Which scenario illustrates a negative aspect of relying solely on property tax for local revenues?

Relying solely on property tax for local revenues can lead to significant vulnerabilities during economic downturns, as illustrated by the scenario involving an economic downturn decreasing property values. When property values drop, the tax base shrinks, which results in reduced revenue for local governments. This reduction can necessitate cuts in essential services such as education, public safety, and infrastructure maintenance, directly impacting the community's overall well-being.

Moreover, during a downturn, homeowners may face financial difficulties, making them less able to pay property taxes, further exacerbating the fiscal challenges for local governments. This scenario highlights the inherent risk in depending exclusively on property taxes for funding, emphasizing the need for a diversified revenue system that can withstand various economic cycles. In contrast, the other scenarios depict positive impacts or growth that do not illustrate the negative consequences of reliance on property tax revenues alone.