A couple big stories out today in BusinessWeek and the Los Angeles Times talk about how state and local governments are getting pinched by both high gas prices and falling home values, which cut property tax revenues. They're just as broke as the rest of us. Governments are coming up money-saving schemes that range from creative to despicable. With expenses up and revenues down, governments are hoping to boost other revenues, like traffic tickets and lottery sales. So unless you plan to make up the budget shortfall, watch out.

Twenty-four states are in the red this year, the Times says, quoting stats from the National Conference of State Legislatures. They're cutting the favorite targets of school budgets and public health benefit. Local governments are cutting back on services like buses or parking the bookmobile. Some places are cutting back on all the unnecessary grass-mowing. BusinessWeek says Stillwater, Oklahoma cut its mowing in half, letting parkland turn into prairie. Somewhere Lady Bird Johnson must be smiling.

As much as no one wants to cut back on public safety, for some districts it's inevitable. Cops around the country have to watch their gas spending. Some are switching to alternate vehicles, like golf carts, or just doing foot patrols. Cops in El Paso County, Colo., saw their gas bill climb from $160,000 in 2003 to a projected $700,000 next year, the Times reported, so they stopped car patrols, a move they say will mean they won't be able to catch as many drunk drivers. BusinessWeek says Arizona is going to boost traffic tickets from cameras -- how many speeding tickets can a cop in a golf cart issue -- and stepped up lottery sales. Earlier this year California hatched a new lottery plan and Colorado decided to increase ticket fees. Expect to see these schemes around the country.

Last week five homeowners in the Madison, Wisconsin area completely lost their homes because of flood waters. Many other homes were affected by flood waters, but these were completely destroyed. The homeowners think they shouldn't have to pay their full property tax bills, but the taxing authorities say that the law requires them to pay.

Property tax bills are based upon a property's value as of January 1, regardless of the value of the property today. And although I feel badly for the homeowners who lost their houses, I understand the logic behind the laws. There has to be a uniform way of assessing taxes and making taxpayers pay accordingly.

If you've ever built a house, you know that taxpayers sometimes win this game. You might have a very low tax bill for a year because the house wasn't completed and therefore the value at the time of assessment was low. Even if your house is finished later in that year, you still pay the low tax bill because of the timing.

How can you profit from Oracle CEO Larry Ellison's amazing eccentricity? Hint: the answer is not buying Oracle stock. Nope. According to the San Francisco Chronicle, Ellison recently successfully gained a reassessment in the property taxes for his enormous Japanese-style home in Woodside, California. And you can too!

Ok, so you probably didn't spend so outrageously much on your home (for Larry, $12 million for the land and another $200 million to build his Japanese-style seven-bedroom palace complete with separate tea house, bath house, and waterfalls; Luxist had details on all Larry's real estate ventures). And you probably won't register a $3 million refund. But you might be able to get back a few hundred dollars, if you feel your home's worth has been set at the market's peak, while your income is slightly more down-market. And remember, as Tracy Coenen posted, you have rights as a taxpayer!

So, how was Ellison able to justify the reassessment?

It's no secret that parts of our horribly complicated tax code have been invented (in part) to encourage or discourage certain behaviors. One of the "encouraged" behaviors is home ownership.

Along with home ownership comes the potential to itemize your deductions on your personal income tax return, and hopefully save yourself some tax dollars. Included in your itemized deductions are real estate taxes and home mortgage interest. Those can give taxpayers literally hundreds or thousands of dollars of tax savings.

So when you're considering whether or not to buy a home, you might want to factor in the tax impact. Although my home costs me more each month in terms of my mortgage payment and property tax escrow than my last apartment, I'm building equity, living in a larger place, and saving money each month when I factor in those tax deductions that I get at the end of the year.

Online Tax Filing

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.