EDITOR’S NOTE: Contributing Columnist, Steve Nicklas, expresses his views and insights on various topics of local interest (Nassau County, Amelia Island and Fernandina Beach, Florida) in Steve’s Marketplace column. _____________
Some believe that another shoe could drop on the U.S. economy through a rapid downturn within commercial real estate.
The impact of a slowing commercial sector has been delayed, as compared with residential real estate. There have been copious reports of the 20 to 40 percent declines in residential real estate values across the country.
Another consequence of the economic downturn is not as publicized. It is also related to real estate — and the falling values within both the residential and commercial sectors. And how this translates into lower revenues from property tax dollars for cities, counties and states.
Budget shortfalls could drop like a steel-tipped boot on the stair-step levels of government. Within the state of Florida, the shortfall is estimated to be in the billions by the next budget year. This is tied to the loss of value in real estate — residential and commercial — and how these will detract from tax receipts.
In Nassau County, Clerk John Crawford has forewarned commissioners about what lies ahead. The pattern of increasing tax revenues and commensurate government spending no longer works here.
Within the next two years, Crawford anticipates a significant decline in property tax receipts. This is because the reductions in assessed values have been delayed (for some reason) in this area — but now loom like a tropical storm. Property values have certainly fallen here and new construction has sputtered.
This calls for either a reduction in the size of government, and services, or a substantial increase in property tax rates to offset the decline in assessed values (an unpopular recipe with the electorate, by the way).
County officials got a head start in this direction with their last budget. They reduced the county budget by 15 percent through various cutbacks, and have imposed a hiring freeze.
Within the city of Fernandina Beach, officials seem unfazed about what lies ahead. They do not have anyone acting in the gatekeeper capacity of a county clerk (Crawford), and there seems to be little interest in cutbacks or reducing services. In fact, city officials increased property tax rates this past year.
Other cities and counties are also feeling the financial pinch. The idea of smaller government is not a popular one — at least within the ranks of elected officials. This is the only option, however, other than substantially increasing property tax rates. Let’s see how that goes over with a testy and vigilant public.
(Steve Nicklas is a financial advisor who lives on Amelia Island. He can be reached at 904-753-0236 or send eMail to [email protected])
TAKE AN INVESTMENT CLASS AT LOCAL NASSAU CAMPUS OF FLORIDA STATE COLLEGE
A four-week continuing education class, “Investing in Today’s Financial Markets,” will be offered beginning March 9, 2010 at the Florida State College’s Nassau Center in Yulee, Florida. The class, taught by local financial advisor Steve Nicklas, will cover many aspects of the financial markets, including stocks and bonds and popular investment vehicles such as mutual funds.
Sessions will be from 6:30 to 8 p.m each Tuesday. The class schedule is: March 9, 2010 investing in stocks; March 16, investing in bonds; March 23, investing in IRAs, 401ks and other retirement vehicles; and March 30, 2010 devising a financial plan.
The cost is $36, which includes all materials. Students must pre-register at the college and makes checks payable to Florida State College. The college can be reached at 904-548-4432.