Brevard County Housing Market Decline Causes $1B Drop in Property Tax Revenue
Brevard County’s soft 2006 real estate market will shrink taxable property values for the first time in recent history, Florida Today reports.
If the estimates become reality, they may force local governments to either increase property tax rates to maintain existing programs or cut spending on schools, roads and public safety.
“It’s certainly out of the norm,” Brevard County Property Appraiser Jim Ford said of the declining roll. “We don’t normally see a drop at all.”
He expects the tax rolls this year to drop by at least $1 billion, or 3.3 percent, to $38 billion, including the value of all new construction. Even with the decline, the figure is still more than double the total in 2001.
Brevard County and Brevard Public Schools officials, however, have been working from state projections showing an increase of about 8 percent.
“What concerns us is the level of discrepancy with the state numbers,” said Dennis Rogero, the county’s budget director.
“We have to start planning, and we’ve got such a wide range of information now. We don’t know whether to zig or zag.”
Officials are also waiting to see whether property tax reform passed in Tallahassee has a greater impact than the $35 million loss of revenue Ford projects if last year’s tax rates are applied to the reduced roll.
In anticipation of state-imposed rollbacks in tax rates, County Manager Peggy Busacca has asked departments to detail by this week how they would cut up to 30 percent of their budgets.
After four years of double-digit increases, Ford’s estimates show a nearly 6 percent drop in existing property values in 2006, to $37 billion. The value of new construction sank 36 percent, to about $1 billion.
Ford attributed the drop to a decline in Florida mortgage demand, and the subsequently sluggish housing market.
High property insurance costs aren’t helping matters.
Sales of single-family homes last year dropped 34 percent, to 10,540. And the median price for single-family homes was down 22 percent in September 2006 from a year earlier to $206,100.
The tax roll reflects annual adjustments to the appraised values of all property based on local market activity. Some property values might not change depending on the volume of sales in an area.
Sean Snaith, director of the University of Central Florida’s Institute for Economic Competitiveness, said a lower tax roll was “not that surprising.”
“It’s part and parcel of the adjustment in the [Florida housing market] right now,” he said.
But Judy Preston, the school district’s associate superintendent for financial services, said while new construction was expected to fall, existing property was not.
The impact to the district’s operating budget and tax rate from a reduced tax roll would depend partly on how many other districts saw similar declines and how that affected the state budget.
But the property appraiser’s estimates would generate about $8 million less in funds while the district is in the midst of a seven-year, $890 million building plan.
“If this does materialize, then we would have to make some significant changes in the plan,” she said.
Hopefully, the county is able to work within the confines of the revenue it receives, because demand for Florida mortgages isn’t likely to bounce back in the near future - at least not to pre-2005 levels.
ARTICLE & IMAGE SOURCE: Florida Today
