Over the last month, the Federal Reserve has come to the aid of failing banks (Fed Leaders ponder an expanded mission, Washington Post, March 28, 2008: A1), proposals have been made to help homeowners refinance their mortgages, but one group, who did not make stupid over extending decisions, have been left in the cold.
The towns, cities, school boards and some states that rely heavily on income from property taxes are likely to suffer. They too should get federal aid.
If, as is predicted, 7% of home owners are likely to see foreclosures on their homes, these innocent bystanders are likely to see a drop of 7% in their revenue from property taxes. The Federal government should immediately announce a program to make good their losses by providing an infusion of 7% of property tax revenue to these jurisdictions.
This will prevent a massive reduction in local and state government programs at a time when the social safety net will be most needed.
Sent to Washington Post