Friday, April 20, 2007

Property Tax RollBacks "Signal a Repeat of the 1990s"

From the Sacramento Bee:

A housing slump that has wiped out countless millions of dollars in Sacramento-area home equity is soon to give a few million back.

Letters to 50,000 Sacramento County homeowners are being mailed today announcing cuts of up to 10 percent in their fall property tax bills, said Sacramento County Assessor Kenneth Stieger.

The rollback will erase about $15 million in revenue for schools, the county of Sacramento, its seven cities and numerous special districts, Stieger said. It affects 12.8 percent of the county's 390,000 residential parcels.
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Prices for homes have dropped as the housing market slowed. In Sacramento County, for example, median sales prices for all new and existing homes are at December 2004 levels, according to La Jolla-based DataQuick Information Systems.
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The rollbacks signal a repeat of the 1990s when recession and job losses pushed down area housing values and 30 percent of Sacramento County homeowners received property tax relief. State finance officials call the re-evaluations a significant indicator of stresses ahead on state revenue.

"This is one of the biggest, if not the most significant, channels through which current real estate conditions affect property tax receipts," said Marcus Stanley, an economist with the Legislative Analyst's Office.

Stieger said nearly two years of falling prices have pushed many home values below their purchase prices..."We're probably going to see instances of market value deterioration from a few percent to, it's possible, 10 to 15 percent," he [Placer County Assessor Bruce Dear] said.
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With home prices still falling, next year likely will be worse, said Geoff Davey, [Sacramento] county's chief financial officer. "A year ago we were starting to see signs of it. Now we're really into it," he said. "I'm afraid many entities in this region that get the majority of revenue from property taxes have been reliant on growth that's not sustainable."

10 comments:

norcaljeff said...

So we know this is somewhat different from the 1990s situation. The economy still apears to be doing well, GDP growth is positive, unemployment is near historic lows, the stock market continues to move to record highs. As long as inflation stays in check the the Fed doesn't do anything stupid like the did in 2000, we'll float along on thin ice for a while. Anyone know what percentage of area jobs are in the RE field? You can't throw a stick without hitting a realtor, appraiser, mortgage broker, plumber or contractor in Placer Co. Would love to know exact figures, that would at least show the possiblity that unemployment would move up and get the market to really unravel.

Cmyst said...

I know this is very simplistic, but my daughter recently went on a rant about home prices (she had a baby last year and now she and hubby want a home, instead of their downtown flat). She summed up her argument as "Holy crap, have none of these people ever played Sim City?? Don't they know that if you make housing too expensive and tax them too much, people disappear from your city??"

Patient Renter said...

As someone who posted a comment to the Sacbee article said, you wouldn't think schools received funding from property tax based on their conditions. In general, our schools need more money, not less.

RMB said...

PR,

I am going to have to disagree with you on that last statement. I don't think the schools need more money, I think they need to spend the money they already get more efficiently. I think $60 Billion a year to run the schools should be enough money. Run some of the numbers and I think you will be astounded as to were all the money goes.

Patient Renter said...

"I am going to have to disagree with you on that last statement. I don't think the schools need more money, I think they need to spend the money they already get more efficiently."

You could very well be right. Seeing things on the ground though where individual schools and teachers don't have enough money to buy simple supplies for their students, something is wrong. It's hard to tell if there isn't enough money or if it's being misdirected, but it's very easy to tell that something is very very wrong.

So how do we tell what/where the problem is?

ralphk said...

PR,

I think a lot of the problem is we're top heavy with administration. Ever see what an elementary school principle earns?

I've always wondered why we have so many school districts. Many state have one statewide or a few regional.

Besides taxes, mello roos, bonds and the lottery, parents are constantly writing checks for this and that. The bus costs $2 day.

I totally agree with rmb, there's plenty of money. As usual government doesn't know how to manage it so the easy fix is ask for more.

buying time said...

I just recently moved from Fairfax, VA (D.C. suburb). The public school system there is phenomenal, and the property tax rate is about the same as here (1.1%). The big difference is that everyone gets reassessed every year, and most everyone pays the same rate across the board. None of the ridiculous taxes tied to the purchase price of the house (which has trapped some folks and kept them from buying, since new purchase taxes are so high to compensate for the low taxes of others.)

Gwynster said...

I used to pin up a large graphic of a house with the words Prop 13 on it off my dart board. It's right up there with the Briggs Initiative and the CA recall for stupid legislation. I remember wandering around Forest Lawn not long after Javis died to see if I could get away with peeing on his grave. Oh my rebellious youth >; )

RMB said...

OK PR,

Here's some data for the trenches - sources are CA gov websites and the Fed Census.

In CA there are ~6.3 million K-12 students. There are 300K teachers in the classrooms for an average of 21 students per teacher. The state gov school site list the average class size as 27, seems like a huge difference to me. Even with the 27 number I am at a loss for where is this overcrowding problem? 30 years ago when I was in grade school the class size the same.
When you look at the total employment picture there are ~332K other people employed by the school system. Now if this was a business and you had more overhead than production workers you would not stay in business very long.
The K-12 system is budgeted for $66 Billion next year ($45 billion from CA state) which is a little over $10K per student.
This BS of schools not having enough money for supplies and the teachers having to go out and buy them is a joke. I am not saying it doesn't happen, what I am saying is that money is there if it is spent correctly. These type of things are the way bureaucracies get more money. They scream wolf and threaten to (and actually do) cut things people really want and then leave all the fat alone. In the end they know the stories will get around and they will end up with more money. The only problem is there is only so much money to go around and I think people are getting really sick of having 50% of their wages confiscated ever year with no apparent return. If the CTA actually cared about the students they would push on the school district to get that teacher to non-teacher ratio in line and push for at a minimum 65% of the budget to be spent these classroom. As it stands now less than 50% of the education budget goes toward education in the classroom.

Rob Dawg said...

California also spends additional billions off budget on schools. All those bonds which always pass are general obligation bonds outside of the $10k per student mentioned. The CTA doesn't like to talk about that or the shennigans around the retiement funding pipeline either.