Everyone is impacted by inflation and the worst news of all is it’s permanent. Once a new price for a good, service or tax is set, it typically becomes the rule.
The rising cost of everything is the new norm as it would be foolish to think the costs we are paying today for goods and services a well as owning property will be reduced over time. There is hope gasoline prices will return to prices more easily stomached in the future, but it will take time and what exactly the new range will be is unclear. It seems a certainty gallon prices will remain over $3 for the foreseeable future as opposed to a year ago when it was about $2 on average.
While rising fuel costs is a serious problem for all consumers, the extenuating impacts of a consistent rise in the general inflation rate are complex. As of February, the inflation rate is 7.9%, as compared to 1.7% a year ago and 5.4% six months ago. It’s the largest 12-month change since August 1982. The prolonged effect of these soaring price increases should be worrisome, but the long-range permanent impact is property owners are getting hit hard through the taxes they pay.
This is the time of year when government budgets are taking shape, and most officials are working through the expenditure side of the ledger outstripping the revenues. The situation is unavoidable for some departments due to rising fixed costs, despite booming property values resulting in new tax revenue. Inflation in most cases is causing expenditures to soar above and beyond the property value increase level. It’s disappointing because this was to be when booming property values should at a minimum keep tax rates flat and even lead to some officials lowering the tax rate to the constant yield level – which brings in the same amount of revenue as the year prior.
Most disturbing is decision makers cannot keep pace with the inflation rate. For instance, a 7.9% inflation rate will pale in comparison to typical annual salary increases of 2% to 3%. For a teacher in Worcester County, for example, the school system budget calls for a 4% cost-of-living adjustment for teachers (in addition to a step increase that varies by length of service and certification). This is a nice and worthy bump, but the reality is in today’s economy the increase will be a wash or even a deficit amid rising monthly expenses for food, energy, taxes and regular household necessities.
Everything associated with living is going up faster than people’s income. Harsh decisions will have to be made. It’s a disturbing model to observe costs escalating while quality and service time fall. The pandemic cannot be blamed for the entire predicament. There’s more that must be done.
