Homeowners Fight Back Against Property Taxes

Financial crises in many states have led local and state legislatures to return to an easy source of revenue: increased property taxes on the nation's homeowners.

But homeowners — and some politicians — are steaming mad and in one town, they have decided to revolt.

Homeowners in Millburn Township, N.J., have decided they would rather secede to a neighboring county where taxes are lower than to face hikes in property taxes that could reach $3,000 per household.

Thomas McDermott, the mayor of Millburn, said something is seriously wrong with the government's solutions when homeowners are forced to resort to this kind of measure.

"If every town is that dissatisfied, then something's wrong with the system so you have to re-examine the system. So, I think just because we're doing it and more towns want to get on board and do it themselves, then I think that's an indictment on the way we tax people in this country," McDermott said.

But states are having a tough time finding money. With a collective budget gap of $49 billion, the National Governors Association and the National Association of State Budget Officers reported last week that state budgets are in the worst fix in 20 years. And few revenue-raising alternatives exist.

"Now, we've had a combo of a big decline in the economy and a big decline in the stock market. Those two factors don't usually come together, but the fact that they've come together now is a very bad hit for state revenues," said Nick Johnson of the Center on Budget and Policy Priorities.

And while the revolt trend may be picking up momentum, city officials say property taxes pay for valuable services that would otherwise be lost without the imposition of tax increases to fill in the gap during these tough economic times.

The New Jersey state Legislature still has to approve the move by Millburn. In the meantime, other towns are also staging revolts. In Houston, Texas, where property taxes are up 44 percent, thousands of folks are now learning how to fight their tax bill in court. One anti-tax group in Washington put together a book to help homeowners fight property taxes.

In Maine, hundreds of protesters are rallying to demand property tax relief. And in one Atlanta suburb, homeowners angry over a nearly 70 percent property tax increase protested at city hall, where they likened the town's financial management to the now-bankrupt Enron and Worldcom corporations.

Fox News' Heather Nauert contributed to this report.