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Impact Fees and Transfer Taxes May Make Up Budget Shortfalls

By Lauren Schwartz
April 2020

Current events have taken a toll on state and local budgets for 2020. Consumer spending is down, unemployment is at a record high, and budget shortfalls will have to be recouped from somewhere.

In times like this, local governments sometimes target private property. Everything from transfer taxes to impact fees seem to be fair game. While homeowners may feel helpless when this happens, there is a way to fight back.

Across the country, communities continue to organize to stop local governments from expecting private property owners to fund budget deficits.

History teachers are quick to remind us that past is prologue, and future efforts by local residents can use the following successful community actions that stopped these plans in their tracks.

  • Oregon – The state introduced a resolution in February that would have amended the state constitution and added a state real estate property transfer tax. Eight years earlier, Oregonians amended the state constitution prohibiting taxes, fees or other assessments upon the transfer of any real property. Thousands of people sent emails to their legislators against this 2020 proposal, and it ultimately failed in committee.
  • Madison, Alabama – A week later, City Council members in this town wanted to impose an impact fee on all new construction projects. This would have led to an additional $10,896 cost that would be passed on to homebuyers – the second highest in the nation. Members of the community showed up in force at the City Council meeting, where one Councilmember remarked he received so many emails that he stopped reading them all.
  • Tennessee – In early March, a bill was introduced that would have authorized impact fees on the city of Nashville, right after they were hit with a devastating tornado. Citizens took action and deluge the state legislature with phone calls and emails that successfully saw the bill killed in committee.

In the months ahead, there is likely to be legislative action to make up for budget shortfalls that come from the Coronavirus (COVID-19) pandemic. Local governments could try and fill in these monetary gaps with extra taxes on homes and private property just like Oregon, Madison AL, and Tennessee. When the time comes, contact your local representatives and tell them you oppose these measures.


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