Results 1 to 7 of 7

Thread: at least a few state gov'ts are starting to face reality

  1. #1
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default at least a few state gov'ts are starting to face reality

    but apparently California isn't one of them !

  2. #2
    God/dess Deogol's Avatar
    Joined
    Dec 2003
    Posts
    5,493
    Thanks
    120
    Thanked 50 Times in 35 Posts

    Default Re: at least a few state gov'ts are starting to face reality

    Sounds like housing is becoming more and more affordable in California every day. I just read someplace where there are more foreclosures for sale than not. I'm sorry, but if that isn't a message from the market in terms of affordable homes I don't know what is.

    Regarding the circuit court people being furloughed on unpaid leave, that is one of the symptoms I believe shows how the end will come. Slowly... things... shut... down... until finally a support point is reached.

    Of course, if you get a ticket for an expired license plate even though the DMV is only open two days a week and mobbed by a thousand people -- it's still no excuse and you can pay the fine at the court house that is only open three days a week. If you are next in line when the clerk shuts the window you will still be in breach of court ordered "restitution."

  3. #3
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: at least a few state gov'ts are starting to face reality

    Sounds like housing is becoming more and more affordable in California every day. I just read someplace where there are more foreclosures for sale than not. I'm sorry, but if that isn't a message from the market in terms of affordable homes I don't know what is.
    unfortunately, 'affordable' housing involves a lot more than the sale price of the house !!! First is the issue of 'monthly payment' ... which is actually under upward pressure despite the falling sale prices. This is due to several factors ...

    - decreasing job security for both private and public sector workers

    - mortgage lenders becoming ever more wary of writing new loans due to new gov't rules being discussed that will exacerbate their losses on delinquent future mortgages (i.e. lender can't repossess their property, lender must accept bankruptcy court ordered reductions in mortgage interest rate = lower total return on investment)

    - rising property taxes, rising energy costs, rising insurance costs

    If you put all of the pieces together, I'm not sure that a 35% reduction in selling price of a home actually makes any difference in terms of 'affordability', with higher mortgage interest rates + higher taxes / energy / insurance costs + stagnant or declining paychecks factored in.


    The larger point that I took away from the article was that some states (in this case California) are still under the impression that they can borrow money at will. Schwarzenegger's proposal essentially amounts to borrowing money at relatively high interest rates from uber-rich Californians looking for a tax shelter via the sale of yet more muni bonds- then spending that money to create public sector jobs with the ultimate goal of building 1700 new units of subsidized public housing.

    Maybe I'm missing something, but I really can't figure out how this plan can be a positive economic stimulus in any way. It basically commits California taxpayers to taking on even higher bond payments in the future, as well as taking on more tax burden to fund the additional subsidized housing. Yes for the one year or whatever required for construction this will provide paychecks for gov't contractors. But for the following 29 years it will mean increased tax burden / expense, due to bond principal, bond interest, ongoing subsidy costs for low income occupants of the public housing, and foregone tax revenues from the uber-rich California buyers of these additional muni bonds.


    I believe shows how the end will come. Slowly... things... shut... down... until finally a support point is reached.
    Actually, that's an optimistic outlook. It's one thing to deal with the consequences of reducing the staffing of the court system by 25%. It's another thing to deal with the consequences of reducing by 25% police coverage, fire coverage, sewer and water system coverage etc.

    Of course one mayor (in Indiana I think) had the great idea of selling his city's sewer system to a private business ... thus raising a couple of hundred million dollars to help cover the city's budget shortfalls and to provide free tuition to colleges in that city. But the mayor didn't mention that if/when a private firm takes over the sewer system, it's suddenly going to become very expensive to take a s#!t !

  4. #4
    Veteran Member
    Joined
    Jul 2004
    Posts
    521
    Thanks
    1
    Thanked 0 Times in 0 Posts

    Default Re: at least a few state gov'ts are starting to face reality

    Quote Originally Posted by Melonie View Post
    ...- rising property taxes, rising energy costs, rising insurance costs...
    The following is an article from one of the LA alternative papers, which contains links to several other articles about Proposition 13. These articles, taken together, indicate just how unpopular Proposition 13 has become amongst progressives,

    http://www.lacitybeat.com/cms/story/...d_jarvis/6623/

    And iirc, a "dirty little secret" about all the people who lost their homes in the recent SoCal wildfires is this: Once they rebuild with their insurance checks, their new homes will then be assessed at current market rates. No doubt much higher than prior to the loss of their homes. Unless, of course, the state legislature passes legislation to fix this. But since most of our state senators and assembly reps are financial predators of the middle class, I have my doubts anything at all will be done about this problem.

    As one of the local morning radio talk show hosts puts it, a few times every month, the attitude of most of the politicians in the state legislature here is, "How dare you bastards own your own homes!"

  5. #5
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: at least a few state gov'ts are starting to face reality

    ^^^ the California 'property tax increase cap' is somewhat unique. As I understand this cap, it was enacted some 30 years ago, and limited the authority of county / city gov'ts to raise property taxes to something like a 3% annual rate ... which was far below the rate of local gov't spending growth, and which was FAR below the rate of increase in real estate assessed values. In a sense, this 'property tax increase cap' locked in a comparatively low rate of taxation for (then) current homeowners - which in fact turned into a windfall of tax savings as the US dollar inflated and as California real estate values GREATLY inflated over the course of the next 30 odd years.

