What would be a likely reason for a neighborhood's assessed value increasing more than its taxes in a budget-driven tax system?

An increase in a neighborhood's assessed value relative to its taxes in a budget-driven tax system can be largely attributed to the situation where the tax rate was reduced. In a budget-driven system, local governments typically set a budget and then determine the tax rates required to meet that budget based on total assessed values. If a neighborhood's assessed value increases while the overall tax rate declines, the increase in assessed value does not necessarily translate to a proportional increase in taxes.

When the tax rate is reduced, even if the assessed values increase significantly, taxpayers may not see a significant increase in their individual tax bills. This can occur if the local government anticipates higher revenues from other sources, such as new developments that generate additional income or improvements in economic conditions. Essentially, a lower tax rate can cushion the impact on taxpayers even when their properties are valued higher, leading to a disconnect between assessed value growth and tax increases.