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Finance and Economics Discussion Series: Data for paper 2010-49

The Housing Crisis and State and Local Government Tax Revenue: Five Channels

Byron Lutz, Raven Molloy, and Hui Shan

Figure 1 Panel A: Percentiles of the Distribution of House Price Appreciation Across States

Year 10th Percentile 25th Percentile 50th Percentile 75th Percentile 90th Percentile
2000 3.7 4.3 6.4 9.7 12.6
2001 3.2 4.1 5.6 9.7 12.4
2002 2.9 3.9 5.8 10 12.5
2003 2.7 3.9 6.4 10.7 13.5
2004 4.2 5.6 10.1 12.8 19.1
2005 4.4 6.4 9.8 14.8 20.9
2006 0.2 2.7 5.8 8 13.8
2007 -6.5 -3.2 0.6 2.6 4.5
2008 -15 -10.8 -7.1 -4.1 -1.8
2009 -13.6 -10.8 -5.7 -2.4 -0.9

Figure 1 Panel B: Percentiles of the Distribution of Home Sales Growth Across States

Year 10th Percentile 25th Percentile 50th Percentile 75th Percentile 90th Percentile
2000 -6.5 -3.8 -0.7 2.9 4.3
2001 -1.1 0.8 5.1 8.7 15.1
2002 -0.7 1.8 5.3 10 13.6
2003 -0.3 1.5 6.8 9 13.6
2004 4.6 9.2 12.6 16.8 24.3
2005 -1.2 3.7 6.2 10 14.3
2006 -22.7 -12.8 -5 1 6.7
2007 -23.1 -15.1 -9.1 -5.1 -3.3
2008 -27.4 -25.4 -19.3 -14.1 -8.2
2009 -10.3 -6.1 0.7 7.3 16

Figure 2: State and Local Tax Revenues

Calendar Years Total (% change) Property (% change) Sales (% change) Individual (% change)
1990 5.35 8.53 3.49 4.80
1991 4.55 7.79 0.41 3.86
1992 7.21 5.92 9.08 6.92
1993 4.32 2.52 3.61 4.54
1994 3.73 4.44 3.36 3.20
1995 5.17 2.54 10.91 4.45
1996 7.54 6.07 6.71 11.66
1997 5.46 4.07 4.94 8.27
1998 5.40 2.96 6.85 11.74
1999 4.99 5.26 7.10 6.37
2000 7.71 4.19 8.42 13.51
2001 2.15 5.52 1.34 1.81
2002 0.33 7.85 0.96 -11.30
2003 5.24 7.80 3.70 1.49
2004 8.60 7.44 8.87 10.17
2005 10.18 7.97 8.17 12.71
2006 7.10 6.82 6.50 10.12
2007 5.46 7.15 2.92 7.32
2008 2.49 4.18 0.36 3.85
2009 -5.60 5.45 -7.41 -17.18

Souce: Census Bureau, Quarterlyl Summary of State and Local Tax Revenue

Figure 3: Local Property Taxes

state Property Tax Fraction of Total Tax - 2000 Property Tax Fraction of Total Tax - 2007
AK 0.8065557 0.7696174
AL 0.3898085 0.3970637
AR 0.4435126 0.4003553
AZ 0.6896569 0.5930996
CA 0.6316796 0.6772971
CO 0.5992069 0.6011545
CT 0.9867947 0.978539
DE 0.7862145 0.7556763
FL 0.7789888 0.7846952
GA 0.6039192 0.6363236
HI 0.7858214 0.7711141
IA 0.8947318 0.8100412
ID 0.9455609 0.9088642
IL 0.8276455 0.8157396
IN 0.8863682 0.8645907
KS 0.7675616 0.7588502
KY 0.5379279 0.547571
LA 0.3925456 0.3884571
MA 0.9687138 0.9661409
MD 0.5737883 0.4972022
ME 0.9793125 0.9877194
MI 0.8942879 0.9221541
MN 0.9423519 0.9233622
MO 0.5897348 0.6164414
MS 0.9199107 0.9233395
MT 0.9556679 0.9511055
NC 0.7522793 0.7448204
ND 0.8805422 0.8471473
NE 0.7754123 0.7770252
NH 0.9821879 0.983943
NJ 0.9833552 0.9789358
NM 0.553798 0.4946468
NV 0.6379568 0.6500093
NY 0.5584002 0.5373883
OH 0.6538457 0.6638597
OK 0.540191 0.5244129
OR 0.8045061 0.7863028
PA 0.7049036 0.7188922
RI 0.9863 0.970993
SC 0.8437326 0.8378243
SD 0.7822703 0.7285506
TN 0.6153784 0.6273668
TX 0.7989984 0.819554
UT 0.6879075 0.6754991
VA 0.7056165 0.729297
VT 0.9620251 0.9448386
WA 0.6154034 0.5776464
WI 0.9381815 0.9356124
WV 0.8356735 0.7741663
WY 0.7604203 0.7616147

