Mill(stone) Rate

2011 Hennepin County Property Taxes

Every time I think I'm a Democrat, they do something stupid. Every
time I think I'm a Republican, they do something greedy.

--Jay Leno

What do you call proposing to steeply raise property taxes against a backdrop of weak home prices and an economy just emerging, maybe, from recession?

How about, greedy and stupid?

Like a couple hundred thousand other homeowners in Hennepin County, I got my proposed 2011 property tax statement yesterday.

My assessed tax value: down 3% from last year.

My proposed 2011 property taxes: up 12%.

WTF?!?

Add: Arrogance

How can property taxes being going up at the same time assessed tax values are going down?

Because of something called the "mill rate," or the percentage tax levied on each $1 of assessed value, which has been increasing.

Good thing my Realtor's income, 401(k), and interest on my savings have all gained so smartly the last year, allowing me to easily foot that increased property tax bill.

Not.

Most homeowners -- myself included -- will figure out some way to come up with the extra dough.

But we'll have to compensate by finding savings elsewhere.

Such does not a robust recovery make.

P.S.: And no, I'm not expecting a 12% increase in the services I receive for my increased property taxes.

The Fed & Unintended Consequences

The Fed, Commodity Prices & Economic Recovery

Twelve hundred miles (give or take) from Wall Street, me thinks that a not-so virtuous cycle has emerged regarding the government's various and sundry efforts to nurse the economy back to health.

The dynamic goes something like this:

Step 1: the Federal Reserve and Treasury essentially borrow and/or create money -- at this point, trillions of it -- then direct it where they think it's most needed (not necessarily to me or you . . . but that's another post).

Step 2: the markets ("Mr. Market") take note of all that deficit spending, and drive down the dollar while pushing up commodity prices.

Step 3: elevated commodity prices retard recovery.

To take just one example, at $80 a barrel, oil is likely twice what supply and demand would otherwise dictate at the moment. Meanwhile, "stores of value" like gold -- now around $1,100 an ounce -- drain money that would otherwise fund economic growth.

Step 4: the Federal Reserve and Treasury, noting anemic growth, serve up another helping of stimulus cum deficit spending (see Step 1).

How long can this go on?

As many commentators have now noted, eventually one of two things happen: 1) economic recovery kicks in, and the government can taper its rescue efforts; or 2) the U.S. bumps up against the natural limits of its ability to borrow (not a bright line).

The "canary in the coal mine" for this kind of kind of fiscal/monetary tightrope is Japan, which is a good 15 years ahead of the U.S. on its trajectory of boom, bust, and (non)recovery.

The lesson for policymakers would seem to be, "don't do what Japan has done."