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January 25th, 2013
The lead article in today’s New York Times, “Towns’ Next Hit from Hurricane is to Tax Revenue,” describes some of the invidious effects Hurricane Sandy may cause, well after all the debris is cleaned up and a new sense of normalcy is established.
Local municipalities rely heavily on property tax assessments and after Hurricane Sandy, some of these towns may experience severe revenue shortfalls in two ways. First, the homes that have been damaged or destroyed certainly are not worth as much, and therefore they will need to have their properties reassessed. Second, the very ground on which the homes stand is now worth less, too, because no one wants to locate in hurricane-prone areas.
The property tax shortfalls will require municipalities to cut back on support for schools as well as first responders such as firemen and police. This in turn will reinforce the shortfalls creating a vicious cycle.
Already, bond agencies are starting to make noises about the financial stability of municipalities in hurricane-ravaged areas. And while the $50 billion of federal support finally passed through the House, its support for municipalities is far too parsimonious to have any real effect.
Experts suggest it may take as much as two years to fully understand all the damage that Hurricane Sandy has caused. Meanwhile, the local towns will continue to struggle to make ends meet.
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