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Hey, Alameda: Budget crisis news from around the state

Perhaps you’ve been distracted by the failing of major banking institutions/insurance companies/car companies, to notice that California’s budget is looking to be $28 billion short in the next 18 months. What might the impact be around the state? Here’s some headlines:

By capping enrollment in the state college systems, the community college system may become even more impacted. And more cuts to K-12 schools seem inevitable. Look for cuts to social services, to city services, and parks.

epearlman

  • bob

    Kind of interesting that Prop 13 is one of the tags to this piece, and only fitting given the financial troubles California at large has these days. As someone who has studied prop 13 for years, it would seem that if you look at California’s legacy of budgetary problems, they all come after the years in which prop 13 was passed.

    Simply put, Prop 13 basically puts a stick in the spokes of what is in most other places a natural progression of homeownership: As people age, the escalating property taxes on their home causes them to downsize and move to smaller homes or condos, which in return puts more inventory on the market for future buyers. This may sound sad, but it is the case in most parts of the country. If you think about it, its actually logical for people to downsize as they age.

    In the case of California, people simply stay in their homes forever, the supply of homes is more limited, and in the end, these older folks wind up paying a tiny fraction of what more recent homeowners in property taxes. I have a neighbor who paid $30,000 for his house. Its worth probably 500-550k at this point. But regardless, he’s only paying property tax on a 30k house.

    In many states, property taxes are used to pay for things such as schools, roads, airports, and other public works and projects. Again- California is missing out on untold billions, if not trillions of dollars in potential real estate taxes. Equally troubling is that the age of the average Californian is getting older and older. Alameda’s avg age is pushing 50 years old, as are many other Bay Area cities. I attribute this to it being increasingly difficult for younger buyers between 25-35 years of age to buy homes, thus they move away. So here you have a deteriorating situation where the age of the average citizen is getting older, the amount of taxes collected will progressively dwindle, and the state will have larger and larger budget shortfalls. Is it any wonder that California schools are ranked 47th in the USA? That is one of many results of having a badly implemented measure that shelters people and also cuts taxes due to the state.

    My proposal is to get rid of Prop 13, reinstate a property tax system, and start using these taxes to rebuild California’s infrastructure. The added bonus would be that in having a sort of consequential expense that increase with home values, this measure would also discourage rampant over-appreciation as seen in the housing bubble. Just look at Austin, TX ( or the state of Texas for that matter) which is one of the only states that is enjoying stable home prices and a healthy job market.They have higher property taxes, as in 3% or so. But houses are also relatively affordable, hence a healthier environment for all.

    That’s just my two cents…

  • Eve Pearlman

    Hi, Bob,

    Thanks for your thoughts/information. You might be interested in this blog,
    proposition13.wordpress.com, which tracks Proposition 13 news from around the state. Of particular interest, perhaps, is a conference at Cal last June devoted examining at Prop. 13 thirty years later. –Eve