Higher taxes

Among the many aspects of the current financial crisis is the nationwide decline, with exceptions in some areas, in the market value of homes. For decades an investment in a house has been considered prudent for many reasons, including the likelihood that the property would increase in value over time. That has been the case, and Americans have the highest percentage of homeownership in the world.

Now that home prices are being affected by the economy, some taxpayers are wondering if they will also enjoy a decrease in property taxes based on assessed valuations.

As a recent Southeast Missourian story detailed, of 18 local taxing jurisdictions -- school, libraries, fire protection districts, city governments -- all but one are raising their levies. In addition to declining property values, assessed values on personal property -- cars, boats, manufacturing equipment -- have dropped.

In Missouri, how much these taxing entities can raise rates is limited by the constitutional provisions known as the Hancock Amendment. Tax increases cannot, under Hancock, generate more revenue than the rate of inflation, excluding the value of new construction.

When the assessed value of property goes up, as it has steadily for many years, taxing entities must adjust their tax rates to keep revenue within the Hancock limits. So when assessed values go down, taxes can go up without exceeding those revenue limits.

Tax increases are never popular. But the cost of providing essential government services continues to climb. Until someone comes up with a better way to balance the need for tax revenue with the ability of taxpayers to bear that burden, higher tax bills will be something to look forward to, even when the economy sours.