patrick.net

Stable taxes is good. The problem with Prop 13 is not that it limited tax increases. It creates a vested majority that can vote or allow spending without paying for it.

If taxes were fixed on the same tax basis for everyone, California would have owned up to this mess earlier.

Instead, we have a majority of people paying a less of the taxes, and the recent and the young buyers of property paying much more.

So increase in fire, police wages pensions, schools have been piled on to these new buyers.

In other words, bubble prices drove a bubble in taxes, which drove a bubble in spending. And the majority, having pre-bubble level taxes, did not care.

If tax basis was not allowed to bubble, these bubble based tax income would not have existed, and CA would have had to face up to the music earlier - pony up, or cut.

Tax reform wont happen, as most of the Prop 13 supporters (old buyers/those with low basis) do not have to face that choice of pay up or cut.

For old basis owners, the choices are
(a) keep current taxes(low taxes), and don't cut.
(b)keep current taxes (low taxes), cut.

For the new basis owners the choices are
(a)keep current taxes (high taxes), and don't cut
(b) keep current taxes(high taxes), and cut.

For old basers, (a) is preferable - pay low, and get more. Greed wins
For new basers ,(b) is not acceptable - pay more and get less. So they also chose (a). Value for money.

Hence no cuts

yep, it aint gonna happen. The old geezers would be out on the streets.

Yes, we will have more homeless geezers with a $million in their pockets, but the total number of homeless should not go up, because, with the home prices coming down faster, we will now have more younger people who can afford to buy.

Unfortunately, the old geezers actually vote. The young people love to march in the streets but are too stoned to make it to the polls. I heard the average age of voters is almost 60.

This is a major generational warfare. The young people will eventually remind the boomers how they squandered away all the inheritence money, and left them with nothing but debt and unemployment. The boomers will die a very broke and lonely death, rotting away in their termite-infested bungalows.

Nobody will admit it, but I believe that 90% of California's troubles comes from Prop 13. There are other states which are just as profligate as California (New York, Illinois to name a few), but they still have lower taxes, and they are not insolvent. The main difference is Prop. 13.

Dunnross,

not so sure. Boomers are still a bigger voting block though.

Don't forget that they will for sure make us pay for their 80+ age advanced cancer drug and defibrillator.

As I always said, the faster Medicare goes broke, the better off we all are. The economy, Social Security, prop 13 will all not be a problem if we take away Medicare. Medicare is the only thing keeping these blood suckers alive. Once Medicare goes, our tax will go down, there will be far more houses up for sale to pay for their medical bills regardless of prop 13.

Remember, you will be old someday too. I think the rage against the Boomer is misplaced. They are the ones that built this country into a world leader. Take a look at the infrastructure, the college system and the inventions and advancements. It was the Boomer that layed it all out. Unfortunately, they raised a bunch of cry baby ingrates. Now those ingrates are turning on them and trying to blame all our problems on the Boomers. They dont have the guts to blame the real culprits. They know the Boomer wont respond to their inane blather. Take that SurferX dude for example. Here he is on the Housing Crash site doing his rants against the Boomers and everyone loves him. Then he goes and buys a house at the peak of the market. His problem was that he was too busy blaming someone else for his problems. All he had to do was pay attention to what was going on. Instead he chose to get drunk and do a Boomer rant on the housing crash site.

He is the epitome of the cry baby generation.

Both SS and Medicare are systems into which my generation will pay but will inevitably get nothing back. Why should we keep supporting this system? Is it fair that we become the last generation that holds the bag?

You are also wrong in pointing out that the baby boomer built this country into the world leader, NO, it is the Great Generation, the one before them who did so. The baby boomers are simply beneficiaries of a bulge in population growth. More heads = more consumption, as simple as that.

When I am old, I will have enough money to pay for everything myself. I prefer to have no medicare, no social security starting from today, and I definitely do not expect a dime from the government when I am old. I don't need anything from the government either. I will already be very thankful if the government doesn't come after my money when I am old.

OO,

For SS and Medicare we still have to wait, at least 10 years. My kids are growing up fast, and they need a house. I don't have time to wait that long. Prop 13 is something we can take care of right now. I wish that someone had an actual dollar amount of revenue generated, so that we could start a petition going. Besides, if the boomers are going to object to Prop 13 going away, they would form an even stronger opposition to Medicare. However, they voted no on all the budget ballot measures, which means that there will now be huge cuts to education and children's healthcare. So, we cut education dollars in a state which is already 49th out of 50 in education, just so that the millinaire geezers can keep their stupid bungalows. Where is the justice?

Throwing more money at the education system is clearly not the answer. I think calif. is one of the biggest spenders on public education. Again you point your finger in the wrong direction.
If you have the political clout to change prop 13 then go for it. You cant change the fact that the reason they are called the Boomers is because that's the bulk of the population.
Why complain? Look at the positive side of having a shrinking population as the Boomers die off. The real problem in this world is over population. Solve that and you solve all of our problems. Actually, it's a problem that most likely will solve itself, at least in this country.

