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Letter to the Senate opposing a property tax limitation in the American Housing Rescue and Foreclosure Prevention Act (H.R. 3221)

June 24, 2008

Dear Senator:

On behalf of the National Education Association's (NEA) 3.2 million members, we would like to express our strong opposition to a provision in the American Housing Rescue and Foreclosure Prevention Act (H.R.3221) that would prevent localities from raising tax rates to help compensate for shrinking property tax revenues resulting from declining home values. This potentially dangerous provision could force localities to cut funding for schools, police, and other vital public services and will have other unintended consequences. We urge you to vote NO on cloture for this legislation unless these provisions are removed from the bill. Votes associated with this issue may be included in the NEA Legislative Report Card for the 110th Congress.

Property taxes are a major funding source for schools in most state. They also support vital services such as police and fire departments, road maintenance, libraries, parks, and social services. In the areas hardest hit by the housing crisis, property values are falling. If values are falling, property tax revenues will fall unless the rates are raised.

The number of children who must be educated does not drop just because property values fall. Nor do the costs of providing police and fire protection, maintaining roads, and other services. If localities do not have the flexibility to offset even a portion of this revenue loss by raising property tax rates, they may have to lay off teachers or take other drastic action to cut K-12 education, as well as cut police forces and close fire stations.

If the federal government limits the ability of localities to raise property tax rates, states will face pressure to make up the revenue that localities need to maintain services. At the current time, more than half of the states face deficits that average nine percent of their expenditures. Some states are cutting various forms of aid to localities in order to meet their own balanced budget requirements; states experiencing fiscal stress are in no position to replace lost property tax revenue. In short, this proposal could squeeze state and local services from both ends.

We urge you to protect education and other vital public services by opposing this ill-conceived provision in H.R. 3221.


Diane Shust, Director of Government Relations

Randall Moody, Manager of Federal Advocacy