Less income, more outgo

The recent revelation that lower property values are not being offset by lower taxes doesn't sit well with some citizens.

Nor should it.

For some reason we can't comprehend, the taxpaying public is essentially being told that even though their property is worth significantly less than what it was a few years ago, they should be happy that their taxes haven't increased even more than they have.

Lauded is the fact that "only" 26 of 44 taxing entities in Kootenai County this year took the maximum 3 percent increase allowed by state law. Because the value in those taxing districts is going down, you're told that levy rates must go up to compensate for that lost value. This formula suggests very generally that the taxing districts' budgets should remain flat or reflect modest increases.

Levy rates are determined by dividing property tax dollars by the value of the property within that taxing entity. As onerous as the suggestion might be to taxing entities, why not cut spending to the point that levy rates will decrease in proportion to falling property values? More to the point, who's really focused on levy rates anyway? Isn't the real issue how much in property taxes those 44 districts are collecting, and how much that costs you?

Too often, particularly when it comes to government operations and machinations, things are done backward. Most taxing districts figure out what they want to spend based primarily on what they spent the year before. Little consideration is given to levy rates and assessed valuations in that district; the target is how many actual dollars need to be brought in, and can that figure fit into last year's spending level plus up to a 3 percent increase allowed by law.

What makes sense and would be much more fair is that a taxing entity would first look at the overall assessed value in its district - that value is essentially the asset from which it derives revenue - and compare it to the previous year's. If, say, the assessed value has fallen 5 percent, a logical budgeting approach would be to reduce spending at least 5 percent.

That approach would result in property tax savings for residents when their property is worth less. Not coincidentally, when property is worth less, people tend to be struggling more, so the savings to citizens becomes critical. And if the taxing entities are disciplined, it would not necessarily mean property taxes increase when property values start to rise again.

But until citizens insist on change, you can bank on the status quo. Your taxes will continue to go through the roof even as your assets are crashing through the floor.