Town that was home to first Homestead Act tract passes a new one to boost its tax revenue

The Homestead Act of 1862 was the federal government's vehicle for populating the West. Now towns across the country are re-examining similar strategies as a possible method for increasing tax revenue. Beatrice, Neb., home to the first federally recognized homestead in 1862, passed the "Homestead Act of 2010" in part to replenish its city coffers, Monica Davey of The New York Times reports. "The calculus is simple, if counterintuitive: hand out city land now to ensure property tax revenues in the future," Davey writes. Tobias J. Tempelmeyer, the city attorney, quipped, "There are only so many ball fields a place can build."

"Around the nation, cities and towns facing grim budget circumstances are grasping at unlikely — some would say desperate — means to bolster their shrunken tax bases," Davey writes. "Like Beatrice, places like Dayton, Ohio, and Grafton, Ill., are giving away land for nominal fees or for nothing in the hope that it will boost the tax rolls and cut the lawn-mowing bills." Despite recent signs of an economic recovery, municipalities may not emerge from the recession for several years because of slumping revenues from property taxes and sales taxes and reduced support from state governments. These areas are looking to other alternatives to raise money, including a controversial proposal in Manchester, N.H., and Concord, Mass., to re-examine the tax-exempt status of local non-profit organizations.

Beatrice was recognized as the home of the first Homestead Act application nearly 150 years ago when the federal government bought the property back to build a national monument, Davey reports. (NYT photo of Beatrice homestead monument by Kevin Moloney) While other small towns across the Great Plains have turned to homesteading in recent years to boost dwindling populations, Beatrice, whose population has held steady around 12,000 for decades, has a much different goal. "If the city were to give away just a few lots — and if people were to, as required by the law, build homes on them and stay for at least three years — Beatrice would secure annual real estate taxes on them, collect money for water, electric and sewer use, and no longer pay to mow the lawns," Davey writes. Since the act took effect in May, just two families have filled out homestead applications and both have since delayed plans to move. (Read more)