Source: Census Bureau, State and Local Government Finance Data.

Figure 4: House Price Appreciation and Property Taxes

Calendar Year LP House Price (Percent Change) Property Taxes (Percent Change)
1989 8.13 12.19
1990 2.56 8.53
1991 -1.12 7.79
1992 -0.01 5.92
1993 1.52 2.52
1994 1.97 4.44
1995 1.85 2.54
1996 2.75 6.07
1997 3.64 4.07
1998 7.25 2.96
1999 7.40 5.26
2000 10.07 4.19
2001 9.32 5.52
2002 9.20 6.93
2003 10.02 8.72
2004 15.31 7.44
2005 16.68 7.97
2006 5.49 6.82
2007 -5.14 7.15
2008 -14.39 4.18
2009 -11.84 5.45

Note: 2002Q2 property tax value is an estimate

Source: LoanPerformance; Census Bureau, Quarterly Summary of State and Local Tax Revenue

Figure 5: Distribution of Change in Property Tax Collections

Percent Change in Property Tax Collections Density
less than -.4 0.001
between -.4 and -.36 0.000
between -.36 and -.32 0.001
between -.32 and -.28 0.000
between -.28 and -.24 0.001
between -.24 and -.20 0.001
between -.2 and -.16 0.003
between -.16 and -.12 0.001
between -.12 and -.08 0.006
between -.08 and -.04 0.014
between -.04 and 0 0.042
between 0 and .04 0.177
between .04 and .08 0.361
between .08 and .12 0.254
between .12 and .16 0.096
between .16 and .2 0.020
between .2 and .24 0.012
between .24 and .28 0.006
between .28 and .32 0.004
between .32 and .36 0.001
between .36 and .4 0.002

Note: The state is the unit of observation. Property tax collections include both state and local government revenue. The data span 1976 to 2007.

Figure 6 Panel A: Change in Property Taxes Following a House Price Decline

  0 Years Since House Price Decline 1 Year Since House Price Decline 2 Years Since House Price Decline 3 Years Since House Price Decline 4 Years Since House Price Decline
75th Percentile 10% 9% 7% 8% 8%
25th Percentile 4% 3% 3% 2% 2%
Mean 7% 6% 5% 5% 5%
Episodes         153 Episodes

Figure 6 Panel B: Change in Property Taxes Following a Large House Price Decline

  0 Years Since House Price Decline 1 Year Since House Price Decline 2 Years Since House Price Decline 3 Years Since House Price Decline 4 Years Since House Price Decline
75th Percentile 11% 8% 7% 8% 8%
25th Percentile 6% 4% 4% 5% 4%
Mean 9% 7% 6% 7% 6%
Episodes         26 Episodes

Figure 6 Panel C: Change in Property Taxes Following a House Price Bust and Price Decline

  0 Years Since House Price Decline 1 Year Since House Price Decline 2 Years Since House Price Decline 3 Years Since House Price Decline 4 Years Since House Price Decline
75th Percentile 10% 9% 7% 7% 8%
25th Percentile 4% 4% 4% 3% 3%
Mean 8% 7% 5% 5% 6%
Episodes         62 Episodes

Figure 6 Panel D: Change in Property Taxes Following a House Price Bust and Large Price Decline

  0 1 2 3 4
75th Percentile 11% 7% 7% 7% 8%
25th Percentile 7% 4% 4% 5% 4%
Mean 10% 6% 5% 6% 5%
Episodes         17 Episodes

