Saturday, January 10, 2009

California Property Tax Shortfalls

This is not surprising but it's interesting how fast things seem to be unwinding as we enter '09. The MSM is starting to write about the dwindling property taxes. If you look at the NODs posted previously, you can imagine it's only going to get much, much worse. This is gonna be ugly.

2009-01-10: Property tax assessments could plunge across California, worsening fiscal crisis
California's plunging property values have already clobbered homeowners, but now the trend is promising pain for struggling counties, cities and schools that rely upon property taxes — a downward shift unseen in decades.

"It's the first time since the Great Depression that we've had a negative growth in property taxes that are the heart and soul of local government services," said Paul McIntosh, executive director of the California State Association of Counties.
...
Santa Clara County's property tax roll is projected to show low-single-digit growth, down from 7 percent last year. But that could well change as a growing number of properties are evaluated, said longtime county Assessor Larry Stone. Final assessed values will not be sent to property owners until mid-May.

"I've never seen an economic downturn as significant and pervasive as this," Stone said.

...
Shrinking property tax funding "exacerbates the need dramatically," said Santa Clara County Supervisor Liz Kniss. Applications for safety net programs here have increased almost 40 percent in the last year, as county leaders wrestle with a $220 million budget shortfall.

Homeowners whose properties are devalued "may be getting a break on their tax bill," Kniss said. "But they're going to feel it in the health care arena, in schools, and in what we are able to provide in services for the homeless."

2 comments:

Hobo said...

"may be getting a break on their tax bill," Kniss said. "But they're going to feel it in the health care arena, in schools, and in what we are able to provide in services for the homeless."

I don't get it. Were health care, school services and the homeless a huge problem BEFORE the bubble, or did the govt. just decide to blow their tax windfall on these services because the money was there? What ever happened to rainy day funds? Oh I forgot, it is always sunny in California, right?

Tyrone said...

Hobo,
Good question regarding rainy day funds. I said to a friend this week that if government (state of CA, included) had half a brain, they would have recognized that the housing boom and EVERYTHING associated with it (retail sales, incomes, jobs, etc) could not last and were artificially high. Knowing this, their spending could have been tempered; in other words, spend LESS than what's coming in. Unfortunately, the concept of 'living within one's means' seems to lost everyone, particularly including government.