Editor's Note: The free market gone wild

If you own a home in the Las Vegas Valley, you remember well a few months ago when the real estate market went bonkers. Everybody, it seemed, was buzzing about how the value of his home was going up, up, up. People, including this writer, were telling stories of neighbors who had sold their homes for tens of thousands of dollars more than they could have reasonably expected just months before.

There were a whole lot of smiles in the valley as homeowners patted themselves on the back for their wise investments.

Market analysts said the surge in property values was a classic case of supply and demand. For a variety of reasons, the valley found itself in a situation where there were a lot more home buyers than sellers. Sellers, as a result, found that they could demand a higher price for their homes. It was not uncommon for a seller to get bids above his asking price and to ink a deal within an hour of its listing.

But after a few months, the real estate market cooled off. Las Vegas remained one of the hottest markets in the land, but the hyperactivity of the spring slowed to a more reasonable pace, one in which it might take 60 days to sell a house.

And it didn't take long for all those smiles to be turned upside down.

You see, the side effect of this surge in home values was a parallel surge in property taxes. It's a simple, time-honored formula: The more your home is worth, the higher tax bill you must pay.

Property owners, of course, are upset. After all, they didn't ask for their property values to skyrocket practically overnight. Sure, they reveled in visions of a big payday if they sold their houses, praising the glories of the free enterprise system, but what about those who didn't plan to sell anytime soon or waited too long? Why should we be penalized by forces beyond our control?

Clark County Assessor Mark Schofield has been hearing from all corners of the community about rising property taxes. In response, he has proposed a 6 percent cap on yearly increases in the taxable value of homes--a figure that reflects the valley's revenue growth expectations while preventing homeowners from receiving bills showing 10 to 50 percent hikes. It's a reasonable measure that state lawmakers should approve right away through a legislative special session. Waiting until next year's regular biannual session will only complicate matters.

And yet I'd be remiss not to point out the hypocrisy inherent in the bipartisan support expressed for this plan. It's interesting how the free market is worshipped like a god, proclaimed as the solution to all our problems--until that same market doesn't yield exactly the result we want. Then it's time for government to step in and save the day.

The conservative spin is interesting, too. The tax cap is needed, they say, so that local governments don't receive a tax revenue "windfall." That would be bad, of course, despite the fact that those local governments fund and operate our police and fire departments, our courts, our schools, our roads, our parks and ballfields, our water and sewer systems, and other public services that make this community function. The fact that this "windfall" could be used to improve the quality of life in Las Vegas is not a consideration.

It's an amusing turn of events. But it's not very funny for those who struggle to make their house payment each month and risk becoming victims of a free market gone awry. It's especially troubling when we're already coping with rapidly rising costs for health care, utilities and gasoline.

Property taxes are the backbone of a community, and the progressive way they are levied reflects sound civic principles dating to the days of Benjamin Franklin and his funding plan for colonial Philadelphia's police force. People know that the more valuable their property is, the more they will pay. That is fair and appropriate. At the same time, it's not healthy for thousands of valley residents who have worked hard to achieve the dream of owning a home to face the prospect of losing it as a result of forces beyond their control. A mortgage payment that is $200 higher each month would be devastating to many young families and senior citizens.

Schofield's proposal is a classic case of governmental intervention to ease the effects of an unfettered market on those who can least afford it. The bipartisan support is a refreshing indicator that Nevada's long-standing preference for pragmatism over ideology remains alive and well in this highly polarized era.

As for those who celebrated their skyrocketing equity a few months back, I hope you're able to make a bundle. Just remember: There's usually a catch. Easy money is hard to come by.

--GEOFF SCHUMACHER