    However, by preventing county / local gov'ts from collecting the needed amount of property taxes from 'legacy' homeowners, it forced these county / local gov'ts to greatly increase property tax rates on freshly sold homes. In effect, this forced new homeowners to subsidize 'legacy' homeowners. A friend in California tells me that over the years this has grown to a 3:1 tax ratio, where a now retired couple who has owned the same home for 30 years must pay $2500 a year in property tax, but where a recent buyer of a similar house must pay $8000 a year in property tax on what are essentially the same 'value' properties.

    Indeed, any situation which terminates existing primary mortgages / deeds, and which replaces them with new primary mortgages / deeds throws this 'legacy' tax increase protection overboard, and will subject the holder of the new mortgage / deed to the full effect of current property tax rates. Besides hitting rebuilt homes with a huge pent-up property tax increases, this phenomenon is also exacerbating the ability of would-be 'new' buyers of California properties to afford the necessary monthly cash flow (i.e. when a $666 per month property tax cost must be factored in on top of mortgage payment and other costs) to actually obtain mortgage financing even at comparative 'bargain' real estate prices.

    Remember that just because real estate market prices have dropped, this does NOT correspond with any drop in local gov't budgets. Thus for new homeowners without 'legacy' property tax protection, if the California real estate market price is cut in half but local gov't budgets remain unchanged, it simply means that the 'new' property tax rate must be doubled.

  6. #6
    God/dess Deogol's Avatar
    Joined
    Dec 2003
    Posts
    5,493
    Thanks
    120
    Thanked 50 Times in 35 Posts

    Default Re: at least a few state gov'ts are starting to face reality

    Quote Originally Posted by Melonie View Post
    ^^^ the California 'property tax increase cap' is somewhat unique. As I understand this cap, it was enacted some 30 years ago, and limited the authority of county / city gov'ts to raise property taxes to something like a 3% annual rate ... which was far below the rate of local gov't spending growth, and which was FAR below the rate of increase in real estate assessed values. In a sense, this 'property tax increase cap' locked in a comparatively low rate of taxation for (then) current homeowners - which in fact turned into a windfall of tax savings as the US dollar inflated and as California real estate values GREATLY inflated over the course of the next 30 odd years.

    However, by preventing county / local gov'ts from collecting the needed amount of property taxes from 'legacy' homeowners, it forced these county / local gov'ts to greatly increase property tax rates on freshly sold homes. In effect, this forced new homeowners to subsidize 'legacy' homeowners. A friend in California tells me that over the years this has grown to a 3:1 tax ratio, where a now retired couple who has owned the same home for 30 years must pay $2500 a year in property tax, but where a recent buyer of a similar house must pay $8000 a year in property tax on what are essentially the same 'value' properties.

    Indeed, any situation which terminates existing primary mortgages / deeds, and which replaces them with new primary mortgages / deeds throws this 'legacy' tax increase protection overboard, and will subject the holder of the new mortgage / deed to the full effect of current property tax rates. Besides hitting rebuilt homes with a huge pent-up property tax increases, this phenomenon is also exacerbating the ability of would-be 'new' buyers of California properties to afford the necessary monthly cash flow (i.e. when a $666 per month property tax cost must be factored in on top of mortgage payment and other costs) to actually obtain mortgage financing even at comparative 'bargain' real estate prices.

    Remember that just because real estate market prices have dropped, this does NOT correspond with any drop in local gov't budgets. Thus for new homeowners without 'legacy' property tax protection, if the California real estate market price is cut in half but local gov't budgets remain unchanged, it simply means that the 'new' property tax rate must be doubled.
    In California, the problem is over-spending.

    Not that they can run old people off their properties for higher tax paying yuppies.

    The proposition is a protection for the people against the government in my mind.

  7. #7
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: at least a few state gov'ts are starting to face reality

    In California, the problem is over-spending.
    No argument there. Same problem in NY, NJ, IL and a bunch of other states.

    The proposition is a protection for the people against the government in my mind.
    and arguably the recent US Supreme Court decision re eminent domain for purposes of tax revenue enhancement rendered the California property tax cap law unconstitutional. If the bottom hadn't fallen out of the California housing market, this law probably would have been challenged already. But now the California politicians are probably happy if somebody is still living in the house, paying their utilities and mortgage, and paying anything at all in property taxes !

Similar Threads

  1. Replies: 2
    Last Post: 06-02-2011, 02:25 PM
  2. Reality Attack strikes Official Gov't Statistics
    By Melonie in forum Dollar Den
    Replies: 1
    Last Post: 02-25-2010, 06:02 PM
  3. Replies: 6
    Last Post: 11-11-2009, 09:06 AM
  4. Replies: 2
    Last Post: 12-29-2007, 04:17 AM
  5. Replies: 2
    Last Post: 12-16-2006, 09:17 AM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •