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The Presidential Election is Over. It’s Time to Think Local.

In the last weeks, our attention has (rightly) been focused at the national level, and in a time when the word “unprecedented” has been used so often it barely registers, it was hardly surprising that the 2020 Presidential election was one for the record books.  But while what happens in Washington clearly affects each of us, the local politics and the fiscal health of our hometowns and cities have an arguably greater effect on our lived experiences.  

Think about your daily choices and environment.  This morning, did you make your coffee with water from the sink, or do you use bottled water because it’s safer?  Do you send your kids to public school, confident that they’re getting a quality education, or do you pay for private school or tutors to ensure they get what they need?  Is your neighborhood walkable?  Is there trash on the sides of the roads?  Do you have easy access to fresh groceries?  Can you take public transit or do you have to own a car to get around?  The questions could go on and on, but the point is this: what happens at the local level matters to virtually every aspect of our daily lives; and everywhere we look, COVID-19 has cities and towns across the United States struggling to make ends meet, and that means a diminished quality of life for many of us.

So, how bad is it?  According to the National League of Cities 35th Annual City Fiscal Conditions survey, just shy of 90% of cities will be less able to meet their fiscal needs this year than they were last year.  Why? The COVID-19 driven decline in tax revenues.  The general outlook is bleak, but not all tax bases are created equal, and that’s where the Robert Schalkenbach Foundation, and specifically the Center for Property Tax Reform (CPTR), come in.

Sales and property taxes are the two most commonly relied on revenue sources for U.S. cities, with a smaller number (only about 10%) looking to wages as their major tax base.  Sales tax is highly elastic, showing the nearly immediate effects of trends in consumer spending, which as we all know, contracts in periods of economic stress.  A quick scan of the U.S. Census’ quarterly summary of state and local tax revenue data shows a more than 13% decline in seasonally adjusted sales tax revenue in the second quarter of 2020, as compared to the same time period in 2019.  Given the nation’s high rates of unemployment, it’s not surprising that income taxes (corporate and individual) have fared even worse, dropping nearly 39% in the same time period.  Property tax, in contrast, is far less reactive to short term economic stress, and although many residents are struggling to afford their mortgages in these trying times, the U.S. as a whole saw an increase of just over 1% in property tax revenues from Q2 2019 to Q2 2020.  

That’s where CPTR comes in.  With the Center’s expertise in working with municipalities to explore how this highly stable revenue source can be designed to enhance equity and incentivize investment and desirable land uses, we are poised to offer an economic policy lifeline to cities and towns nationwide, right when they need it the most.  And with that in mind, I’m very excited to announce that we’ll soon be growing the Center to include a full-time Community Outreach and Engagement Coordinator.  This Coordinator will help facilitate the Center’s existing efforts and work to grow its impact and reach to include new locales across the U.S. and beyond.

In next month’s newsletter I look forward to introducing our new staff person.  Until then, if you are interested in learning how CPTR can help your hometown thrive, even in a pandemic economy, check out the Center’s website, or contact [email protected].

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