House Prices and City Revenues

Transcription

1 House Prices and City Revenues William Doerner & Keith Ihlanfeldt Florida State University Prepared for The Crisis in Real Estate and its Impact in Public Finance Federal Reserve Bank of Atlanta September 24, 2010

2 What are the Revenue Categories? Category Examples/Description (1) Ad Valorem Taxes Property value taxes (2) General Government Taxes Local option sales taxes, utility service taxes (3) Federal Grants (4) State Grants (5) State Shared State revenue sharing, state payments in lieu of taxes (6) Local Grants Grants from other governmental reporting entities to be used for specific purposes (7) Service Charges Revenues stemming from charges for current services (8) Licenses and Permits Franchise fees, building permits (9) Fines and Forfeitures Fines and penalties; forfeitures include proceeds from sale of property seized by law enforcement agencies (10) Other Sources Transfers Revenues from a constitutional fee officer including payment for goods provided or services performed (11) Other Sources Revenues from proprietary non-operating sources (12) Miscellaneous Impact fees, rents and royalties, contributions/donations 2 / 10

3 City Mean Revenues per capita by Revenue Categories 3 / 10

4 City Mean Total Revenues per capita by City Type 4 / 10

5 Effect of House Price on Ad Valorem Tax Revenues a Symmetric Effect Asymmetric Effect house price (hp) (122) b (228) hp up -222 (.015) hp pop (143) hp pop up.885 (.541) income (2.910) (3.111) up 7643 (10634) population (pop) ( ) (370) R Observations City size = 50, (86) down 464 (174) up 286 (84) up-down -178 (122) a Estimated equations include year and city fixed effects. b Standard errors robust to heteroskedasticity and serial correlation.,, indicate statistical significance at the 10%, 5%, and 1% levels 5 / 10

6 Estimated Effects of House Price Assuming Symmetric Effects Homesteaded Homes Non-Homesteaded Homes Total Revenue Non-SF Tax Base Parcels Avg. Assessed Value Parcels Avg. Assessed Value Millage Rate Per Capita Per Capita Per Capita Per Capita Per Capita Per Capita house price (hp) (220) (34398) (.0142) (11.22) (.0141) (31.54) (.00035) income (18) (792) (.0095) (.27) (.0009) (.45) ( ) population (pop) (2209) (86751) (.0244) (29.47) (.1298) (71.22) (.00339) hp pop (3) (291) (.0001) (.10) (.0002) (.27) (.00000) R a b.924 c City size = 50, (178) (25138) (.0127) (7.50) (.0108) (21.74) (.00035) Federal Grants Licenses and Permits Fines and Forfeitures Other Sources Transfers Impact Fees Utility Services Per Capita Per Capita Per Capita Per Capita Per Capita Per Capita house price (hp) (54.17) (15.92) (31.00) (62.70) (12.44) (17.78) income (2.79) (1.02) (.25) (3.58) (.69) (6.20) population (pop) (294.20) (107.78) (60.72) (614.21) (115.16) (249.26) hp pop (.43) (.17) (.20) (.74) (.15) (.22) R City size = 50, (38.42) (12.18) (22.04) (47.09) (9.84) (15.93) Note: There are 3103 observations unless noted with superscripts as a 3102 observations, b 3101 observations, or c 3035 observations. 6 / 10

7 Estimated Effects of House Price Allowing for Asymmetric Effects Homesteaded Homes Non-Homesteaded Homes Total Revenue Non-SF Tax Base Parcels Avg. Assessed Value Parcels Avg. Assessed Value Millage Rate Per Capita Per Capita Per Capita Per Capita Per Capita Per Capita house price (581) (37598) (.0248) (15.23) (.0184) (33.60) (.00052) hp up (486) (17887) (.0163) (6.68) (.0143) (15.50) (.00040) hp pop (4) (320) (.0002) (.12) (.0002) (.27) (.00000) hp pop up (2) (101) (.0001) (.04) (.0001) (.10) (.00001) up (39310) ( ) (1.3865) (452) (1.0953) ( ) (.04094) R a b.924 c City size = 50,000 down (467) (27135) (.0128) (10.61) (.0148) (14.40) (.00049) up (38) (11636) (.0131) (7.71) (.0108) (8.92) (.00032) up-down (417) (11442) (.0020) (2.50) (.0119) (6.30) (.00015) Note: There are 3103 observations unless noted with superscripts as a 3102 observations, b 3101 observations, or c 3035 observations. Estimates are not reported for income and population, but can be provided upon request. Continued on next slide. 7 / 10

8 Estimated Effects of House Price Allowing for Asymmetric Effects Federal Grants Licenses and Permits Fines and Forfeitures Other Sources Transfers Impact Fees Utility Services Per Capita Per Capita Per Capita Per Capita Per Capita Per Capita house price (61.74) (26.25) (33.97) (109.56) (43.62) (38.79) hp up (76.08) (24.40) (15.82) (89.72) (45.71) (42.76) hp pop (.49) (.24) (.29) (.86) (.35) (.37) hp pop up (.35) (.14) (.06) (.53) (.22) (.23) up ( ) ( ) ( ) ( ) ( ) ( ) R City size = 50,000 down (56.18) (21.25) (23.34) (93.78) (40.87) (38.23) up (65.68) (5.71) (15.76) (49.05) (9.73) (9.66) up-down (35.38) (20.77) (5.50) (83.07) (33.52) (44.36) 8 / 10

9 Elasticity of Average Assessed Value with Respect to House Price a Symmetric Effect Asymmetric Effect ln house price (.0392) b (.0490) ln house price up.1118 (.0385) up (.1934) R Observations elasticity elasticity down elasticity up up-down.8455 (.0392) a All estimated equation include city fixed effects (.0330).8501 (.0564).1118 (.0384) b Standard errors robust to heteroskedasticity and serial correlation are reported in parentheses., indicate statistical significance at the 5% and 1% levels, respectively. 9 / 10

10 Pathways Whereby House Price Affects City Revenue Per Capita Symmetric Effect Price Down Price Up Dollar Percentage Dollar Percentage Dollar Percentage Change Change a Change Change Change Change 1 Non-SF Tax Base Homesteaded Parcels Value of Homesteaded Parcels Non-Homesteaded Parcels Value of Non-Homesteaded Parcels Millage Rate Federal Grants Revenue Licenses and Permits Revenue Fines and Forfeitures Revenue Other Sources Transfers Revenue Impact Fees Utility Service Taxes a All percentage changes are calculated using the city mean total revenue per capita as the base. 10 / 10