The tax deal may have stopped Washington from taking a bigger bite out of our income taxes next year, but that doesn't mean taxes on other things aren't going to rise. And if you're a homeowner, you could be in for a jolt when your next year's property tax bill arrives.
Cities from coast to coast are being forced to boost property taxes to cover the rising cost of health care for municipal workers and a larger pension payout as more workers reach retirement age.
What the increase in property taxes is will be determined by where you live and a quick review shows they range from a high of nearly 14% to somewhere just below 2%.
Some Pennsylvania communities are in the high end. The township of Upper Moreland is hiking property taxes 13.6% in 2011. In nearby Philadelphia, property taxes have already gone up 9.9%. In New York, Saratoga Springs will get 4.4% more in property taxes in 2011 while Troy will increase taxes by just 1.9%.
According to municipal workers, a number of factors are driving the increases, including the need to make up losses from the financial crisis and plummeting sales tax receipts. Add that to the fact that more baby boomer workers are retiring next year when they hit 65 and you get the picture. Some cities are on the verge of bankruptcy and have already skipped payments to their pension funds.
Municipal union executives are blaming irresponsibility on the part of local public officials who for years and years have not been funding their pensions properly. Some cities have also pushed unions to reopen contracts in an attempt to reduce benefits or raise workers' contributions for pensions and health care. This has sparked the usual resistance from unions who claim it's unfair to penalize workers for a financial crisis that isn't their fault.
Cities used to turn to states for help with revenue issues, but state aid has been reduced as well but states have their own similar problems. Unable to fill in the in their financial coffers, many states have already increased the retirement age and required years of service for new hires, increased the amount new workers pay toward their benefits and reduced annual cost-of-living increases.
For example, the Illinois state legislature has passed a bill requiring newly hired police and firefighters to retire at age 55 instead of 50 in order to receive full benefits, among other changes. The bill has gone to the governor who is currently reviewing it.
