How can the whole mess of CA bankruptcy be put on Prop 13? THere has been massive growth since then and those properties are not under prop 13. The big change has been conservative gov't to liberal goverment. In my view that always means financial mismanagement.
It is not the fault of prop 13, they are just trying to prepare everyone for the attempt to get rid of it. We are in this mess as a result of over spending, an excess of entitlements and the cost of illegal immigration. The pin heads in power will not rein in spending unless we force them to and they will try and scare everyone into believing there are no ther options than an increase in taxes.
Submitted by barnaby33 on June 16, 2009 - 11:30am.
Whoever said those properties built after prop 13 was enacted aren't affected is full of it. Prop 13 limited tax growth, not the cost to maintain infrastructure. Furthermore commercial properties also were included. So grandma can keep her strip mall too!
Spending is part of the problem, but really its just part. Inflation is the real killer here. Prop 13 was just a symptomatic fix. It doesn't stop the increases in cost to fix potholes or pay teachers, just the ability to collect taxes to pay for them.
Submitted by pencilneck on June 16, 2009 - 12:01pm.
I would argue that spending is the bulk of the problem. Property tax revenue has gone up faster than the rate of inflation most years of the past few decades.
Although it has softened in recent years, the real estate boom left us with a fortune from a tax revenue point of view. The fact that we were able to outspend the boom leaves me to believe that spending is the true culprit.
Look at the graphs. Spending is exactly the problem. State and locally. Parties over. Tax revenue is falling off a cliff. They will try to change this regardless of the economic contraction we are now experiencing.
Pandering to unions with jobs and comp package increases can no longer be done. And the private sector does not want more taxation. I'd say the politicians in office right now will have a hard time getting re-elected in the next round.
Submitted by SD Realtor on June 16, 2009 - 1:10pm.
Peter you and I don't agree on much but you absolutely nailed it. If people don't think that 1% property tax on what is clearly the most overinflated housing market in possibly the world is enough then they just don't get it.
The state legislation simply does not understand the concept of a balanced budget.
Submitted by SanDiegoDave on June 16, 2009 - 3:15pm.
After last month's ballot measure results, does anyone really believe that CA voters would overturn Prop 13?
One needs only to look at other states that have no Prop 13. The states that have full, unrestricted ability to not only raise property tax rates, but also reassess value every year. They're all running massive deficits too.
Submitted by paramount on June 16, 2009 - 10:14pm.
It's all of the above - mark my words though - nothing will really come of it except possibly more fees and taxes.
Assembly members will still get their 120k salary + free car (many opt for a Lexus of course) + free gas + free insurance + 30k per diem + this + that....
It's all of the above - mark my words though - nothing will really come of it except possibly more fees and taxes.
Assembly members will still get their 120k salary + free car (many opt for a Lexus of course) + free gas + free insurance + 30k per diem + this + that....
If only that was the problem, and not just a symptom.
The problem isnt the few million the legeslator rewards itself with, it is the billions that are spent taking care of people and the costs of providing that service. The medical bills, the Schools, healthy children programs, the free lunch/food programs, the roads and infastructure etc etc etc. All the stuff that sounds good but we dont want to pay for.
Basically there alot of people out there taking alot out of the system and putting little to nothing back in.(Most of them are either old, or very young.)Those putting into the system dont want to put anymore in, so the system is running out. We either need to put more in, or expect less from the system (You mean Octomom cant have 14 children, many of whom are special needs, and have the state pay for all their care/education/costs!) She is only an extream example of the real problem.
This is a big story for another reason. Whatever happens in CA will usually spread to the nation. We should expect CA problem of today to be US problem in less than 10 years. My guess is, by 2020, a major buyer of treasuries will be the Fed.
After last month's ballot measure results, does anyone really believe that CA voters would overturn Prop 13?
One needs only to look at other states that have no Prop 13. The states that have full, unrestricted ability to not only raise property tax rates, but also reassess value every year. They're all running massive deficits too.
It's the spending. Pure and simple.
Absolutely true. I've seen tremendous waste in the public sector, yet think the salaries themselves are not really the problem. There are many places that should be cut long before cutting salaries of those who provide the actual services (teachers, firefighters, cops, etc.). The administrative sector has expanded too much, and the govt is very top-heavy.
