A Chicago Sun-Times piece on a coming crunch in moderately priced homes in the Chicago area points to one possible solution – funding schools through something other than property taxes. With schools (and local government generally) dependent on property taxes for the lion’s share of revenues, there’s incentive for local government to encourage larger and costlier construction. In the extreme case you get affordable housing actually torn down to make way for businesses, as in New London, Connecticut. It’s just one more example of how taxing the bases of productivity has perverse unintended consequences.
Time to start planning for looming housing crunch
One significant proposal was to reform school funding, which now relies on property taxes. “Local officials experience pressure to bring in homes that will generate the most tax revenue,” the report says. “Until this over-reliance on property taxes is addressed, communities will have little incentive to add affordable housing, especially at below-market levels.” That’s an issue we’ve been harping on for some time. Education funding reform would help contain housing costs and level the field for education funding. Something the Legislature should think about. Before 2030 rolls around.