Remember, someday you too will be a millionaire geezer. You will inherit all the Boomers wealth. Those priceless airlooms will be yours for the taking. It's already starting to happen. Go to some of these estate sales and see for yourself

The boomers will be replaced by 'undocumented residents' faster than they can die.

Prop. 13 , yeah! Definitely one of my favorite causes.

My suggestion has always been the following: Take last years total property tax revenue. Then establish for EVERYONE the same tax rate X which results in the same total tax revenue as last year. DONE.

It is fair, it is equitable, it's the way it should be.

Wow, this just in: Ca. needs to be bailed out by the fed.

Wow, this just in: Ca. needs to be bailed out by the fed.

Yep, saw that too. Also saw that one of the conditions of the bailout will likely be repeal of Prop 13. Would that take 2/3 of the Ca legislature, or would it need a referendum? Maybe just a court decision.

Obama may be CA's new defacto governor.

Well, repealing 2/3 rule might also be a possible condition of the bailout.

dunnross,

repealing the 2/3 rule would be very welcome. It is a recipe for gridlock. But America's rulers love gridlock. That is why we have the god-forsaken 2-party system. But I digress.

>>Wow, this just in: Ca. needs to be bailed out by the fed.

Well, we just need to re-incorprate as a bank holding company, and we should be in business with the bailouts.

Geitnher is skeptical, the news says. Why? Only banks are good enough for him? Bah.

If prop 13 and the 2/3rd rule get booted as contingencies for fixing this mess, it is cause for celebration!

Prop 13 must be repealed. It has created way too many problems. In addition to adding to state revenue volatility, it encouraged people to vote for all kinds of perks that they weren't in fact paying for. To paper over things, the income tax rate was raised to the second highest in the country. Reducing the income tax rate in conjunction with reforming prop. 13 would go a long way towards making us more competitive and lowering revenue volatility.

I posted this over at Ben's blog earlier, but it really fits in this thread.

There’s one really interesting possibility vis-a-vis Prop. 13….

Next week the CA supreme court will issue a ruling on Prop. 8 (banning gay marriage). At heart is the issue of whether Prop. 8 contained more than one “issue” and therefore is an improper initiative measure.

If the CA supreme court tosses Prop. 8, that gives precidence to toss Prop. 13 too. Prop. 13 contained (a) a measure limiting property taxes AND (b) a measure requiring a 2/3 majority vote in the legislature to increase any taxes.

Can you imagine the storm if a court invalidated Prop. 13?

"Remember, you will be old someday too. I think the rage against the Boomer is misplaced. They are the ones that built this country into a world leader. Take a look at the infrastructure, the college system and the inventions and advancements. It was the Boomer that layed it all out."

Lies.

The strength of the US was built by the boomer's parents -- the people who fought and died during WWII. Our strength came from the fact that, post war, we were one of the only wealthy nations that didn't have to rebuild our infrastructure from the ground up.

In my giddiest dreams, DennisN!

Someone had said that California is one of the biggest spenders in public education. You could not be more wrong.

The statewide average per pupil expenditure hovers around $9000 per pupil and has been cut for next year. A few weeks ago it was also retroactively cut for this school year, and it is unclear how the schools will manage to handle that one gracefully. Um, you know that money we gave you for this school year? Well, um, I know there are only a few weeks left, and probably you allocated it all months ago, but we're going to need a chunk of that back.

By comparison, New York State was spending $14000+ per pupil in 2006. Now, as everyone knows, New York is expensive. Like California. So it may be more meaningful to say that Nebraska, Wyoming, North Dakota, West Virginia, and New Mexico also spend more per pupil than does California. We were about 33rd in 2006, before the recent cuts to California education. Most of the states spending more per pupil have a significantly lower cost of living, so in addition to actually giving schools more money, the money goes a lot further.

http://febp.newamerica.net/k12/rankings/ppexpend06

So, no, California schools are nothing like flush with cash. We are rapidly dropping from 33rd in a state where money does not go far in the first place.

It's said that California is one of the highest taxed states. Actually, it's true, but people who say that are despicable, because they only tell 1/2 the story. The only reason taxes are so high at the state level is that they've been shot in the kneecaps at the local level by Prop 13, and the state now funds local spending that cities are prohibited from raising.

Of course Prop 13 should go. 2% increase per year, below inflation??? What that really means is that property taxes to DOWN every year if you squat on your property, pass it to your kids through a trust, etc. What kind of logical tax policy has taxes required to go down every year?

If I bought the home I'm renting from my landlord, I'd have to pay 10X the taxes he pays.

People that support prop 13 are your political enemies if you are not a homeowner. Make no mistake about it.

That's not to say I'm for higher taxes, just fair taxes. Spending is way out of control. Just go to usgovernmentspending.com. How the hell does spending for pensions for state workers go from 8 to 22 billion, nearly *triple* in ten years, when the population has only gone up 15%? Simlar numbers for spending on prisons.

Oh, you want to see how much correctional officers make? Go to http://www.mercurynews.com/salaries, and enter a random common last name. $100K is very common, but there's quite a few pulling in $150K or $200K thanks to overtime pay, a badly abused system.

