County

Economics, Real Estate, Tax Lesson

In an effort to predict what’s up for property taxes in the new year, we had a chat about home values with the guy everyone loves to hate, Ada County Assessor Bob McQuade. Tuesday he offered some caution about predicting home values for 2009.

The valuations which we all get in the mail around Memorial Day in May are based on values as of December 31. The housing market is in the dumper, the economy sucks, the weather is cold, but depending on your perspective McQuade offers a ray of hope.

Overall he sees very little change in value for MOST property owners.

“Some values will drop by 40% and a few might actually go up. We use the MEDIAN value, rather than the AVERAGE value because it is less subject to wild swings,” explained McQuade.

The realtor folks will show an AVERAGE 13% drop in overall sales prices for November 2008 compared to November 2007. McQuade says the MEDIAN price is off only 4% on existing home sales while the MEDIAN price is off 38% on new home sales. He correctly notes there are a lot more existing homes than new homes, hence the wisdom of using MEDIAN values instead of AVERAGES.

Unfortunately this exercise has little effect on property taxes. Local governments ranging from cities and counties to library and mosquito abatement districts use the value to calculate the annual tax levy–the percent of value to extract from us each year. Lower value usually means higher levy.

These local governments are allowed to raise their BUDGET by 3% and increase levies to meet the budget. Budget approval comes BEFORE levies are calculated, but few governments lower their annual budget due to inflation, salary contract obligations etc.

In the past, local governments crowed they were “not increasing taxes.” Truth was, taxes did indeed increase. Because of rampant growth the LEVIES didn’t increase.

Now, like that giant Ponzi scheme on Wall Street which always paid dividends–until it came time to collect the money–local Idaho property owners will probably see increased levies and tax hikes to pay for all the growth (roads, schools, unemployment, etc.) which simply does NOT pay for itself.

Comments & Discussion

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  1. Put another way… it is the levy rate times the assessed value to come up with your property tax bill. Bottom line is property taxes will go up for most folks.

    Add to this, the legislature mandated an increase in the homeowners exemption to a maximum of 50% or $104k this next tax year. This will presents a tax shift for property taxpayers at the bottom of the pile. If your home is valued at $208k or more for tax purposes you are ok. If it is less than $208k you will get to participate in a tax shift to the bottom and commercial rental property taxpayers. Why ..it is 50% or a max of $104k of your assessed value.

    The whole idea of property tax exemptions was based on ever increasing values of your property. Funny thing happened on the road to prosperity..the bottom fell out and the market went bust. Now folks on the bottom will enjoy higher property taxes.

  2. Tom Anderson
    Dec 30, 2008, 2:31 pm

    I just went in to the new vehicle registration office, just to the East of the new Ada County Courthouse downtown, near Winco, on the 26th around 2pm.

    There were two women enjoying funny videos behind the ‘homeowners exemption’ desk on an office computer. They were just yucking it up the whole time I was there.

    Maybe their jobs could be axed to save us a few bucks if they really don’t have much to do??

  3. Tom. It is so very hard for me to understand, but the truth seems to be that we, as a society, have come to expect as well as accept the horrible waste of our hard-earned tax dollars, by the people we elect to represent us. Government, at all levels, feeds on itself. Growth is a top priority. I have worked in state government and its amazing to hear department heads, at the end of the fiscal year, talking about how they have to find ways to spend their budget surplus because they absolutely cannot end the year with money in the bank. That would mean they would not get an increase in the next year’s budget! They don’t need an increase, but they’re considered bad managers if they can’t spend their money and find a way to convince us (taxpayers) that they’re doing so much good with what we’ve given them, we simply have to give them more. Thats how they end up with employees who have nothing to do. It will not end because nobody elected to public office in our time, or in the foreseeable future, is going to stand up and say, “Hey, we’ve been either stealing your money to put in our own pockets, giving it to our friends and special interest groups, or just generally throwing it away, for too long and we’re now going to stop doing that and start running this government stuff as if it were a business. Look for the surpluses to start building up immediately.”

