We see that the school district gets about half of all property taxes, the City gets an eighth, the county gets an eighth, and the rest goes to other entities. Out of all of those eight entities, the City of Galesburg is the only one that funds the road maintenance in Galesburg. The city has other forms of revenues, but property taxes are the most stable as long as buildings are in decent shape.
At current rates, it takes approximately $197 of actual value to produce $1 in property tax revenue for the city. So if we take 18,691,200 x $197 we find that our town would need an actual value of $3,682,166,400 to fully fund full road maintenance. Yes, that is $3.6 Billion. For the year 2020 the whole town had a total property value of $1.29 Billion. Or in other words, we only have about 35% of the actual value that we need in order to fully fund the maintenance of our roads, not even accounting for everything else the city does like police and parks.
With the community already paying nearly as many property taxes as they are able to, what do we do?
Galesburg Real-Estate Development, Inc.
Galesburg is a city, by that fact we are an incorporated area. Our town is essentially a corporation where the citizens are the investors and stakeholders in the business that is Galesburg, Inc. We are a real-estate development company that also provides services. Not only that, we’re a real-estate company with holdings totalling $1.29 billion—not too shabby for a town that has been through what we have. But that $1.29 billion is not invested in a way that’s going to lead to financial success. There are plenty of towns our size (especially if you look outside the U.S.) that are financially solvent, whereas we struggle.
This isn’t a story about greedy union pensions or how the factories left, this is a story about how we’ve chosen to develop our town over the years. We have mostly chosen to build single family homes with large lots and commercial buildings that are auto dependent. It’s what every town was doing, so I’m not here to shame anyone for what has happened. But the numbers tell us that we can’t keep going down this path.
Take my own house, for example. If I were to pay for my half of the $20 per foot per year for my 60-foot-wide lot (since I’m just on one side of the street), I’d need to pay $600 a year to the city in property taxes. I currently pay $260.17. The smallest residential lot you can have in town is 50 feet, meaning you’d need a $98,500 house to break even, which is an above average house for the market. Is every building going to pay for all its infrastructure? No, but we need to look at maximizing our productive properties.
The Acres are Not Equal
I guess we can look at my house first: I pay in total $1,693.14 on a 0.18-acre lot, which comes to $9,406.33 in property tax revenue per acre. Not great, but not the worst.
Let’s look at our Walmart, which pays massive amounts of property taxes and is a company worth billions of dollars. Surely they pay much more than I do on my house built in the 1950s?