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Homeowners need relief
(Published March 6, 2006)
Rising residential property values should be good news for D.C. homeowners. But for many, even among wealthier homeowners, skyrocketing assessments every year have become a cause of fear. It shouldn't be this way.
The District's elected leaders are quick to blame the city's hot real estate market when residents complain that city assessors have assigned values with double-digit percentage increases to their homes.
Unfortunately, after too many years, the hand-wringing and gyrations that D.C. City Council members and the mayor perform repeatedly in response to the complaints are beginning to ring hollow. They can do much more to ease the fear among D.C. residents that they may eventually be priced out of their homes. Residents should not need to be clogging the administrative appeals process or the courts with requests for relief every year.
The problem is not so much the market-driven assessments as it is what happens after the city reassesses homes. Without intervention by elected leaders, taxes go up as the assessments rise.
Granted, the council last year voted to cap annual residential property tax increases at 10 percent, along with slightly lowering the tax rate and increasing the homestead deduction for primary residences from $38,000 to $60,000. (The homestead deduction, for eligible residents, reduces the assessed value before taxes are calculated.) As a result, many homeowners' tax bills are expected to be slightly lower this year than last year.
But the council will need to continually revisit the confusing, conditional process it devised last year for tax relief unless it commits to a simple process used annually in many other jurisdictions across the country: automatically reduce the residential property tax rate commensurate with the base percentage increase in residential property assessments. Doing so would mean that a homeowner's property taxes rise only if (1) the homeowner makes improvements to the property or (2) elected leaders justify the need for a tax increase as part of the public budgeting process.
In recent years, the District's elected leaders have become so accustomed to having "surplus funds" for spending on pet projects that the term "budget" has become almost meaningless. Rather than using the millions in extra revenue generated by the city's economic boom toward retiring the District's massive public debt, city leaders have continued to spend like drunken sailors on shore leave.
Residential property taxes should not need to rise every year in a city where elected leaders make responsible financial decisions. Homeowners should remember that when they go to the polls this fall.
Copyright 2006 The Common Denominator