The other situation would be California's Prop 13, which locks down property tax rates to when you bought the house. It keeps long term residents in, but has had some unexpected consequences and its part in California's housing crisis is not to be ignored.

https://edsource.org/2022/californias-prop-13s-unjust-legacy...

That's really weird though, because it can be passed down to heirs, right?

Indeed! Not everyone has the capability to up and move. I've recently heard that having a good community around you is one of the best things for healthy longevity, it becomes even more difficult to do this.

It also happens to be an issue that I am facing, move for more closer alignment to my ideals and abandon my established community, or stay and try to change where I am.

General question related to this: are the spiraling property taxes related to similarly spiraling home values?

Strong correlation, but not exclusively. Plenty of areas regularly vote for bond measures paid by increases in property taxes. So you can get increases of BOTH rate and value.

I don’t know what the alternative is, unless we find a completely different funding scheme. While I do feel for seniors who get priced out of their homes, that feeling it mitigated somewhat knowing they are in that situation because they are sitting on a large asset. If we want to treat housing as an “investment” we have to take the good with the bad.

Couldn't say from NH. It's the only source of revenue, so they go up no matter what housing values do.

Yeah... I hate property taxes as a concept. That you can lose your property due to simply living another year is kind of messed up. At least, it should be locked to value at purchase adding only inflation. My house (according to the city/county) is worth 3x what I bought it at 5 years ago... If it goes up this much again, taxes will likely reach close to the mortgage payment. It's simply not right.

I'd be happy to move right now, but interest rates effectively prohibit that as if I had the same amount burrowed my mortgage payment would be over twice what it is now.

This- fixing property tax to purchase price- is exactly what California's Prop 13 did, which has ended up gutting California local governments (https://edsource.org/2022/californias-prop-13s-unjust-legacy...). It has resulted in lots of people who aren't paying their fair share into the upkeep of their community, and driving CA house prices insane. It's been a giant fiasco, hurting California's growth, and locking people into their house so they can't move: https://www.nber.org/digest/apr05/lock-effect-californias-pr...

So, not a good solution. Got another idea?

Is the claim here that the city's spending needs went up much faster than inflation? If so, why?

Not OP, but one reason could be that if a lot of early infrastructure was debt financed, cities will have an increasingly harder time paying for infrastructure maintenance over time

California's local governments have hardly been gutted. They mostly operate like local governments in every other state. Public school spending per pupil is above the national average.

The situation prior to Proposition 13 was also a fiasco with rapid increases in wasteful government spending. I would be happy to vote for reasonable reforms but only if they keep effective spending caps in place.

Don't really buy it. Unchecked govt spending is different than inflation, which could be accounted for in the baseline property tax rate(s). Having property taxes triple in the course of 5 years is NOT okay in any way, shape or form. This has happened to me since buying/mortgage 5 years ago.

As it stands, for one-off spend and in general there are other means of taxation that can be utilized. It doesn't need to be property taxes.

> At least, it should be locked to value at purchase adding only inflation

This completely eliminates the social upside of property taxes compared to other forms of taxes

Couldn’t that social upside be captured through means that don’t force people from their homes?

It seems like the use of property tax as a major local finding mechanism has a lot of negative effects, from poor school performance to inflated housing costs.

There's very little correlation between per student costs and performance. It's very common for urban schools to have very poor outcomes with very high costs per student compared to suburban towns with much lower costs and much better performance. The state where I live also equalizes educational funding to some degree.

Is your suggestion property taxes could go to zero without an impact on schools?

Regardless, it’s besides the point. The point is there are different potential mechanisms for raising money that don’t have the same second and third order effects of property taxes.

Obviously there are limits to state co-payments and towns also have expenses other than schools--although schools tend to be the majority from property taxes. But, in general, yes I think it's healthy to have significant local revenue pay for local costs. I really don't want the federal government to be paying for all local elementary and high school education.

I think there are valid concerns with an overly centralized funding point. But the counter argument to overly localized funding is that poor areas get less resources because they tend to have lower property values. I don’t think that’s a way to level opportunities.

The current system is a mix, however.

Its called a tax lien. Basically, if you can’t pay your property taxes, you still get to stay in your home, but the unpaid taxes must be paid (with interest) before the home can sold or otherwise transferred (with some rare exceptions for like death of a spouse, etc.)

I was referring to something different.

Property taxes are the way local municipalities raise funds. Tax liens are just the same property tax. I’m suggesting there can be other funding mechanisms, from VAT to income or even automation taxes that raise that money without the same tradeoffs.

Sure, you could charge people directly for services.

Want school? Pay for school tuition. Want roads? Pay the toll. Want fire service? Pay for fire subscription.

etc.

I'd be happy to live in such community but others want men with guns to come toss them out of their house if they don't have the money for the extra services. To me that sounds worse but to each their own.

Would you really though?That sounds like you'd just get nickle and dimed to death. Look at what happened with streaming services. It used to just be Netflix, but now that's but one service of many. So some people pay $100/month to get all the services, other people pick and choose, others have moved back to torrenting media. I dunno about you but it seems like things were better as a viewer when it was just Netflix and Hulu. And that's just for watching movies and tv. I can't imagine what it would be like if it was for critical things like the police. Actually, wouldn't a police subscription devolve with the existence of rival police departments, and then they'd actually fight with each other instead of chasing criminals? Or they'd come by your house and demand payment for the police and unless you paid, a thief might just happen to know your house was unprotected and burgle your house? The incentives under that system seem all sorts of perverse.

Fire subscription seems like it would only be workable in a barely suburban or actually rural environment, where your house burning down won't also catch your neighbor's house on fire. Anything more dense and the whole block would go up in flames, including your house, if one of your neighbors didn't pay and the fire department didn't immediately extinguish the fire in their house.

The state I live in capped property tax increases (Massachusetts)

https://en.m.wikipedia.org/wiki/1980_Massachusetts_Propositi...

It’s as very expensive state but the taxes are limited. And every time a community needs a school or some infrastructure it becomes an old (fixed income) vs young battle.

I live in an ex-urban town and there's very little commercial development in town except at the fringes. However, town services and school need to be paid for and this was becoming an issue without significantly raising property taxes--which aren't super-high but it's also not an especially wealthy town as a whole.

We recently went through a couple of very contentious town meetings about doing a rezone in one of the two parts of town that has some commercial development basically so distribution centers can be built there. But make no mistake. The town as a whole would be perfectly happy to have near zero non-farm commercial activity if that were financially feasible.