I was reading a research report from Fitch related to a Prince William County bond issuance. The proceeds from the bond sale would go to support a number of school projects – great. That is fairly standard and necessary. What concerned me was the following line that appeared under the header “key rating drivers”. The last line of the analysis stated: “The county enjoys strong control over revenues given its independent legal ability to increase property taxes without limitation”. Wow, do they really believe in this difficult economic environment that residents of these various states, counties, and municipalities will provide these taxing authorities carte blanche to raise taxes “without limitation”?

We are seeing the impact of unabated tax increases on populations throughout America. States like Illinois, New Jersey, Connecticut, New York, etc. are suffering from out-migration trends that damage the long-term economic outlook. There is definitely a need to continue to invest in schools, bridges, roads, pensions, etc, but to think that there is no limitation is just silly!