Taxes, spending, and illusory values

200 Old Mill Road. sold 2006, $6.3 million. Going begging today, asking $4.450. Current assessment: $6,389,100.

Just sayin’.

Greenwich resident John Lucarelli has an op-ed in today’s Greenwich Time that raises some good questions about our current Grand List and the spending we’re budgeting based on that list. Excerpt:

Our government needs to realize actual real estate declines over the past decade. The Grand List incorrectly includes a plus-60 percent increase during the 2005 revaluation followed by a token correction of 12 percent in 2009 that was offset by an even greater 18 percent mill rate increase in the same year.

Today’s Grand List is $33.1 billion with a General Fund Budget (not including Nathanial Witherell, Harris Golf Course, and other costs) of $443.5 million which appears to be around our historical average tax rate of 1.3 percent across all properties.

However, taking a closer look, many local real estate experts believe we are trading at 2004 or earlier values which puts our Grand List back below the $20.4 billion level. Applying our current General Obligation Budget of $443.5 million to the 2004 Grand List values gives us an average tax rate of 2.2 percent. So if local experts are correct we have lost more than 40 percent of our real estate values from the 2008 highs on average and at the same time effectively doubled spending relative to our property values.

Using inflated valuations for our properties have allowed elected officials to claim they are maintaining “steady and predictable” tax increases. Accurate valuations of our real estate values will show our taxes have gone up dramatically even as our properties values have fallen.

I’m not ready to sign off on Lucarelli’s estimate of a 40% town-wide decline in house values, but I do think he makes a valid point, overall.