come as officials are trying to strike a balance. Historic job losses caused by lockdowns fueled the downturn that’s put the squeeze on city and state budgets. Washington sought to offset this with stimulus payments, additional unemployment benefits, business grants and more. Any push to raise taxes too dramatically could hurt the economy even more.
But some officials argue that increases are unavoidable.
Property tax rates in Nashville, Tenn., will be increasing by 34 percent in what Mayor John Cooper described as a “painful but necessary” move that will raise money for the city, which has taken a hit during the pandemic.
Elsewhere, the debate is raging.
This November, Californians will vote on whether to strip decades-old protections from commercial and industrial properties. Since 1978, tax reassessments to the fair market value of California property have only been done when the property is sold or there is new construction. Otherwise, assessments are capped at increases of 2 percent a year. The new measure, if approved, would make exceptions from this for industrial and non-agricultural commercial property, requiring them to be reassessed to fair market value at least every three years.
In Chicago, Mayor Lori Lightfoot said property tax increases are “on the table” to help address budgetary problems that include a projected shortfall of nearly $700 million that she said could become even greater.
“Those are the last choices and tools that I want to use, but I can’t take any of them off the table,” she said.
In Texas, Dallas lawmakers were considering a massive property tax hike of as much as 8 percent but needed the city council to pass a measure allowing them to increase rates by more than 3.5 percent. In May, the resolution failed after a 12-3 vote.
“I want to take this option off the table,” City Council member Cara Mendelsohn said, according to local NBCDFW. “And if we were to pass this resolution and we were to increase taxes even close to this amount, we would be creating the next disaster for Dallas.”
Other areas are looking at different methods of increasing revenue, such as wealth taxes. A New York state senator from Queens said in May that “the only people who actually have money right now are billionaires,” and introduced a bill that would treat capital gains as income and would tax unrealized capital gains.
That money would not be used for existing programs, however. The funds raised by the increased taxes on billionaires would go to a new “worker bailout fund” that would provide monthly payments of $3,300 for people who do not qualify for unemployment benefits or CARES Act payments.
Other New York state lawmakers are pushing for income tax hikes for those who earn more than $5 million.
In Seattle, a new measure approved by the City Council will add a tax on companies with at least $7 million in annual payroll. The “JumpStart Seattle” tax will tax businesses up to 2.4 percent on Seattle-based employees who earn more than $150,000. The bill specifically references the emergency conditions imposed by the pandemic.
Last week, New Jersey approved a plan to borrow up to nearly $10 billion to address a massive budget shortfall. Republicans have warned that this could lead to an increase in property taxes or a wealth tax, while Gov. Phil Murphy has said that if the state does not borrow, he would “have no choice but to raise property taxes,” according to NJ.com.
In a Friday interview with the Washington Post, however, Murphy said taxes could still go up, as the state will likely need “revenue raisers” and “everything is on the table.”
Fox Business’ Brittany De Lea contributed to this report.