The other reason the total assessed values don't drop easily is that commercial properties typically don't get reassessed even when they are sold. The corp/LLC owning the property is sold, rather than the property itself. Tada! No ownership transfer for property tax purposes.

mal (profile) wrote on Thu, 7/9/2009 - 9:40 am

Fiduciary Doodie... there was a great article in LA Weekly (I think) about the demise of yuppified town Eagle Rock. About the death of all those cute little shops, which the author called "mirrorshops," since they weren't really there to sell you anything you needed, or even make a secure profit - they were there to create atmosphere, to create the world as the proprietors and browsers wished it could be. Which would explain why there is so much handmade soap out there. Handmade soap isn't less expensive, or better for you (unless you enjoy smelling faintly like sour milk after your goat's-milk-soap shower)... it's just the idea of handmade soap is so nice.

It all relies on disposable income... The sand states and any place the bubble called home are awash in these sorts of businesses, as they provided sinks for copious disposable income.

MAL,

Nail meet hammer +10

pigged:

shill (profile) wrote on Thu, 7/9/2009 - 10:36 am reply Ignore user Hello Elmo..

keep asking where is the $12 trillion.

no no you dont get it, doesnt matter if there is or isnt 12 Trillion, we have 12 in stuff we need because of 8 year s of inseert name here... nothing to do with campaign contributors, or friends or relationships... its about fixing all those insert party /name here, irresponsible decisions...blah blah... we have only had 6 months, give us a chance and quit asking resonsible qustions

Just think what those property tax revenues would be now, absent Prop 13.

fiduciary doodie
that is very good.

This is often the case for people who have owned their home for many years. The Proposition 13-mandated 2 percent annual increase has likely not kept pace with the double-digit annual percentage increases in market value.

Double BS! Prop 13 does not "mandate" 2% increases, it limits increases to 2% without a vote. Municipalities are in no way required to increase taxes ever.

Second, market value is not the basis of property taxes in California. That is the point of Prop 13. Market valuation caused a situation where the stupidest person on the block caused the smartest persons taxes to rise. Who here would put up with that for any other form of taxable purchase? Instead of paying sales tax on the great $4 deal you got for that shirt at Kohl's in the 80% off section using a coupon you are charged based on the list price somebody paid 3 weeks ago.

My tax rate is ~1.6% on my home purchase, my neighbor ~1.1% on his. This is fairer? My taxes are going up, his going down. This is fairer? It's taxation, it ain't never gonna be fair. Get over it.

I hate it when bureaucrats spout off against never having all the taxing power they need/want. They are the reason we need things like Prop 13.

So, if we dissolve the current CA government, and start a new one, do the obligations carry over?

fiduciary doodie
that is very good.

Thx but never as elequent as Pavel or others....

how much Prop 13 costs California each year?

relative to higher taxes? relative to what?

Some that believe the taxes should be higher will tell you "lots" those that believe in no taxes will say "legis;ature should adjust their spending like other no tax states"..

you know what they say about statistics.. 90 percent are lies the other 40 percent damn lies...

burnside (profile) wrote on Thu, 7/9/2009 - 7:47 am

Just think what those property tax revenues would be now, absent Prop 13.

I'm listening. What do you think? Certainly values wouldn't be so high as buyers would have to discount for future tax increases. Lower revenue. Commercial buildings taxed at market value would cause a general business exodus lower remaining values and crushing the economy of this already business hostile state. Lower revenue.

It is an unprovable assertion that gross state/local tax revenues would be higher sans Prop 13.

Ah, wonderful Prop 13:

1. Convert your '70s home to an income producing rental @ market rates. No property tax increase.
2. Transfer the property to a trust, then to you children. No property tax increase.
3. Buy a commercial property...er...the LLC, not the property. No property tax increase.

Be one of the unfortunate fools who bought in the last 4 - 6 years...full tax.

Californians hate to pay their own way, and have devised numerous means to prevent this, dispite being the wealthiest state in the nation.

Being told you'll have to make do with a 2% cap is costing CA?

There is a differential in taxes paid between new and long-time home owners. What is the aggregate differential?

I'm not looking for a slugfest, I'm looking for arithmetic.

stimuls is used to crete jobs, revenue producing jobs that can stand on their own. Below from the AP are some examples of this and why we need a second stimulus:

Stimulus money targeted to help the homeless

Fresno, California will be given $1 million to dismantle tent cities and move resident's into privately owned apartments.

A nonprofit in eastern Idaho hopes to apply its stimulus funds toward one-time payments for rent or mortgages to those on the verge of losing their homes.

