The recession is starving the government of tax revenue, just as the president and Congress are piling a major expansion of health care and other programs on the nation’s plate and struggling to find money to pay the tab.
The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.
Other figures in an Associated Press analysis underscore the recession’s impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever.
The last time the government’s revenues were this bleak, the year was 1932 in the midst of the Depression.
“Our tax system is already inadequate to support the promises our government has made,” said Eugene Steuerle, a former Treasury Department official in the Reagan administration who is now vice president of the Peter G. Peterson Foundation.
Channel3000.com recently spoke with Dane County Treasurer Dave Worzala on the growing property tax delinquencies:
While there aren’t any figures for this year, property tax delinquencies have been on a steep climb the last few years, WISC-TV reported.
Delinquencies increased 11 percent in 2006, 34 percent in 2007 and 45 percent in 2008, where there is now more than $16 million in unpaid taxes in the county.
“It affects us in that we have to be sure that we have enough resources to cover county operations throughout the year even though those funds aren’t here. And we do that, we are able to do that, but 40 percent increases over time become unsustainable,” said Dane County Treasurer David Worzala.
“I can see that there are probably some people that either lost their jobs or were laid off, they’re going to have a harder time paying their taxes,” said Ken Baldinus, who was paying his taxes Thursday. “But I’m retired, so we budget as we go.”
Big portions of those bills must go to school districts and the state. Worzala said the county is concerned about the rise in delinquencies because if the jumps continue the county could run into a cash flow issue in paying bills.
Resolution of the Madison School District – Madison Teachers, Inc. contract and the District’s $12M budget deficit will be a challenge in light of the declining tax base. Having said that, local schools have seen annual revenue increases for decades, largely through redistributed state and to a degree federal tax dollars (not as much as some would like) despite flat enrollment. That growth has stopped with the decline in State tax receipts and expenditures. Madison School District revenues are also affected by the growth in outbound open enrollment (ie, every student that leaves costs the organization money, conversely, programs that might attract students would, potentially, generate more revenues).