Going to say it again...we cannot support all the illegal immigrants. If people want them to stay here (read: employers), they have to pay for the associated costs themselves. The taxpayers should not be burdened with these costs.
I think most on this blog recognize the State could function on a lot less money and our children would still go to school, police would still ticket speeders and fire-fighters would still put out fires, but just to appease those who believe more taxes are the answer. Say for the sake of argument we repealed Prop 13, increased sales tax to 30% and increased State income tax to 30% etc, and were able to double State Revenue.
OK, problem solved. Schools could get all the extra money they need to provide our children with the finest possible education, police would all all over the place. Fires would almost put themselves out, Pot smokers could all be given life sentences without possibility of parole and we could provide for all the illegals who could ever want to come here.
Don't you think it more likely that raises and bonuses would be flinging around like never before, retirements for senior officials who would surely proliferate would increase massively, and in the end there would be no money for teachers, prisons, firemen etc?
The fact is that there is not enough money in the universe to support the kind of Government we have today and things will have to change radically.
http://www.youtube.com/watch?v=gJZDusqg6qw
to live within your means is meaningless to this politician. Her number is 916-319-2007. I am sure she would like to hear from us.
Adjusted for population growth (including illegals!) and inflation, and using 1998 as our base year, California's budget "should" be about $115 billion. Instead it's about $145 billion.
That sure looks like a spending problem, not a revenue problem, to me. Furthermore, I believe CA's revenue is slated to be about $110-$120 billion this year - even in these "troubling times." Again, this looks like a spending problem, not a revenue problem.
I don't recall Californians "suffering" from a draconian budget back in the late-90s. Somehow, they managed...
Submitted by patientrenter on July 2, 2009 - 6:08pm.
The play comes in several acts. This not the final act. We have to go through small and /or temporary cuts in the most visible and painful segments of CA govt spending.
After that builds some public sympathy for relief for CA, the feds will relent. "We had to save poor flesh and blood Californians from this horrible and unfair fate. They are practically dying for want of a few tens of billions of dollars." A few of the most high profile spending cuts will be left in place, as a sop to federal taxpayers.
It is possible that a condition of receiving federal funds will be an increase in California taxes. There are many who would like nothing better than to see the end of Prop 13, and this bailout would be one of the best chances in years to achieve that. A good number of Republican pols and businessmen could be turned by the bailout money.
Give it another few months. The bailout is on its way.
There are many who would like nothing better than to see the end of Prop 13, and this bailout would be one of the best chances in years to achieve that. A good number of Republican pols and businessmen could be turned by the bailout money.
Proposition 13 was approved in 1978 by a 65%/35% margin. Since that time, most polls have shown an approval rating for Prop 13 in the high-60s. While I never say never, it would be unbelievably difficult to overturn it. Anyhow, Prop 13 ain't the problem. The spending is the problem.
Submitted by patientrenter on July 2, 2009 - 7:23pm.
davelj, I am not predicting that Prop 13 will fall. But if Prop 13 is that big castle on the hill with stout walls that seem impregnable, I am suggesting that the barbarians outside the gates are eyeing the possible weak spots, seeing something interesting, and sizing them up carefully. We will see what they decide to do.
Many other states besides California have budget problems, and they do not have Prop 13.
While Prop 13 does affect the budget, the crazy government way of spending money is the real problem. In government budgets not increasing spending is a cut in spending?
At 3.75% annual return, wouldn't California IOU's be better than current CD's right now for investment purposes?
Also...
1. State issues registered warrants @ 3.75% interest.
2. Major banking institutions will accept the registered warrants as cash.
3. Major banks can borrow money from the Fed at 0% or use TARP money to cover these warrants.
4. Major banks cash in warrants in Oct'09.
5. State of California gets Govt bail out indirectly.
6. State Congress delays even more because debt has been financed....
What is the risk? California going BK?
Would the registered warrants be redemable?
Does anyone have about $200-300k of registered warrants they want to sell?
3. Major banks can borrow money from the Fed at 0% or use TARP money to cover these warrants.
The TARP money does not cost 0%. Last quarter, BofA paid over $400Mil on interest alone (per quarter) on the TARP money they borrowed. Its in their 10Q. ($400M * 4Q)/$45B = 3.555% interest. Banks don't want to risk it because of the risk of default. It is not money-good.