Stockton, California plans to buy foreclosed houses and renovate them as affordable housing.

Franklin County, Pa., will use stimulus money to help families with back rent and utilities, moving costs, short-term storage and credit repair.

In Reading, Pa., a coalition for the homeless plans to provide short-term rent aid and landlord-tenant mediation to prevent evictions

If it happens in California, it is humor.
There ought to be a special blog tagline or something to identify those.

what voters of cali need is a proposition to vote on each and every state expenditure. Then see how much revenue the state has to take in then...

like was said, if they relized they had to pay their own way or those that do see what is going where it would be different. Just like if every worker had to writye a weekly check to the IRS vs witholding...

Dealers offer $17.09 billion in debt to Fed

Fed buys $3 billion in Treasurys

Swell just swell

Oracle plans to cut as many as 1,000 jobs in Europe, the CFDT labor union said on its Internet site. Of the total, about 250 jobs will be lost in France, equivalent to 16 percent of the company's workforce there.

SP500 chart this morning looks like someone dropped one of those high-bouncy balls. We are currently headed back towards the floor.

JP:

I just momentarily bridled at the whole idea that P13 "costs" CA.

The clear intent was to give notice on the revenue side - the state's lawmakers seem never to have seen a spending bill they couldn't add a bit of bloat to, and homeowners made an attempt to rein them in. Or at least to make it clear that they'd be proceeding without control over RE tax increases. I don't live there, but I'd have voted for it. The legislature had no fiscal discipline then, and it obviously has none now.

Rob Dawg, substitute Rent Control for Property tax for your post.

Cali is the model/harbringer of the failed nation-state that we will all become. At the point when enough are either on the dole or government employees to constitute a voting majority, no conflicting interest exists to curtail continuous tax increases on everyone else and the wielding of law and emergency services for revenue purposes... and inevitable collapse begins in earnest.

cont:

The net effect of the evolving revenue mix on California's taxpayers was to leave them very close to where they were before Prop. 13 — near the top in rankings of taxes paid.

The Tax Foundation, which has tracked these statistics since 1977, put California's total state and local tax burden at 10.5% of per capita income, sixth highest among the 50 states and D.C.

In 1978, the year before Prop. 13 hit, California ranked third, with a burden of 11.7%. Prop. 13 briefly knocked it down to 22nd in 1979, but the next year it was back in ninth place and has been in the top 10 every year since 1995.

Even property taxes in California are above national averages when measured against income — that is, by ability to pay them. Census figures analyzed by the Tax Foundation show that California property taxes on owner-occupied housing in 2007 were 3.4% of the median homeowner income, compared to the national average of 2.9%.

So let's go back to asking what, in Time's words, "has brought California to such a perilous state?" One answer, consistent with the facts, is that Prop. 13 didn't go far enough. It raised barriers to tax increases but did nothing on the spending side.

And other attempts to limit spending (California technically has a cap now) were gutted by ballot initiatives to guarantee spending growth where it was popular, especially on schools.

Another cause was the state's failure to stand up to public-employee unions. The key year here was 1999, when Gray Davis and the Democrats had just won back the governor's office from the more fiscally conservative Republicans.

You mean like the high speed rail that was recently approved? Convincing people to spend is easy. It's getting them to tax in proportion that's hard.

Nate,

When i lived in GA we had SPLOST's in every county. What the voters did was get to vote to implement a temporary 1 cent special local option sales tax. but the kicker was the govt had to present to the people what the specific project was, how much it would cost and time. no open purse.

it was always successful. built roads, parks, pools, buildings, whatever the locals needed or wanted. some of the 1% burden fell on other county residents shopping....

thats why almost always SPLOST started with a road to a nice quiet spot on the outskirts to have a developer put a huge TANGERS outlet mall.....

"Orange County’s first drop in taxable property values in 14 years"

Mmm, I love the smell of default in the morning. Smells like..... HA! HA!

So what is happening with respect to CA state "revenue sharing" with the municipal governments?

Many good points here...

At least the govi coffers in Cali are getting more from some. Cali seems like a high tax state to me.
I wonder if the voters meant to extend prop 13 benefits beyond the grave.
Does the 33+ food stamp recipients include the dependent children or are the number of actual mouths far higher?

Bob Dobbs-

California has always wanted a free lunch. Now they are trying to get one from the Federal government.

"When i lived in GA we had SPLOST's in every county..."

