Property tax revenues for U.S. states and local governments reached a record high in the final quarter of 2013, according to Census data released on Tuesday showing the housing recovery is finally reaching school districts and cities' budgets.
According to the Census, total property tax revenues in the fourth quarter were $182.76 billion, the highest quarterly amount on records going back to 1992. That was also about 3 percent more than the $177.7 billion in the fourth quarter of 2012. Most property taxes, 98 percent, are collected by local governments.
For the year, property taxes totaled $488.34 billion, 3 percent more than the $473.71 billion in 2012 and nearly 5 percent more than the $466.98 billion in 2011.
A booming housing market led property taxes to increase steadily in the early years of this century. They peaked in the fourth quarter of 2009 at $182.48 billion, long after the housing bubble burst. Property tax revenues do not immediately react to housing price changes because most jurisdictions assess real estate values only once every three years.
When home sales and prices began picking up again, local governments grew hopeful for their long-suffering budgets. Property taxes provide almost all the revenue for most school districts, cities and counties.
INCOME TAX GROWTH SLOWS
The Census data also shows that income taxes continued to rise at the end of 2013, but at a slower pace.
The Census redesigned its survey of governments and selected a new sample, causing it to release both the third- and fourth- quarter reports at the same time.
Early in 2013 taxpayers took advantage of expiring federal tax breaks, selling off investments and accelerating bonuses, which inadvertently gave a lift to states' revenues. Many states pattern their tax codes after the federal government's and income taxes are states' leading source of revenue.
According to public policy researchers at the Rockefeller Institute at the State University of New York, the first two quarters of 2013 represented the strongest growth in personal income taxes since the start of the 2007-09 recession.
Census data shows that for that first half of 2013, state and local individual income taxes totaled $193.5 billion, 17 percent more than the first half of 2012.
For all of 2013, individual income taxes totaled $344.47 billion, far greater than 2012's total of $313.15 billion.
The effects of the acceleration have begun to subside, though, just as states hammer out their budgets for the fiscal year starting on July 1.
Individual income taxes totaled $73.49 billion in the third quarter of 2013 and $77.49 billion in the fourth. Both were higher than in the same time periods in 2012, but the increases were slight - individual income taxes were $70.48 billion in the third quarter of 2012 and $76.66 billion in the fourth.
In the third quarter of 2013, corporate income taxes were $10.45 billion, compared with $10.41 billion in the third quarter of 2012. In the fourth quarter, they hit $10.75 billion, compared with $10.43 billion in the fourth quarter of 2012.
Sales taxes were also stronger in the final two quarters of 2013 than in the previous year. They totaled $80.27 billion in the third quarter, compared with $73.97 billion in the third quarter of 2012. In the fourth quarter they reached $82.56 billion, up from $79.84 billion. (Reporting by Lisa Lambert; Editing by Dan Grebler)