How can the whole mess of CA bankruptcy be put on Prop 13? THere has been massive growth since then and those properties are not under prop 13. The big change has been conservative gov't to liberal goverment. In my view that always means financial mismanagement.
More taxes and less services. Change that you can count on.
It is not the fault of prop 13, they are just trying to prepare everyone for the attempt to get rid of it. We are in this mess as a result of over spending, an excess of entitlements and the cost of illegal immigration. The pin heads in power will not rein in spending unless we force them to and they will try and scare everyone into believing there are no ther options than an increase in taxes.
Any attempt to remove prop 13 would be political suicide. But since the Governator doesn't care about reelection, he may give it a try.
Whoever said those properties built after prop 13 was enacted aren't affected is full of it. Prop 13 limited tax growth, not the cost to maintain infrastructure. Furthermore commercial properties also were included. So grandma can keep her strip mall too!
Spending is part of the problem, but really its just part. Inflation is the real killer here. Prop 13 was just a symptomatic fix. It doesn't stop the increases in cost to fix potholes or pay teachers, just the ability to collect taxes to pay for them.
I would argue that spending is the bulk of the problem. Property tax revenue has gone up faster than the rate of inflation most years of the past few decades.
Although it has softened in recent years, the real estate boom left us with a fortune from a tax revenue point of view. The fact that we were able to outspend the boom leaves me to believe that spending is the true culprit.
http://www.signonsandiego.com/uniontrib/...
Look at the graphs. Spending is exactly the problem. State and locally. Parties over. Tax revenue is falling off a cliff. They will try to change this regardless of the economic contraction we are now experiencing.
Pandering to unions with jobs and comp package increases can no longer be done. And the private sector does not want more taxation. I'd say the politicians in office right now will have a hard time getting re-elected in the next round.
Eventually, in the near future, the USG will be in the same position. That is when the fun starts....
Peter you and I don't agree on much but you absolutely nailed it. If people don't think that 1% property tax on what is clearly the most overinflated housing market in possibly the world is enough then they just don't get it.
The state legislation simply does not understand the concept of a balanced budget.
It really isn't that challenging of a concept.
After last month's ballot measure results, does anyone really believe that CA voters would overturn Prop 13?
One needs only to look at other states that have no Prop 13. The states that have full, unrestricted ability to not only raise property tax rates, but also reassess value every year. They're all running massive deficits too.
It's the spending. Pure and simple.
It's all of the above - mark my words though - nothing will really come of it except possibly more fees and taxes.
Assembly members will still get their 120k salary + free car (many opt for a Lexus of course) + free gas + free insurance + 30k per diem + this + that....
Assembly members will still get their 120k salary + free car (many opt for a Lexus of course) + free gas + free insurance + 30k per diem + this + that....
If only that was the problem, and not just a symptom.
The problem isnt the few million the legeslator rewards itself with, it is the billions that are spent taking care of people and the costs of providing that service. The medical bills, the Schools, healthy children programs, the free lunch/food programs, the roads and infastructure etc etc etc. All the stuff that sounds good but we dont want to pay for.
Basically there alot of people out there taking alot out of the system and putting little to nothing back in.(Most of them are either old, or very young.)Those putting into the system dont want to put anymore in, so the system is running out. We either need to put more in, or expect less from the system (You mean Octomom cant have 14 children, many of whom are special needs, and have the state pay for all their care/education/costs!) She is only an extream example of the real problem.
California essentially bankrupt
Deficit forces California to issue IOUs
http://www.ft.com/cms/s/0/1940d18e-64cf-...
States brace for shutdowns
http://www.latimes.com/news/nationworld/...
This is a big story for another reason. Whatever happens in CA will usually spread to the nation. We should expect CA problem of today to be US problem in less than 10 years. My guess is, by 2020, a major buyer of treasuries will be the Fed.
One needs only to look at other states that have no Prop 13. The states that have full, unrestricted ability to not only raise property tax rates, but also reassess value every year. They're all running massive deficits too.
It's the spending. Pure and simple.