Like Mello-Roos here in CA?
Mello-Roos 

As far as I can tell, on a state level, all money is sucked into the general fund, and then funged, so there's not a whole lot of connection between tax and result. Moreover the tendency is to push stuff into, not out of, the general fund. It's also much harder to convince people to tax for commitments that have already been made.

There is a differential in taxes paid between new and long-time home owners. What is the aggregate differential?
The differential is the price they paid for the property. If you paid 1 million for a property in 1970 or 1 million for it in 2007, your Prop 13 taxes are roughly the same.

Nate,

No Mello from what i read is special tax on local property, SPLOST is a SPecial Local Option Sales Tax.

Special-purpose local-option sales tax - Wikipedia, the free encyclopedia 

My old town, smallest county in Ga and US i think so that says a lot:
Athens-Clarke County's SPLOST [Special Purpose Local Option Sales Tax] Program

Rent Control is government price control and not competitive market pricing. In other words wrong.

nova (homepage, profile) wrote on Thu, 7/9/2009 - 7:59 am
Before I write the same old thing I would like to suggest that you make it to a poster from here (Bob Dobbs) blog.

Nova, thanks for the tip-link.
Bob's story on tee shirts is brilliant. Definitely hooked.

CR, "tax roll" and "taxable value" are not taxes (tax roll x tax rate = tax revenue), so you might want to change the post title.

Edit: I see the Bee title says "revenue" but then talks about values (I did not read the entire article to see if total county revenue is buried in there somewhere).

The success of the SPLOST programs are directly affected by the hard work of citizen volunteers and community participation. The Athens-Clarke County Commission appointed community members to craft the programs for the 2004, 1999 and 1994 votes. Members of the committees have continued to work with the ACC staff and elected officials as the Citizens Advisory Committees for each program. Additionally, community meetings are an integral component of many SPLOST projects

NOTE: Made up of community volunteers to craft the programs....... and its not a menu, you have yea or nea for all or nothing.... dont get me wrong many including myself were initially opposed , esp. since seemed to good to be true. Dont know many against it now.....

If you paid 1 million for a property in 1970 or 1 million for it in 2007, your Prop 13 taxes are roughly the same.

I understand that your taxes are the same for those two cases. However, the 1970 property is (probably) worth quite a bit more in 2009, so if that property were sold today, then there would be X more dollars collected in taxes over the next year. What is X? What is the sum of X across CA?

[Yes I realize that a change in tax structure would cause revaluation of RE. However, I'm am curious as to the present differential. As near as I can tell, that number is not known. I would love to know differently.]

Blackhalo (homepage, profile) wrote (in reply to...) on Thu, 7/9/2009 - 10:33 am

THAT is Cali.

Hot dogs are great, too, until you visit the sausage factory. CR provides a great view of that factory.

agree with novas' comment about mr. dobbs' blog.

nice writing bob, very enjoyable.

OT Noise @ BSR,
Nice work on the food bank donations!
Keep it up.

JP,

Figure on the generous side of "should be" 4% YOY appreciation in housing on high side avg, 2% low 3% nominal...

so 1 MM since '70 3% or 4% YOY appreciation..... thats your delta then apply the tax rate on the delta and you get the missing link revenue to the state...

From the manhattan rent link above: Studio prices fell 18 percent to $2,000; one-bedrooms declined 13 percent to $2,795; two-bedrooms were down 5.1 percent to $4,550 and three-bedrooms dropped 4 percent to $7,673.

Damn. Any guesses as to price to rent in The City?

Thnx, HomeG........it's for selfish reasons - it makes ME feel better.

"Studio prices fell 18 percent to $2,000;"

COUGH

damn, I should have kept the $700/mo studio I had in the East Village in the mid-90s, and then just subletted it out forever after I moved. :-/

When insanity enters the market as did real estate in Cali there was not even a though of reality little lone prop 13.

It is just that our current crop of politicians do not feel constrained by such nuance.

are you serious I didnt know that, seriously, have to have a balanced budget but dont aknowledge that...wow precedent set for national pay go efforts...crap

So ... I don't understand it. In the middle of GDII, with a historic housing crash and lost wealth, the state of California has a budget shortfall which is 3.5% of the state's GDP.

That seems remarkably good to me. Why shouldn't the state be able to survive this without catastrophic failure?

(note: I am long California, having just moved here).
(edit: restate the shortfall as a percentage of total state domestic product)

Alcoa earnings:

First, Alcoa's report is nowhere to be found on the web. Alcoa hasn't posted it on its site, and the SEC doesn't have it on EDGAR. I found the news release on Bloomberg.

