National property tax revenues rose through Q3 2010, according to the Rockefeller Institute. Nevada, epicenter for housing's boom and bust, enjoyed higher property tax revenues well into last year, according to the Fed study.
But property tax receipts have begun to roll over and will likely keep falling until well after real estate prices recover, which may still be a ways off.
Most properties haven't been reassessed yet at their dramatically lower values. Now that is beginning to happen. See the quote from my colleague Mike Pagano--it will hit harder in 2 or 3 years, at which time cities and counties will have to make some hard choices about what to pay for and "who subsidizes whom."