Posted on 11/26/2008 10:00:54 AM PST by NormsRevenge
California's financial free fall is likely to get much worse before it gets better, spreading from the statehouse to every other level of government, including schools, cities, counties and the special districts that fight fires, maintain parks and levees and run libraries.
Gov. Arnold Schwarzenegger and state lawmakers are already grappling with an expected drop in revenue from taxes on personal income, sales and corporate profits. Since they adopted the budget in September, the state's revenue estimate for the current year has dropped by $11 billion, or about 10 percent, with no prospect for a recovery in sight.
But that might be only the beginning of the bad news, according to a new forecast from a private economic consulting group that has consistently – and accurately — sounded a pessimistic note even as others predicted that the downturn would be brief and relatively benign.
The new outlook from Beacon Economics is especially grim because it suggests that property taxes, the most stable revenue source for local government, are about to start declining for the first time in a quarter-century. If that happens, the reversal would have dire implications for local services that so far have not taken the full brunt of the economic slowdown.
Property taxes in California are governed by Proposition 13, the still-controversial 1978 amendment to the state constitution. That measure capped real estate taxes at 1 percent of assessed value and limited assessment growth to 2 percent a year as long as a piece of property did not change hands. When property is sold, it is reassessed at the market value.
Although Proposition 13 triggered a huge, one-time reduction in property tax revenues, since then, property tax collections have only gone up. The limit on assessments has acted like a reserve, ...
(Excerpt) Read more at sacbee.com ...
Maybe paying for illegal immigrants to go to college on the state taxpayers dime (and other foolhardy spending programs) wasn’t such a great idea after all.
time for State Senate and Arnold to cut some programs... won’t happen, but it should.
“still-controversial”?
It’s only “controversial” to the rapists in Sacramento.
Exactly... and their lap mice in the press. Any amendment or law or ruling that allowed unlimited tax hikes would NEVER be called "controversial" by a mouse like Weintraub.
The State has conviently forgotten that the people expect them to work within their means. If the economy of the State goes down, the spending must go down accordingly. Just because the economy goes down, doesn’t give the State the right to keep spending at the existing level and expect home owners to pay for it.
You can never say Sacramento Democrats and spending cuts in the same sentence.....
They are about to lower the boom. Every person with any kind of a good job - beware! We are going to get hit from all sides. This is frightening beyond belief. They wouldn’t dare cut any stupid programs, either. They are going to cut all the programs near and dear to conservatives’ hearts. Get ready. I have often thought if the courts overturn Prop 8 I would love to get outta Dodge but then we have family ties. End times alert.
CA is in for a really rough ride. All taxe revenues going down. Property tax is the slowest one going down, but it will. Also..this year revenue from capital gains will go down. At the same time the state and local retirement funds have taken a huge hit..so they will be further in the red.
Nobody wants to really put out the total extent of this disaster.
The only real solution is for the state to cut spending..big time. If CA weren’t paying for schooling, health, busing, etc etc for illegals it would make a big difference. You can’t have a wellfare state with open borders. If zero makes them legal..then more will come and it will get even worse.
If they repeal Prop 13, lots of old folks will sell and property will drop further.
A Prop. 13 repeal would heavily impact retirees. I imagine many would not be able to afford their homes any more. Also this will impact the stable rural poor and middle class who have lived in their homes for decades. I know I wouldn’t be able to stay in my home and my parents wouldn’t either.
California economy, RIP
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