San Diego Housing Bubble News and Analysis

Special election is May 19, deadline to register is May 4, I think.

Vote no on everything. Our "representatives" have hijacked the system to such an extent that we do not know what we are voting for. Try to read the actual text of the measures. If you understand any of them let me know. They always say one thing but in the end they do what they want. Remember how the lottery was going to provide all that money to the schools?

Vote no to everything unless you want to feed the government beast with more taxes.

Yep, I'm voting no on all this bullshit.

I haven't read the pamphlet yet, but tend to vote no on any measure which limits the legislature's ability to shift cut or raise spending. Ca already has too much auto pilot spending, which is actually a large part of why we are so broke and unable to cut spending. The legislature only controls about 16% of the budget (IIRC).

If you don't like what the legislature spends money on, vote for a different legislator. Prop 13 is a prime example of trying to fix a symptom, not the problem.

Josh

there are issues with Prop 13 - it could well be reformed

commercial real estate very rarely gets re-assessed for tax purposes because of Prop 13 - the property is held inside a corp or LLC - the corp or LLC is sold but, the way Prop 13 currently works, the property held inside the corp / LLC DID NOT CHANGE HANDS and therefore no tax re-assessment is triggered

another injustice of Prop 13: person has owned residential real estate in CA for 30 years - tax increases on the property are limited by Prop 13 but the tenants living in those properties are paying rents based on TODAY'S cost of living which includes property taxes - ie, the long-term landlord is collecting today's property taxes (in the form of rents) but only paying yesterday's property taxes to the city - the landlord is shifting the burden of supporting those tenants onto the rest of the tax-payers

because Prop 13 limits the re-assessment of property values, cities try to expand their tax basis by building new sub-divisions, strip malls and big-box stores - thus we have the ever-expanding suburbs and all the commercial properties that now have 'For Lease' signs in their windows [stay tuned for the crash of the commercial real estate market - coming soon to a theater near you]

just making the point that Prop 13 is NOT just a symptom, it is one of the contributing factors to the economic woes being felt in CA right now

There are some inequities WRT prop 13 and non-residential property but with the way our state spends money, the minute the protection on the residential home owner is removed be prepared for a housing collapse that makes the current one look like a blip. We are in a severe recession and yet the fed, the state and the city are ALL raising taxes/fees and sticking it to the citizens. If you think that property taxes are any different you're high.

Screw with prop 13 or the home mortgage interest deduction and I'm walking away from my house and I'm sure many feel the same way.

4plex:

You are brave to suggest any changes to Prop 13. Your points are reasonable, but they won't be heard.

Prop. 13 has done a tremendous amount of damage to the state's fiscal situation and, as your examples illustrate, has many negative side effects.

But none of that matters, because the anecdote about a little old lady losing her home will scuttle any possibility of an objective debate.

This is a bunch of crap. The assessed value of real estate in CA doubled between 2000 and 2007, yet the state still managed to outspend the doubling in property tax revenue.

Our state does not have a tax problem, it has a spending problem.

that's right folks, an ex-landlord (and maybe future landlord) is recommending changes to Prop 13 that will hurt landlords

fair is fair

and yes, I know that changes to Prop 13 and winged monkeys flying out of my butt have about the same odds of occurring

~

I was NOT suggesting that we change Prop 13 at this point, just that there are changes that could be made

IMO most cities, counties and states are flat broke and busted (face it folks, the system is broken!) - we've already had two cities go bankrupt (iirc) and CA will probably be the first state to declare bankruptcy [if you have $$$ in municipal or state bonds be careful!]

raising taxes and fees is not the answer to these fiscal woes but that is what will be attempted first

at some point Americans and their supposed leaders will have to live within their means (which means massive cuts to spending) but that day will be postponed as long as possible

The Proposition method of governing in CA stinks. Very few people care enough to read the propositions carefully, and even fewer understand them. Never mind the long term consequences.
The spineless legislature refuses to make any hard decisions, and then various factions gin up a proposition. By the time it's time to vote on the thing, it is often impossible to decipher what a Yes or No actually implies.
When (not if) the results are negative, the politician's simply shrug their shoulders since it wasn't their bill!

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the public treasure. A. Tyler

--MicroGravity

I don't think it's necessarily a spineless legislature, although I think they're sometimes happy to hide behind the will of the voters. Due to the way the constitution is structured, some issues do require voter approval. However, due to the limited number of signatures required, a lot of bad props sneak onto the ballot if a big enough special interest wants to push them.

