[EconProf]

$10 per hour minimum wage.
Yep. That will sure help those minority teenagers get their first job.

[EconProf]

My son is a single, healthy 30-year old. He has always bought inexpensive health insurance on his own with a high deductible. He pays the first $2000 per year of any medical expenses and 20% of anything over that amount. Very cheap because at his age the insurance company has little risk and competition with other insurance companies forces them to price it low. Also, he shops around when he needs medical service, offers to pay up front, and gets huge discounts when the provider realizes they don’t have to deal with insurance paperwork. In other words, he is dealing in the private sector he has found the right solution for his situation, and puts no burden on others to subsidize his medical needs.
Now, under Obamacare, he will see his costs double or triple because he will have to pay for older, less healthy people. The government is imposing a one-size-fits-all plan upon us rather than letting us pick and chose what best fits our situation. The result is hidden subsidies to some and hidden costs to others. For all you Piggs under 40, and especially those under 30, the coming rate shock will be a wakeup call. Interestingly, the under 30 year olds were those who most likely voted for Obama.

[EconProf]

I’m surprised so many people on this site want to go whole hog into single payer. I guess the government has done such a good job rolling out Obamacare, they should now take over 100% of health care.

[EconProf]

I have always found the Assessor’s office to be helpful and conscientious in my many dealings with them over the years. They have to be because they are constantly challenged in their decisions and rulings and have to justify and document them thoroughly. If anything, they tend to avoid conflict by leaning slightly toward the taxpayer’s side. The value of landscaping is murky, unlike hard and fast square footage and neighborhood comps, so you are likely to actually be underassessed for the true value of what you have done.
In contrast, I have many properties in Yuma County where I’ve done battle with the Assessor, and come out on the short end. Their property values have been falling in recent years (stabilizing now), and the Assessor has been completely unreasonable in recognizing that–revenues, you know. I only got some relief on two recent appeals by threatening court action and hiring and paying for a private appraiser to prove the lower values.

[EconProf]

Go ahead and fill out the form and stress that it was all outside landscaping on a new house that had no landscaping.
Their assessment depends mostly on square footage and neighborhood price per square foot. Accordingly this should have little or no impact on your property taxes.

[EconProf]

A couple of factors limit how much water savings this could really achieve:
1. San Diego can go six months without a drop of rain (as your comment suggests), so this would be of no help during those months–the very months in summer when your lawn needs the most water.
2. During our rainy winter months, some people can get away with turning off their lawn sprinklers entirely, so your plan would yeild no savings for those periods.
Finally, leveling a lawn is a HUGE amount of work. And do you have a place for the extra soil?

[EconProf]

For those who do not know the background of Dr. Carson, he is a famous black physician, a strong conservative, and an eloquent speaker. Several months ago he gave a powerful speech in front of the Obama’s during which Obama was visibly embarrassed by what he heard. In true Chicago fashion, the good doctor was soon thereafter subject to an IRS audit.
Yes, this could be sheer coincidence, although I believe less than 1% of returns are audited (higher for higher-income people like Dr. Carson).

[EconProf]

Yes, I know. The New York City Opera Company declared bankruptcy two days ago. It operated in Lincoln Center. Not related to the Metropolitan Opera, which survives.
My comment was to wonder whether union pay & work rules played a part in the demise of the NY City Opera.

[EconProf]

Didn’t the New York Opera just go out of business? I know they were close to the edge. High union wages may or may not have been a factor. But ticket buyers and donors do not have infinite resources, and high costs of production must be reflected in ticket prices. Consumers have choices.

[EconProf]

Correct, Leorocky, the stock market has historically delivered far better rates of return than the bond market and Treasuries. That’s going back many, many decades to smooth out short term ups and downs.
CA Renter may be referring to the pension funds’ poor timing in entering into the stock market, but that’s due to the managers poor choices. No one forced them to take risks–they had the same information available to them as all other investors (myself included) who lost money in the stock market meltdown.

[EconProf]