    That will never happen. Men like butch otter and the liar jim risch will continue to be elected at all levels of government because they’re the ones who have the time and the money and the greed for power that it takes to win elections. Good businessmen, like perhaps yourself, don’t traditionally run for office and don’t run government agencies. The men, and few women who do, are either just like the greedy bast*rds already there, or they soon get caught up in the feeding frenzy, or they quit in disgust.

    Good politicians and good businessmen are not very compatable. Sorry for the rant.

  4. So if our taxes are based on last years Dec 31 value then our next years value better drop. Everyone reading this bolg should plan to appeal their taxes if the value goes up next year. I am in the real estate business and I have not seen a single home sell for more than it was worth on Dec 31 of 2007. The other thing we should all do is call our legistators and tell them that we still need property tax relief and that our cities and counties need to do what the rest of us are doing and that is live on less money. If our mayors and city councils do not cut back then we vote them out next round.

  5. Maybe Ada County Assessor Bob McQuade need to be replace with someone who has some common sence. His pay check hasn’t been affected so how would he understand or care.

  6. It doesn’t matter what the values are overall. The budget will be what it is and the levy adjusted. What matters is the value of your home relative to others. If they all drop or rise equally, no harm, no foul. Some variation will be due to location: mine might change more or less than yours. That’s where the inequity arises. Services remain the same, but taxes go up. It’s a problem with the system.

  7. Idaho does property taxation pretty fairly. My old state used to revalue as often as possible when prices were rising but might wait a decade to revalue when prices fell. Annual assessments are at least honest.

  8. Ripped Off, One More Time
    Dec 31, 2008, 11:31 am

    So, “the MEDIAN price is off only 4% on existing home sales while the MEDIAN price is off 38% on new home sales.”

    That means that existing homes will now be charged a higher percentage of the county’s tax revenue requirement than will new homes.

    And, if you think existing homeowners are already subsidizing growth in the valley, as I do, they will now be carrying an even bigger piece of the burden.

  9. Phil,

    Perhaps you should go back to Real estate school and learn about paired sales before you spew garbage out of your mouth. Any idiot with MLS access can find paired sales where the same house is selling for more in 08 than in 07. Obviously, there are less of them in this market, but in certain neighborhoods they do exist. Get your facts straight before you post this garbage.

  10. No way roto I am hoisting the B.S. flag on you buddy. Give us one example of home that sold in 08 for more than 07. The only way that might have happened would be through manipulation of credit towards renovation or some such MLS shenanigan which is easy to do. Silence Phil and I by providing supporting your evidence.

  11. No matter what home prices do, I’ll betcha our taxes ain’t gonna go down noticeably.

  12. Where did roto come from? BOB McQUADE office?

  13. Tom Anderson
    Jan 2, 2009, 10:46 am

    Bob McQuade: Thanks for checking, that is probably enough of a slap on the wrist.

    Having been a software trainer with CompUSA for years, I would bet though, that there is no software program where two people would laugh at the screen for 10 minutes straight, trading each other amused glances, and never touching the keyboard.

    If you wanted to take this further, I could meet you down there to see the people involved and point out the workstation where it happened. (When standing facing the vehicle registration desk it was at my 2 O’clock position)t2anderson@hotmail.com

  14. The property tax system is a Ponzi scheme. New growth tax pays for the pile of debt caused by unpaid for infrastructure caused by developers. What happens when the jobs dry up?

  15. John Mitchel
    Jan 7, 2009, 12:54 pm

    Another little known ploy in the Idaho municipal budget process is the proclivity to budget a line item for much more than is required to ACTUALLY fund it. They do that little trick out here in Eagle and call it a “carryover” (they don’t like it to be called a “surplus”; that has bad implications). As an example, they budgeted $8438.00 for “Public Relations” under the Public Affairs and Community Relations section of the Executive Department: as of June 08 they only used $441. They will use this excess as a “carryover” (translated “slush fund” for OUR discretion next year since the voters are too dumb to allocate funds properly). (This is how they funded that “much needed” bike park off Hwy 55. Right now we have a 2 million dollar deficit in our little Eagle City budget. Are we reducing expenditures?? No. Staff?? NO.

    Chet has it pretty much dialed in—insatiable government thirst with very little reponsibility.

    There is one hope on our little council—Councilman Al Shoustarian who raised some red flags last summer—-rest of the council ignored him.

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