I would like to remind all the "No on everything" posters that Prop 1F's only purpose is to limit legislature pay raises. Even if you vote no on the rest, yes on 1F sends more of a message than a straight No vote.

Personally I think CA has both a tax revenue problem AND a spending problem. I don't have the expertise to have answers, but I'm pretty sure 1A-1E aren't very good answers.

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the public treasure. A. Tyler

If I understand correctly, our founding fathers did not create a democracy, they created a republic where the only people who could vote were property owners

I believe democracy is workable IF the vote is limited to stake-holders - once non-stake-holders are allowed to vote, Mr. Tyler's quote above becomes true

Not sure how to define 'stake-holder' in today's society - much easier to define who is NOT a stake-holder but I don't want to get the bleeding-heart liberals spun up

Yes, I heard a recent stat that 40% of US citizens don't pay a single cent in taxes, yet they can vote themselves new, costly government programs.

At a state level, I think the prime example was the approval of the high-speed rail system up to S.F., costing us billions. When this was approved, I knew for sure that we were all doomed.

I can't wait for the next proposisition mandating that all children get their own pony.

Like I said, even hint at re-evaluating the logic behind Prop 13, and they pounce. And they are always so angry...

Got a source for that statistic?

Here's lots of data on the State budget:

http://www.lao.ca.gov/laoapp/laomenus/la...

Total state budget for 2000/01:
$88 billion

Total for 2007/08:
$102 billion

Not exactly "double".

Property taxes go to the counties anyway...

But I'm willing to concede the benefit of the doubt: The state has a spending problem. So what do we cut?

Typically, when I ask this I just get answers like "cut off the welfare mothers", "deadbeats", and "Sacramento fat cats." Not really useful.

http://www.ebudget.ca.gov/pdf/BudgetSumm...

Seems like the only way to make substantial cuts is to go after the big ticket items: schools (already in trouble) or grandma's MediCal. Oh well, at least her property takes won't go up.

http://www.dof.ca.gov/budgeting/budget_f...

1999-2000: $85 billion
2007-2008: $138 billion

That's an increase of 62%. Not quite double but not nearly as low as your numbers indicate. Over that period, property tax revenue doubled and to hear the counties talk, the state takes the majority of the property tax revenue for themselves.

Did the population of CA increase by 62% in 7 years? 30%?

CA state spending is OUT OF CONTROL.

You want to know where to cut spending? Eliminate the generous pensions and paid healthcare. Do you know anyone in the private sector that gets to retire with a full pension and health benefits after 25 years on the job? Do you know anyone in the private sector that gets GUARANTEED investment returns on their retirement investments?

unfortunately we have dug ourselves a very deep hole with Keynesian economics and fiat currency

what we have created is an unsustainable system and we may have reached the system's limits

in the good old days, grandma wasn't on 6 prescription medications costing several hundred dollars per month - now that we've created a system where grandma IS on those meds, what do we do when we can no longer afford them? "Sorry, grandma - you're toast" doesn't go over very well in the media

and not only do we have grandma on 6 meds we have created an entitlement society where there is a general expectation that grandma's meds will be paid for one way or another

and not only do we have an entitlement mentality, our citizens are so economically illiterate that they believe just printing more money will solve every problem

damn this is depressing ...

Of course, increases in revenue would also need to be inflation adjusted.

Why did you choose 1999/2000 as the the benchmark year? Was CA so much better off back then that it is now? Why is that year the standard? (If all we have are relative numeric comparisons, one could even argue that spending in 1999 was too low...)

I do agree that state employee pensions are overly generous. But I don't know the numbers. How much of the budget goes towards pensions? Is it 30% of the total budget? (probably not that high) Even if was that high, and we slashed pensions by 33%, that only reduces the total budget by 10%. Still not enough. (And BTW, there's no law against you or I becoming a state employee -- we could enjoy the perks as well.)

In general, we are probably in agreement with the basic sentiment that government spending is too high. But vague, generic rants about it don't help, and only clutter the message boards. A real solution will require some homework - crunch some numbers and propose a specific course of action. Otherwise it's just complaining.