Figure 7 Panel A: Residual Change in Property Taxes Following a House Price Decline

  0 Years Since House Price Decline 1 Year Since House Price Decline 2 Years Since House Price Decline 3 Years Since House Price Decline 4 Years Since House Price Decline
75th Percentile 3% 3% 2% 2% 2%
25th Percentile -2% -3% -3% -3% -4%
Mean 1% 0% -1% -1% -1%
Episodes         153 Episodes

Figure 7 Panel B: Residual Change in Property Taxes Following a Large House Price Decline

  0 1 2 3 4
75th Percentile 5% 2% 2% 3% 2%
25th Percentile 0% -2% -3% -1% -2%
Mean 3% 1% -0% 0% -0%
Episodes         26 Episodes

Figure 7 Panel C: Residual Change in Property Taxes Following a House Price Bust and House Price Decline

  0 1 2 3 4
75th Percentile 5% 3% 2% 1% 2%
25th Percentile -1% -2% -2% -3% -3%
Mean 2% 1% -0% -1% -0%
Episodes         62 Episodes

Figure 7 Panel D: Residual Change in Property Taxes Following a House Price Bust and a Large House Price Decline

  0 1 2 3 4
75th Percentile 5% 2% 2% 2% 1%
25th Percentile 0% -1% -2% -1% -2%
Mean 4% 1% -0% -0% -1%
Episodes         17 Episodes

Figure 8 Panel A: Property Tax Case Studies

Year Market Value Assessed Value Property Tax Collections Tax Rate
Nevada 2000 100 100 100 3.00421343578214
Nevada 2001 109.406280167508 108.400385920952 109.4704288143 3.03386865527005
Nevada 2002 121.433942216661 115.360971490771 117.361151058138 3.05630181760321
Nevada 2003 137.170409141922 125.874323244679 128.875554583827 3.07584313181978
Nevada 2004 173.241596391718 137.183264103133 142.084448327267 3.11154579584551
Nevada 2005 239.867216059105 151.872024612061 157.63468563275 3.11820588243866
Nevada 2006 282.855107875209 186.901103094104 163.184479264627 2.6229968523571
Nevada 2007 290.446892693115 249.486258723953 198.326191368907 2.38816442967793
Nevada 2008 251.538676321575 292.52172934467 222.069387283161 2.28066420380656
Nevada 2009 190.592758317661 312.776870053288 246.953693447476 2.37198359247131
Nevada 2010 159.314247622406 260.731922440111 235.832163912502 2.71731266653108

Figure 8 Panel B: Property Tax Case Studies

Year Market Value Assessed Value Property Tax Collections Tax Rate
Florida 2000 100.00 100 100 2.891
Florida 2001 112.44 110 109.356123768111 2.991
Florida 2002 127.95 121 116.18959644447 3.0838
Florida 2003 147.68 135 133.103345678221 3.2864
Florida 2004 178.63 152 146.950795970068 3.1402
Florida 2005 232.89 180 168.014930181615 3.1602
Florida 2006 275.05 224 199.046415454904 3.2103
Florida 2007 263.31 249 202.827925213525 3.4682
Florida 2008 219.19 235 197.798974947349 3.6231
Florida 2009 183.35 208 183.992462583807 2.95390

Figure 8 Panel C: Property Tax Case Studies

Year Market Value Assessed Value Property Tax Collections Tax Rate
Arizona 2000        
Arizona 2001 100.00 100.00 100.00 120.73
Arizona 2002 105.60 106.76 106.41 120.32
Arizona 2003 111.74 118.47 114.44 116.62
Arizona 2004 121.76 128.97 121.10 113.36
Arizona 2005 149.11 141.94 130.43 110.94
Arizona 2006 195.67 157.79 137.07 104.88
Arizona 2007 200.52 208.38 151.37 87.70
Arizona 2008 179.19 249.73 163.09 78.85
Arizona 2009 146.69 250.93 173.96 83.69

