Subprimes, Shortfalls, and Spillovers: The Impact of the Financial Crisis on Mortgage-Related Revenues in NYS Counties

Helisse Levine

Municipal Finance Journal, 2009, vol. 29, issue 4, 87 - 99

Abstract: Taxes collected from mortgage-related transactions are an important revenue source for many U.S. state and local governments. Because these receipts are subject to the volume and dollar amount of residential real estate transactions, they are particularly vulnerable to the current financial crisis and economic downturn. This paper explores the impact of the subprime mortgage crisis on mortgage recording taxes in 57 New York State counties and the spillover implication on property tax receipts. Hierarchical regression supports the hypothesis that a decline in mortgage-related taxes, due to lower residential property sales, will result in lower property tax receipts. These results imply that the financial crisis will require state and local governments to adjust budgetary expenditures to offset these declining receipts.

Date: 2009
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