Cities With the Highest, Lowest Tax Rates
N E W Y O R K, May 14, 2003 -- Here are the five U.S. cities with the highest and lowest property tax rates.
The Five Highest
1. Bridgeport, Conn.
Nominal Rate (per $100): $6.50 Assessment Level: 70 percent Effective Rate (per $100): $4.55
Although Bridgeport's experience hiking property taxes should serve as a lesson to other financially strapped areas considering similar actions, the city seems to have recovered remarkably well. Last month it was announced that Bridgeport avoided a potential budget gap, due to a little shifting of funds, and the city should be able to avoid raising taxes. It's bound to be an improvement from the bankruptcy blues the city sang 10 years ago.
2. Des Moines, Iowa
Nominal Rate (per $100): $4.44 Assessment Level: 90 percent Effective Rate (per $100): $4.00
Homeowners in Des Moines are very unhappy with talk of rising property taxes. A recent survey conducted by the Des Moines Register found that when comparing sales taxes, income taxes and property taxes, Iowans found property tax hikes the least fair. Some of the proposals floating around to avoid further property tax hikes include rolling out a flat income tax rate of 3.5 percent, assessing all property based on market value (versus the tax assessment) or implementing a statewide property tax.
3. Providence, R.I.
Nominal Rate (per $100): $3.59 Assessment Level: 100 percent Effective Rate (per $100): $3.59
Similar to many other cities on this list, the vast majority of Providence's tax revenue comes from property. Unfortunately, tax-exempt organizations own about 40 percent of the property in Providence. The city, which is projecting a $34 million deficit in 2004, is hoping to cut costs and raise additional revenue — without increasing taxes — from such things as dog licenses and towing fees.
4. Newark, N.J.
Nominal Rate (per $100): $26.40 Assessment Level: 11.8 percent Effective Rate (per $100): $3.12
For the first time in years, Newark homeowners saw properties reassessed — and they weren't happy. Some owners claim their tax bills will be doubled. And in 1997, Newark residents paid more property taxes per capita ($1,591) than the other 49 cities included in the annual tax-burden comparison.
5. Manchester, N.H.
Nominal Rate (per $100): $3.07Assessment Level: 100 percent Effective Rate (per $100): $3.07
Manchester, along with many other New Hampshire cities, is sometimes referred to as a "donor town" for the fact that it largely relies on property taxes for school funding. To be fair, however, New Hampshire's other taxes (sales, income, etc.) are inordinately low. Despite trying economic times, the city ended the year with a surplus of several million.
The Five Lowest
5. New York, N.Y.
Nominal Rate (per $100): $11.18Assessment Level: 6.9 percent Effective Rate (per $100): $0.77
New York City won't be able to boast such low property taxes in future years. (A major reason why it could in the past was that income taxes were a significant source of revenue.) In December 2002, New York City Mayor Michael Bloomberg managed to hike property tax rates to 18.5 percent and slash some $500 million in spending, but the city is still looking at a multibillion-dollar gap.
4. Cheyenne, Wyo.
Nominal Rate (per $100): $7.33 Assessment Level: 9.5 percent Effective Rate (per $100): $0.70
Wyoming is something of an anomaly. Not only does Cheyenne offer low property taxes, but the state has no personal income tax. How can it afford such skimpy tax laws? The state generates significant revenue from oil and mineral taxes, and that seems to be plenty effective. Unlike some of its low-property-tax counterparts, Wyoming is looking at a budget surplus.
3. Birmingham, Ala.
Nominal Rate (per $100): $6.95 Assessment Level: 10 percent Effective Rate (per $100): $0.70
In Birmingham, the issue of raising property taxes has become a religious debate — quite literally. Professor Susan Hamill of the University of Alabama School of Law is arguing that the state needs to change its entire tax structure (property, sales and income) on Judeo-Christian grounds. That is, because taxes are so low, the state can't afford to take care of its poorest residents. Religious fervor aside, the city is still considering shaving $30 million in school spending and raising an additional $10 million in property taxes in order to close the budget gap.
2. Denver, Colo.
Nominal Rate (per $100): $5.68 Assessment Level: 9.2 percent Effective Rate (per $100): $0.52
Ten years ago, Coloradoans approved tax-limitation (and government-spending) legislation called the Taxpayer's Bill Of Rights. These days, in the midst of a statewide budgetary crisis, officials are trying to figure out how to get around the tax restrictions. Denver public schools are aiming to cut $12 million in spending; and because the county is prohibited from raising property taxes, officials are hoping that increased sales taxes will be able to generate enough revenue to close the gap. The mayor is also said to be considering enacting five-day furloughs to reduce costs.
1. Honolulu, Hawaii
Nominal Rate (per $100): $0.37 Assessment Level: 100 percent Effective Rate (per $100): $0.37
Considering that Honolulu's major industry is tourism, it's not surprising that the county generates most of its tax revenue from sales taxes. But it may not stay that way for long. Honolulu Mayor Jeremy Harris just submitted his $1.8 billion operating budget, which would be subsidized in part by a 2.7 percent increase in residential property taxes.
For more, go to Forbes.com..