Local governments are witnessing their first back-to-back declines in quarterly property-tax revenue ever, according to Census Bureau data.
An unwillingness to raise taxes fast enough to counter drops in home prices is to blame, according to a Wall Street Journal analysis of the data.
Total revenue from property taxes across the U.S. fell 3 percent in the fourth quarter of 2010 and 1.7 percent in the first quarter of 2011, compared with a year earlier.
That's a first since the Census Bureau began tracking the data in 1963.
Property taxes aren't providing "the relief governments are looking for to get them out of their fiscal doldrums," says Richard Ciccarone, chief research officer at McDonnell Investment Management in Oak Brook, Ill., according to the Journal.
Property taxes are based on home prices, which continue to lag on the economy.
Nationally, home prices were down 4 percent in April from year-ago levels, according to the Standard & Poor's Case-Shiller 20-City index.
Economist, author and Yale University Professor Robert Shiller, co-founder of that index, says a weak housing sector and persistently high unemployment rates are threatening the country's fragile economic recovery.
"My gut feeling is we might see a continuation of the decline (in home prices)," Shiller says, according to Reuters.
Another 10 percent to 25 percent slump in home prices "wouldn't surprise me at all."
The glut of unsold homes and the large amount of homeowners owing more on their homes than they are worth continue to pressure prices.
"There's no precedent for this statistically, so no way to predict," Shiller says.
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