Absolutely true. I've seen tremendous waste in the public sector, yet think the salaries themselves are not really the problem. There are many places that should be cut long before cutting salaries of those who provide the actual services (teachers, firefighters, cops, etc.). The administrative sector has expanded too much, and the govt is very top-heavy.
Going to say it again...we cannot support all the illegal immigrants. If people want them to stay here (read: employers), they have to pay for the associated costs themselves. The taxpayers should not be burdened with these costs.
I think most on this blog recognize the State could function on a lot less money and our children would still go to school, police would still ticket speeders and fire-fighters would still put out fires, but just to appease those who believe more taxes are the answer. Say for the sake of argument we repealed Prop 13, increased sales tax to 30% and increased State income tax to 30% etc, and were able to double State Revenue.
OK, problem solved. Schools could get all the extra money they need to provide our children with the finest possible education, police would all all over the place. Fires would almost put themselves out, Pot smokers could all be given life sentences without possibility of parole and we could provide for all the illegals who could ever want to come here.
Don't you think it more likely that raises and bonuses would be flinging around like never before, retirements for senior officials who would surely proliferate would increase massively, and in the end there would be no money for teachers, prisons, firemen etc?
The fact is that there is not enough money in the universe to support the kind of Government we have today and things will have to change radically.
Government is the problem:
http://www.youtube.com/watch?v=gJZDusqg6qw
to live within your means is meaningless to this politician. Her number is 916-319-2007. I am sure she would like to hear from us.
I think I pointed this out months back, but...
Adjusted for population growth (including illegals!) and inflation, and using 1998 as our base year, California's budget "should" be about $115 billion. Instead it's about $145 billion.
That sure looks like a spending problem, not a revenue problem, to me. Furthermore, I believe CA's revenue is slated to be about $110-$120 billion this year - even in these "troubling times." Again, this looks like a spending problem, not a revenue problem.
I don't recall Californians "suffering" from a draconian budget back in the late-90s. Somehow, they managed...
The play comes in several acts. This not the final act. We have to go through small and /or temporary cuts in the most visible and painful segments of CA govt spending.
After that builds some public sympathy for relief for CA, the feds will relent. "We had to save poor flesh and blood Californians from this horrible and unfair fate. They are practically dying for want of a few tens of billions of dollars." A few of the most high profile spending cuts will be left in place, as a sop to federal taxpayers.
It is possible that a condition of receiving federal funds will be an increase in California taxes. There are many who would like nothing better than to see the end of Prop 13, and this bailout would be one of the best chances in years to achieve that. A good number of Republican pols and businessmen could be turned by the bailout money.
Give it another few months. The bailout is on its way.
Proposition 13 was approved in 1978 by a 65%/35% margin. Since that time, most polls have shown an approval rating for Prop 13 in the high-60s. While I never say never, it would be unbelievably difficult to overturn it. Anyhow, Prop 13 ain't the problem. The spending is the problem.
davelj, I am not predicting that Prop 13 will fall. But if Prop 13 is that big castle on the hill with stout walls that seem impregnable, I am suggesting that the barbarians outside the gates are eyeing the possible weak spots, seeing something interesting, and sizing them up carefully. We will see what they decide to do.
Many other states besides California have budget problems, and they do not have Prop 13.
While Prop 13 does affect the budget, the crazy government way of spending money is the real problem. In government budgets not increasing spending is a cut in spending?
At 3.75% annual return, wouldn't California IOU's be better than current CD's right now for investment purposes?
Also...
1. State issues registered warrants @ 3.75% interest.
2. Major banking institutions will accept the registered warrants as cash.
3. Major banks can borrow money from the Fed at 0% or use TARP money to cover these warrants.
4. Major banks cash in warrants in Oct'09.
5. State of California gets Govt bail out indirectly.
6. State Congress delays even more because debt has been financed....
What is the risk? California going BK?
Would the registered warrants be redemable?
Does anyone have about $200-300k of registered warrants they want to sell?
Luck In OC
@LuckyInOC
The TARP money does not cost 0%. Last quarter, BofA paid over $400Mil on interest alone (per quarter) on the TARP money they borrowed. Its in their 10Q. ($400M * 4Q)/$45B = 3.555% interest. Banks don't want to risk it because of the risk of default. It is not money-good.