Property Tax Limitations and Disaster Recovery: Do limits hinder local recovery

• In Event: Tax Limits

Abstract

Few states have avoided natural disasters in recent years and yet most must confront limits on their primary revenue source--property taxes—as they recover and rebuild.
The costs associated with disasters are immediate and far reaching. In the aftermath of the 2025 fires, Los Angeles County, in preparing their budget for next year, expects that the hit to the county may exceed $1 billion over the next several years to address recovery. While the economic impact of disasters has been studied, one area that has not received careful examination is how property tax limits may aid or hinder local government’s recovery.
Initially, we will examine how various property tax limits may impact restoring the tax base. The study will include a discussion of how, in the aftermath of the disaster, tax limits may hamper the restoration of the tax base and recovery efforts. Restoring destroyed property raises questions for assessors as to the growth of value attributed to “rebuilding” or “new construction” in the context assessment limitations. Financing increased costs associated with clean-up and mitigation efforts, even if reimbursed later, may be unavailable because of levy limits. Similarly, the destruction of a portion of the tax base may impact the tax rate needed to address getting back to “normal.”
This presentation will explore how property tax limits impact the local tax base and the jurisdiction’s ability to successfully recovery. It will examine the impact limits have had in getting back to “normal” in various states

Authors

• Catherine Collins, GW Institution of Public Policy

• Joseph Cordes, George Washington University