Evaluating the Impact of Depressed Housing Prices on Property Tax Revenue in Florida

While economic models were effective in forecasting Florida property tax revenue from 1950 through 1997, the models have become unreliable since the current housing boom and decline cycle started in 1998. As a result of the ineffective models, Florida Department of Revenue (DOR) property tax revenue forecasts have been higher than actual property tax revenue in 2008 through 2012. The inaccurate property tax revenue forecasts resulted in severe mid-year county budget deficits and forced drastic cost saving actions in many counties. The problem addressed in the current study was the Florida DOR property tax revenue forecasts for 2013 and 2014 were inaccurate with continued use of the traditional economic forecasting models. The quantitative correlational comparative study was designed to capture the housing decline impact on property tax revenue to create and test new economic models to more accurately forecast 2013 and 2014 Florida county property tax revenue. Regression analysis was conducted on one year's property values and the following year's property tax revenues for Florida counties for the period 2006 through 2012. F-tests were conducted at the 95% confidence level on the resultant regression equations for selected counties and all counties as a whole. The results indicated the change in one year's property value did relate to the following year's property tax revenue for 34 of the 46 counties and all counties as a whole, p ≤ .05. One-tailed t-tests conducted at the 95% confidence level indicated DOR 2014 forecasts for Nassau County (t = 5.43, p = .003) and Wakulla County (t = 6.17, p = .002) were statistically greater than the new model forecasts. The recommendations for future research are to validate the current study results by comparing the 2013 property tax revenue forecasts to actual 2013 property tax revenue, update the study 2014 property tax revenue forecasts when the data become available, and generate a forecast for 2015 property tax revenue when the data become available.