Figure 8 Panel D: Property Tax Case Studies

Year Market Value Assessed Value Property Tax Collections Tax Rate
California 2000 100 100 100 11
California 2001 115.122481232714 107.948828237012 108.200087374399 11
California 2002 126.01738443303 117.930040554581 118.66754041066 11
California 2003 144.310549190043 126.564833331471 128.22629969419 11
California 2004 170.999604899249 135.934654615737 138.977719528178 11
California 2005 210.766495456341 146.897192833495 150.812581913499 11
California 2006 242.740023706045 163.113811646501 167.501092179991 11
California 2007 240.715132358751 183.080705106004 188.536478811708 11
California 2008 212.495061240616 200.736471565243 206.251638269987 11
California 2009 171.700908731727 210.245710859616 217.737003058104 11

Figure 8 Panel E: Property Tax Case Studies

Year Market Value Assessed Value Property Tax Collections Tax Rate
New York 2000 100.00 100.00 100.00 43.63
New York 2001 113.30 106.76 104.29 42.63
New York 2002 126.49 115.62 111.09 41.93
New York 2003 144.69 130.64 118.93 39.72
New York 2004 162.72 145.17 134.44 40.41
New York 2005 185.70 158.09 142.48 39.33
New York 2006 210.06 175.21 148.12 36.89
New York 2007 218.72 197.36 155.53 34.39
New York 2008 217.20 215.18 163.48 33.15
New York 2009 202.19 216.68 173.44 34.93

Figure 8 Panel F: Property Tax Case Studies

Year Market Value Assessed Value Property Tax Collections Tax Rate
Minnesota 2000 100.00 100.00 100.00 19.39
Minnesota 2001 115.15 109.68 107.62 19.03
Minnesota 2002 129.88 121.10 98.01 15.69
Minnesota 2003 144.07 134.76 107.16 15.42
Minnesota 2004 158.89 150.71 114.16 14.69
Minnesota 2005 173.83 170.67 121.31 13.78
Minnesota 2006 184.99 192.40 133.01 13.41
Minnesota 2007 185.66 214.96 144.52 13.04
Minnesota 2008 176.63 232.73 155.72 12.97
Minnesota 2009 161.68 240.92 164.85 13.27

Figure 8 Panel G: Property Tax Case Studies

Year Market Value Assessed Value Property Tax Collections Tax Rate
Georgia 2000 100 100 100 32.2151301937407
Georgia 2001 110.344827586207 106.55737704918 106.153846153846 32.0545965314685
Georgia 2002 119.157088122605 116.939890710383 109.230769230769 32.6776551274427
Georgia 2003 126.819923371648 127.570789865872 113.846153846154 31.4522922001558
Georgia 2004 134.865900383142 135.469448584203 129.230769230769 30.2030318445178
Georgia 2005 145.977011494253 143.765524093393 135.384615384615 30.5966946924672
Georgia 2006 159.386973180077 154.148037754595 149.230769230769 31.2308937125363
Georgia 2007 168.199233716475 168.604073522106 161.538461538462 30.8528554065999
Georgia 2008 163.984674329502 185.444610034774 169.230769230769 29.4669166889901
Georgia 2009 144.061302681992 190.660705414804 172.307692307692 29.1439624879058

Figure 8 Panel H: Property Tax Case Studies

Year Market Value Assessed Value Property Tax Collections Tax Rate
Colorado 2000 100.00 100.00 100.00 75.62
Colorado 2001 115.73 120.62 111.61 69.97
Colorado 2002 127.16 124.22 118.63 72.22
Colorado 2003 133.88 127.06 124.63 74.18
Colorado 2004 138.98 132.56 131.23 74.86
Colorado 2005 147.84 144.85 143.70 75.02
Colorado 2006 157.47 152.90 148.45 73.42
Colorado 2007 165.38 174.63 168.14 72.81
Colorado 2008 167.36 179.56 172.54 72.66
Colorado 2009 160.41 200.55 184.83 69.69

Figure 9 Panel A: State Real Estate Transfer Taxes

Calendar Year Transfer Taxes (% of Total State Taxes)
1994 0.66%
1995 0.59%
1996 0.62%
1997 0.57%
1998 0.78%
1999 0.76%
2000 0.73%
2001 0.85%
2002 1.04%
2003 1.31%
2004 1.47%
2005 1.76%
2006 1.53%
2007 1.28%
2008 0.82%
2009 0.65%