Oh, that doesn't include their defined benefit retirement plans, which essentially do not exist if you're unfortunate enough to work in the private sector.

But of course Sacramento won't talk about cutting salaries and entitlements. They talk about releasing prisoners instead. The unions are way, way too powerful to even mention pay cuts.

Prop 13 was a simple response to out of control gov't spending. The average citizen normally simply cannot fight the combined power of public sector unions, their clients, and other gov't hangers on.

what else could they do? All the public has left are the bluntest of instruments to express disapproval.

And now, CA has a 10% income tax and a 9% sales tax. And the state is out of money. How could that be, in the most successful state in the nation on so many levels?

Simple - illegals.

The CA politicians in DC have been, in general, some of the post pro-immigration and anti-border-enforcement politicos in the country. Well, now you have what you aksed for. Illegals driving up costs for government at every level - health care, education for their children, prisons, etc. And CA has more than any other state.

Yet still, there is no howl of protest from the state citizens. It is as if you all are living in a dream. Or simply cannot perform the most basic powers of observation and reasoning.

some of those citizens recently rejected all the tax hikes. They know that the problem cannot be solved by higher taxes. More and more illegals will absorb the benefit of higher taxes (although higher taxes will probably do more harm than good at this point, given how uncompetitive CA is and will continue to be compared to so many other locales). In any event, until illegals are kept out, and those that are here are sent home, the public has every right, and indeed obligation, to vote against raising taxes.

The CA and national press are silent on the issue. Damn you all! Your children and grandchildren are being robbed of their birthright by your narcistic-feel-good political correctness that substitutes short term feel good ness for the hard decisions that need to be made. And your greed.

CA has always been about 5-10 years ahead of the rest of the country on so many trends. The wave of government insolvency will be crashing to a town near you.

Don't say you weren't warned.

I'm not sure it's illegal aliens.

I would like to see the amount of money spent on pensions and benefits for retired state workers. I bet that's where a bigger chunk of the money is going.

Anyone know exactly where I can find a breakdown of the California budget in clear terms?

Patrick,

I think the Governor's budget page might be a good start for a breakdown of the budget:

http://www.ebudget.ca.gov/agencies.html

Not sure if that provides "clear" terms as I can't make sense of the breakdown.

cresty21 Says: "And now, CA has a 10% income tax"

Not exactly.

For a married couple, the first $87,000, which is well above the median, are taxed at ***2.7%***, then after that 9.3%. Yes, it taxes high earners the most by far, and that's part of the instability of the revenue that largely comes from stock and bonuses when times are good (for high income earners anyway). But calling it 10% is another 1/2 truth, 1/2 lie, which is pretty darn close to a lie in my book.

Simple - illegals.
The CA politicians in DC have been, in general, some of the post pro-immigration and anti-border-enforcement politicos in the country. Well, now you have what you aksed for. Illegals driving up costs for government at every level - health care, education for their children, prisons, etc. And CA has more than any other state. "</blockquote>

And...more lies!
Yes, there are quite a number of illegals, but there are a lot of illegals in arizona, new mexico, and texas as well. The problem is that we're spending too much money. If an illegal immigrant is getting government benefits, you need to be blaming the people that voted to have those benefits, not the poor migrant workers who are just trying to make a better life for their children.
More than 85% of california's taxes are direct taxes on income and expenditure. We place virtually none of the tax burden on corporations (less than 10% of the total) or wealth (less than 3%) In most states, around half of tax revenue comes from income and expenditure. In other words, we go out of our way to punish working people for the benefit of retirees, the unemployed, and the upper class.
This is because we ignored the good examples set by the rest of the country and don't have a real representative democracy. We let the people vote on everything, and unfortunately the people are too stupid to understand that you have to balance benefits with taxation. You can't have low taxes and still get all the benefits.
As a result, we now have terrible benefits and still pay outrageous taxes. Our cost of living in many areas has gotten so crazy that we have to pay police officers and bus drivers six figure salaries just so that they can live within the city limits. That, in turn, makes everything else more expensive, and drives our property prices through the roof.
The state is completely screwed, but it's not because of 'illegals'.

"The CA and national press are silent on the issue. Damn you all! Your children and grandchildren are being robbed of their birthright by your narcistic-feel-good political correctness that substitutes short term feel good ness for the hard decisions that need to be made. And your greed."

My children are being robbed of 'their birthright' by people who refuse to actually cut spending on crap that the state government has no business providing, but also refuse to pay for it. I'm dumping in excess of $15k a year into state taxes a year and my son is being educated by someone who isn't worth 15 cents. Meanwhile, I can't afford to buy a place because prop 13 has skewed property prices completely out of my reach, and yet this stupid government is spending $100 million to try to boost property prices.
California is going bankrupt and yet people just yell 'illegals!' as if that justifies refusing to cut spending. The only real area where legals clearly add cost to the system are the education of their children, who are citizens. Of course, if we have a decent educational system those children will grow up and become productive members of society and will yield a nice return on that small investment. Too bad people are more concerned with property taxes than they are with real reform.