The second quarter of 2009 showed a loss from continuing operations of $312 million, or $0.32 per share...

Revenues of $4.2 billion... down 41% from 2Q08...

"Probably would also push out older retired people "

I'd rather have a tax-rebate system for lower-income seniors (like NY's STAR) rather than prop 13.

People wouldn't get pushed out, but also long-term property owners would still have to pay their fair share.

WASHINGTON (AP) -- Wholesale inventories fell for a ninth consecutive month in May, a decline that has contributed to the longest recession since World War II as factories have been forced to slash production amid crimped demand.

The Commerce Department said Thursday that inventories dipped 0.8 percent in May, slightly smaller than the 1 percent decline economists had expected.

Sales at the wholesale level posted a 0.2 percent rise in May, better than the expected flat reading. It was the best showing for sales since a similar rise in February.

BANGALORE (Reuters) - American International Group Inc (NYSE:AIG - News), the insurer rescued by a series of federal bailouts, may have zero equity value due to the risk of more credit default swap losses and the disposal of key assets at low valuations, Citigroup said.

Potential markdowns in AIG Financial Product unit's regulatory CDS portfolio may result in collateral calls that would again put pressure on AIG's liquidity, Citigroup analyst Joshua Shanker said.

"Such collateral calls could also pressure rating agencies to lower their credit ratings for the company, leading to a similar cycle to the one that the company experienced prior to the massive government intervention in the third quarter," Shanker wrote in a research note.

Last month, AIG revised its 2008 annual report to add a new risk factor that shows it may recognize valuation losses on a CDS portfolio if credit markets continue to deteriorate.

One mans take on green shoots:
YouTube - green shoots your taxes are going up

Thanks, all. We try.

@shill,

Nice article on the condo association BK. That is one F'ed up situation.

Looks like the remaining condo owners will never get access to the pool or parking unless they make separate arrangements. Or, everyone may end up walking and the whole building could become a ghost tower.

I'd rather have a tax-rebate system for lower-income seniors (like NY's STAR) rather than prop 13.
I'd rather know what the tax rate is going to be 10, 15, 20 years from now than have to do a means test. The place I'm in now was purchased four years ago (it's a failed flip) and I don't think it would be fair to my neighbors to pay higher taxes for our insanity. The place uphill from me (really nice place) has lost about 250K in appraised value since it was purchased in 2007; but I don't think it would be equitable to have raised the taxes of my next door neighbor's house which isn't worth that amount (purchased in the '60s.)

Rob Dawg

im a tax and spend democrat who agrees with you about the "smartest-dumbest on the block comment" you made above about how property taxes are computed

while i favor a moderate level social activism and reasonable levels of taxation (yeah i know whats reasonable

none the less i hate property tax...it is irrational, confiscatory and inequitable

hey, with income tax and sales tax, if i make and spend a big pile of money i pay more and i can afford it

with a tax on your home you could be out of work, sick in the middle of a depression, penny-less and be thrown out of a home you built and or paid for years ago...totalitarianism at its worst

Blackhalo wrote: Cali is like the Maddoff investor, who lives next door, who shows you his statement, showing a precisely 20% return, year after year. You tell him, "That's not healthy, get out while you can." But year after year he shows up, to tell you how much of a bazillionare he now is.

That is the best description of the California mess that I have seen to date.

123+ BH

[(note: I am long California, having just moved here).]

Ahhhh... some anecdotal evidence supporting the "everyone wants to live here" contingent.

Did you get a good deal on U-haul rate ? Last one standing in CA gets to hold the bag.

Swimming against the stiff current isn't usually a good strategy.

@shill,

Nice article on the condo association BK. That is one F'ed up situation.

Looks like the remaining condo owners will never get access to the pool or parking unless they make separate arrangements. Or, everyone may end up walking and the whole building could become a ghost tower.

Yes very interesting indeed CC....tough situation for the existing parties.

Did you get a good deal on U-haul rate ? Last one standing in CA gets to hold the bag.

Swimming against the stiff current isn't usually a good strategy.

Funny you mention it -- the U-haul was almost free.

The gasoline to move it was more expensive than the rental by far.

re: tide, been swimming against it for about 35 years, so far, so good. I ain't buying a house any time soon!

Tell a politician about a problem and he or she will derive a way government can fix it.

Tell a Wall Streeter about a problem and he or she will derive a way to profit from it.

good articles... Interesting Finance & Economic articles 

The problem with problems is sometimes solutions become worse problems than the original problems.