Source: Census Bureau, Quarterly Summary of State and Local Tax Revenue

Figure 9 Panel B: State & Local Real Estate Transfer Taxes

state Transfer Taxes as Fraction of Total State & Local Taxes, FY 2000 Transfer Taxes as Fraction of Total State & Local Taxes, FY 2005
AL 0.0028133 0.0045132
AR 0.0028284 0.0048305
CA 0 0.0075852
CT 0.0072947 0.0118245
DC 0.0326759 0.0676298
DE 0.0185238 0.0697705
FL 0.0343271 0.0680791
HI 0.0023045 0.0044021
IA 0.001201 0.0018134
IL 0.0014322 0.0029138
KY 0.0003278 0.0002646
MA 0.0052978 0.0094381
MD 0.0064531 0.0100657
ME 0.0045498 0.0064849
MI 0.0081684 0.0089953
MN 0.0077807 0.0137771
NC 0.0016043 0.0021847
NE 0.001444 0.0018457
NH 0.0259305 0.0382051
NJ 0.0035457 0.011822
NV 0.0005581 0.0179333
NY 0.0050423 0.0300039
OK 0.0010959 0.0016489
PA 0.0087919 0.0168555
RI 0.000635 0.0035472
SC 0.0038674 0.0083395
SD 8.18e-05 0.0002572
TN 0.009648 0.0117921
VA 0.0069065 0.0236638
VT 0.0111066 0.0089158
WA 0.0231565 0.0459359
WI 0.0024421 0.0036079
WV 0.0014919 0.0028405

Source: Census Bureau, State and Local Government Finance Data

Figure 10: State Real Estate Transfer Taxes

Calendar Year Transfer Taxes ($) Real Estate Trasaction (#) House Prices ($)
1994 62.0177338903759 74.6831198719687 72.7238595832551
1995 57.7396140282599 73.3364432965306 74.066078468181
1996 65.9710749545285 79.9799394647918 76.1028721606908
1997 64.3232041730539 84.2145290410509 78.8717852449784
1998 93.3537375995806 96.4291297208539 84.5879481884738
1999 96.0537328340071 99.3431855500821 90.8485076027783
2000 100 100 100
2001 117.89810409601 102.463054187192 109.320443026093
2002 139.938360285299 109.031198686371 119.382391590013
2003 184.023067361381 119.704433497537 131.349727801765
2004 224.475588349761 130.541871921182 151.454852637507
2005 299.202089108282 137.110016420361 176.722357799887
2006 278.259006933909 123.809523809524 186.418246667918
2007 242.294737814031 104.269293924466 176.834991552469
2008 157.993976513665 87.5205254515599 151.389149615168
2009 111.873773857652 93.1034482758621 133.461610662662

Source: Census Bureau, Quarterlyl Summary of State and Local Tax Revenue, National Association of Realtors, Loan Performance

Figure 11: State Sales Tax Revenues from Materials Inputs to Residential Construction

Year Single-Family (Billions of real (2005) Dollars) Mulitfamily (Billions of real (2005) Dollars) Improvements (Billions of real (2005) Dollars)
1995 3.5 0.8 1.7
1996 3.9 0.9 1.8
1997 3.9 0.9 1.8
1998 4.5 1.1 1.9
1999 4.9 1.1 2
2000 4.7 1 2.1
2001 5 1.1 2.2
2002 5.6 1.1 2.3
2003 6.3 1.2 2.4
2004 7 1.3 2.7
2005 8.2 1.5 3
2006 4 1.6 3.2
2007 5.3 1.5 3
2008 3.1 1.1 2.5
2009 2.4 0.5 2.5

Figure 12: Houseing Wealth Effect on Sales Taxes

Years Effect on Sales Taxes
2000 0.902
2001 1.01
2002 1.151
2003 1.334
2004 1.881
2005 2.497
2006 1.731
2007 -0.427
2008 -2.949
2009 -3.108

Figure 13: State Income Tax Revenues from the Construction and Real Estate Industries

Year Construction (Billionf os real (2005) Dollars) Real Estate (Billionf os real (2005) Dollars)
2000 18.4 9.3
2001 19.5 9.8
2002 19.2 10.1
2003 19.4 10.6
2004 20.4 11.6
2005 21.8 12.9
2006 23.2 14
2007 24.2 15.4
2008 24.3 17.2
2009 21 16.9
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