CA renter, we agree on the main facts, but I come to different conclusions.
First, a primer on what Prop 13 did. Throughout the 1970s, property values rose rapidly in CA, and tax assessments rose accordingly. Taxes averaged about 2% of value, roughly in line with the national average. Homeowners were seeing their tax bills rise astronomically, fueling voter anger, especially when they saw local tax revenues soar and surpluses generated. They understandably felt local governments would simply find more wasteful ways to spend it. Crusty old conservative Howard Jarvis capitalized on this anger by proposing an easy-to-understand blunt instrument: Limit all property taxes to 1% of the property’s value, and only allow that amount to increase by 2% a year, no matter what inflation is (which was then soaring). This was easy to understand by the angry voters, but also contained problems. In the long run it created unfairness in that it favored those who stayed put in their homes while their neighbors sold and created a new higher assessment for that neighbor and resulting tax. It also favored business property where changes in ownership or shares did not prompt an actual property sale and resulting higher property value and tax.
We live with these inequities today, and I’d be happy to see them fixed even though that would upset a lot of people.
Now back to where CA Renter and I agree on the facts but come to different conclusions.
I buy the claim that the accumulated surplus would be $10 billion from 1970 to 1978 had Prop 13 not passed. But voters were angry that government was piling up surpluses, profiting from the massive inflation and even faster rise in property values during the 1970s, while widows were being taxed out of their houses. They rightly suspected governments should rein in their spending instead of hiking tax revenues by 10 – 20% per house per year. So they flocked to Jarvis’ crude instrument of Prop 13, however imperfect it was.
CA Renter also stated that 28% of voters believed government could cut 40% of tax revenues without cutting services. I can accept that statement because 1) Many examples of government waste were cited by Jarvis, as well as government surpluses as they couldn’t spend it fast enough, and 2) 28% is not that high a number (72%, after all, do not agree).
In sum, Prop 13 passed because of voters’ anger, by a nearly 2 to 1 ratio. Then-governor Brown was solidly against it, but afterward embraced it, even claimed some credit for it. The huge drop in property tax revenues was offset by the state taking over the financing of many local functions, especially in education. Local school districts lost much of their autonomy and surrendered to state controls, to their detriment. That’s why our income and sales taxes remain so high, while our property taxes paid per homeowner are roughly at the national average (CA homes are higher in value than the national average).

[EconProf]

States tend to have four major tax sources: Sales taxes, individual income taxes, corporate income taxes, and property taxes, (locally imposed). In the first three categories, CA is highest in the nation, or very close to it.
Only in property taxes are Californians about in the middle of states, measured in absolute dollars paid.
The politicians won’t be happy until they eliminate Proposition 13, and succeed in making our property taxes near or at the highest among states. They will likely succeed.

[EconProf]

We agree on most of this, ER. Like much in economics and finance, decisions hinge on assumptions we must make with imperfect knowledge. If the MR does go up 2% a year (which is not assured–they went down for the past two years), then my 4.2% hurdle becomes 6.2%. Since I have 6% mortgages I could pay down with this money, its a tossup.
One question that has been batted around on this thread is whether paying off the MR translates automatically into a correspondingly higher value to the property. If not, IOW if buyers are not perfectly rational, then someone could lose by paying off the MR and then moving. So I should estimate my odd of moving in the next few years and factor that in to the decision.
In general, I think that buyers are pretty rational, and plug do MR’s into prices automatically. A heavy MR will lower a property’s value; its absense will raise it. For a buyer to swear off MR areas entirely would not be rational, since in newer areas they are practically impossible to avoid. If one has a family with school kids, MR is the price you pay for better schools, on average.
As for the close-together, grotesquely large and expensive new houses they are putting up around Santaluz in 4S and Del Sur, I agree with BG that they are not to my taste. But you are paying for the demographics, the shopping, and the resale value, and that is what is compelling to today’s buyers.

[EconProf]

Since early retirement and I both live in Santaluz and face Mello-Roos fees, we met up today to compare notes. It turns out the decision of whether or not to pay off the MR is not at all clear cut.
I brought my tax bill with me so we could crunch the numbers to see if it is worthwhile. I also called earlier today, the number on the tax bill to learn my cost to pay it off, and got additional information about MR.
My bill contains two MR payments, CFD#2 for $2108 per year, and expiring in 2030, and Poway Unified, CFD#4 for $904 per year. I only called the number for the first, which revealed that my cost would be “about $30,000” to pay off (exact amount would cost me $500 to find out, but would apply as a credit to the payoff). That means if the amount stayed the same for the next 17 years, I would pay a total of about $36,000.
It clearly appears I should NOT pay it off, given that I could invest that $30,000 today and have it double assuming a mere 4.2% annual ROR compounded. Of course the unknowns are 1) Will that $2108 stay the same for 17 years, and 2) Will that expiration date of 2030 stay the same.
The guy I talked to on the phone was reassuring on both counts, but I do not share his confidence. Still, changes in 1 or 2, or both, would have to be pretty major to prompt me to pay it off. And the hurdle of 4.2%, (or 5%, or 6% depending on assumed changes in 1 or 2) should be pretty easy to beat with alternative investments, or paying down my other mortgages, of which I have many.
Early retirement and I also determined that the two MR fees are based on different factors. It seems the first depends on square footage, and the Poway Unified one depends on property value. Interesting.
Anyway, I am not paying off the MR, based on this information, unless someone here can bring other evidence to bear.

[EconProf]

BG, you are up against many posters here who claim you are overbearing with your opinions and seem to expect other to share your values when seeking a home. They are right.
That said, you are sometimes a wealth of information, usually well-documented, and I value you for that. And I really do thank you for no longer putting quotes around everything. Now work on minimizing IMHO, CAPITALIZING FOR EMPHASIS, and 🙂 IMHO

[Author]

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