Declining Valuations Are a Danger to Local Tax Collections

Fortunately cities have mechanisms to help them avoid a death spiral.

Even last year, before the total CRE devaluation from post-pandemic highs took place, the issue of metropolitan tax collections had raised its head.

“The divergence in commercial and residential property values makes it hard to predict the fiscal consequences for local governments broadly,” Thomas Brosy of the Tax Policy Center, a venture of the Urban Institute and Brookings Institution, wrote in 2023. “Total property tax revenue accounts for 30 percent of local general revenue, but the pain from this transition will likely be concentrated in major cities with big commercial districts.”

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Erik Sherman

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