Although I'd like to see the gov't change course on some fiscal matters, I certainly don't think any of this is anywhere near depressing. Even if we go totally broke, we can still go outside and enjoy the sunshine. After all, we live in California.

http://quickfacts.census.gov/qfd/states/...

Population grew by about 8%, so if we normalize the 2000 budget number to 2008 using CPI and population growth, it comes out to about $114 billion.

Using meadandale's 2008 number, the size of the budget per capita grew a total of about 20% over an 8 year period. That's 2.5% per year. Definitely creeping upwards, but I'm not sure I'd label it as out of control.

Yep, this is a good discussion of the subject...

http://www.givemeliberty.50megs.com/An%2...

This is an easy one: 6 No's!!!

No on measures 1a-1f - they are tax increases as if we don't pay enough already!

Awesome quote meadandale. That is a keeper.

Try reading the Special Election Voter information guide. Understand it? Think they have hidden any loopholes in there? Trust them? If the "Special Fund for Economic Uncertainties" is such a good idea, why didn't they just implement it rather than putting it on a ballot? Questions, questions questions.

"Prop. 13 has done a tremendous amount of damage to the state's fiscal situation and, as your examples illustrate, has many negative side effects."

despite proposition 13, property tax revenue has gone up nearly 10% annually for the past decade. This is much higher than (the official rate of) inflation during the same time period.

If we are nearly bankrupt after a decade of 9% annual increases in property tax revenue there is nearly certainly a spending problem rather than a lack of revenue problem, in my opinion.

Nice charts here in around the middle of the page:
http://www.signonsandiego.com/uniontrib/...

What's worse than CA propositions? Putting quote stickers on bumpers and dancing in the streets with lattes. That's gonna fix the problem.

My Internet militia stopped Time Warner from capping off the Internet. My radio militia at KFI (AM 640, John & Ken) stopped the 5% raise for state leg. aides. today. They have exposed the CA republican party for their duplicity in the tax increases. These guys were campaigning for Arnold and now they rail against him. Now they are pushing hard against 1A-1E.

http://www.kfiam640.com/pages/johnandken...

Heres Mish's proposal from last year to cut CA budget. Its only a start but everyone else is too busy or not smart enough to read the 1000 pages.

http://globaleconomicanalysis.blogspot.c...

Good luck, I gotta do something more important, vote on next random singing sensation that has been marketed for us.

Whoa, that's exactly what I was thinking just before seeing that line!

As for Prop 13, it protecting poor little ladies like Allan's friend Sen Diane from losing her home.

California ranks among the top ten states with the highest tax burdens placed on its citizens and has been there for DECADES, even with Prop 13.

Here are the numbers to compare California taxes with other states.
http://www.taxfoundation.org/taxdata/sho...

The state is raising plenty of money through taxes, what needs to be cut is spending.

(BTW, the CA numbers dont include MeloRoos, which should be included as they were created by the legislature as a way to get around Prop 13s restrictions - in most every other state the things MRs pay for are funded out of taxes.)

Personally, I see Mello-Roos NOT as a way around Prop 13, but rather as a way for developers to overpay landowners for raw land.

The expenses covered by Mello-Roos should be covered by the developers/builders, and should be factored into their cost basis when doing feasibility studies. They should determine the price they can pay for the land based on these costs.

We have been subsidizing landowners for far to long. End-consumers should not have to pay for the foolishness of the developers/builders. This overpayment is enabled by the lax credit market and housing subsidies.

Agree with 4plex, though about Prop 13 for rentals.

I am 100% behind Prop 13 for personal, primary residences, but do not believe that we all have to subsidize landlords who do NOT pass this benefit on to their tenants (this would be their argument in favor of keeping their Prop 13 protection). Additionally, something needs to be done with commercial RE and Prop 13. Any transfer should trigger a reassessment.

If we ended subsidies for illegal immigrants (education and law enforcement/prisons being some of the largest state expenditures), I'd bet our financial "crisis" would end overnight. I've seen some numbers that claim 40% of our state's prison population consists of illegal immigrants. It's likely our school population at least mirrors this, if not more (much more).

For the bleeding hearts who want to keep illegal immigrants here (hint: it's the businesses who don't want to pay fair wages and want taxpayers to subsidize them for the additional burdens they place on the system), let them pay for these services themselves. We cannot continue to subsidize businesses who exploit illegal labor any longer. Additionally, we need to force Mexico to take responsibility for their problems and make them fix the problems at their source.