The Tipping Point: Beacon Falls is at the edge. Waterbury went past the tipping point eight years ago. Naugatuck two years ago. New Haven fell over last year. Detroit and Philadelphia fell in more than 10 years ago.
Property taxes affect monthly payments for real estate owners. Monthly payment amounts control the real estate market. Just like small changes in interest rates create investment bubbles or collapses, property taxes have a highly leveraged effect on real estate values through the monthly payment.
Beacon Falls property taxes cannot be raised again. How many tax sales have we had in the past four years? Many. How many tax sales in the previous 40 years? Almost none. If you raise property taxes again you not only drive down the value of all property in the town, you also drive fixed-income people to foreclosure, which further erodes property values, and starts the tipping point from which there is no escape.
People buying homes look for good community but they also are attracted to rising real estate values. Waterbury and Naugatuck property values keep falling because as they fall more people leave and more properties go to default and foreclosure. Foreclosures and tax sales really drive down the value of all properties in the area. As you drive down values and default weak property owners you destroy the grand list horizontally with less healthy owners. That means there is a smaller base of financially healthy to bear the tax load, which raises taxes on them again, which drives the values down again, which creates more tax defaults, so on and so on, until the town must go bankrupt to clear out the fiscal burdens. Waterbury has no escape. Naugatuck is unlikely to escape.
Yes, Beacon Falls needs a fire engine and possibly some fancy streetscapes, but a normal family would realize they must cut back on something else to pay for the necessities. Why does the town think they exist above the laws of nature? How can tax revenue be raised forever without regard to the reality of the real estate market which supports our tax base? We should have been saving for the fire engine, but we didn’t and now we must cut back on something until we pay for one. We cannot just destroy our grand list so as to continue spending more and more.
Even better, cut property taxes just enough to start a virtuous circle: cutting taxes allows mortgage payments to rise, which boosts property values, which attracts new buyers to the town, which helps drive up property values more, which makes it easier to spread the tax burden over more people and the town will soon collect more revenue than before.
You might look at a tax cut as an investment in our town. We need a compelling and intelligent leader to show the way to a bright future, a future that starts with the mature realization that we must make choices. We must have some discipline in purchasing things, hiring people, enjoying life and that making hard choices (in cuts) never gets easier with time. The longer we put off making the necessary cuts the more drastic the cuts must be. Just ask the various towns in Rhode Island, or go visit Detroit.
Please do not push Beacon Falls over the tipping point.