The Housing Chronicles Blog: California budget deficit
Showing posts with label California budget deficit. Show all posts
Showing posts with label California budget deficit. Show all posts

Friday, July 3, 2009

Say bye-bye to the California tax credit for new homes

It looks like the very popular tax credit program of up to $10,000 to encourage sales of new homes in California has now been cut off and unlikely to be renewed due to the state's considerable budget problems. Word has it that the tax credit -- even more than the $8,000 program offered by the federal government for all homes -- was instrumental in helping to spike sales in new homes of all price ranges. From an L.A. Times story:

California is cutting off applications for a tax credit that was designed to promote sales of new homes.

The Franchise Tax Board said it would stop taking applications for the tax credits at midnight Thursday.

The program offered $100 million in credits to about 10,000 consumers who buy homes that have never been occupied. The credit is equal to 5% of the purchase price or $10,000, whichever is less.

Buyers must occupy the homes for at least two years immediately after the purchase.

The tax board expects to have received 12,000 applications.

Thursday, June 25, 2009

Why California can't be governed

Ever wonder why we Californians seem to have so much trouble governing our finances? Well, it wasn't always this way, and, as a 7th generation California native, I can personally attest to a huge variety of changes, instituted in large part by a populace that moved from *other* areas to then impose their own will on the rest of us (such as freebies for everyone but no way to pay for it).

Being lucky enough to be born when I was, I enjoyed a solid public education, a safe neighborhood, friends and neighbors who shared similar values, an enviable infrastructure and a state-supported university system that was among the best of the world.

When it changed, it just wasn't due to Prop. 13, although that was the start of it. I remember joining my family to protest the proposition (my first foray into politics), and when a cigar smoke-smelling Howard Jarvis waddled by and told my brothers and I, "Why don't you go home and learn to read?" I'm sure he didn't realize that home schooling would become the savior for many of today's families.

The L.A. Times has an opinion piece on what ails California, and it's a quite instructive. From the article:

After Proposition 13 passed, then-Gov. Jerry Brown and the Democrat-dominated Legislature realigned -- "tangled" would be more accurate -- the relationship between state and local governments by effectively shifting control of remaining property tax revenue to Sacramento. In a crisis atmosphere, they radically transformed California's political landscape, taking power and responsibility for health, welfare, schools and other local services away from city councils, boards of supervisors and school boards, thereby establishing today's chaotic maze of overlapping jurisdiction, which defies efforts at accountability...

Proposition 13 also ushered in an era of ballot-box budgeting, as fiscal initiatives became a favored special-interest tool to take control of public fund expenditures. A series of post-13 initiatives -- including measures creating the lottery, financing public schools by mathematical formula and earmarking revenues for special programs, from mental health to medical care -- established an exquisitely complex state budget calculus that has hamstrung the rational operations of government...

The once-a-decade process of redrawing political maps based on the census has created an increasingly partisan Capitol atmosphere. Reapportionment has become essentially an incumbent protection effort, as lawmakers craft districts that are either safely Democratic or safely Republican. In this way, the crucial contests are party primaries, not the general elections. Because primaries draw the most partisan voters, the most conservative Republicans and the most liberal Democrats tend to win the nominations that guarantee election in November. The dynamic locks in ideological polarization in Sacramento, where lawmakers have little motivation to compromise...

Despite the claims of backers, the 1990 term-limits initiative did not get rid of career politicians -- it simply changed the arc of their careers. Instead of spending decades in the same Assembly or Senate district seat, legislators position themselves for the next office -- or job as a lobbyist -- as soon as they arrive in Sacramento...

Since Proposition 13, state government has become increasingly dependent on volatile sources of revenue -- the sales, corporation and progressive personal income taxes -- that generate annual shifts in tax collections corresponding closely to the business cycle. When economic times are good, as during the dot-com and housing bubbles, money pours in and there's little political incentive -- in fact, term limits create a perverse disincentive -- for long-term financial planning. When revenues contract, the Capitol has rarely made real spending reductions, preferring to wait for the next boom...

California is one of only three states requiring a two-thirds legislative vote to pass a budget, one of 16 requiring a two-thirds vote to raise taxes -- and the only state to require both. The budget requirement has been in the Constitution since the New Deal; the tax restriction began with Proposition 13. In the polarized atmosphere of Sacramento, the two-thirds rules effectively hand a veto to the minority party. Under these conditions, stalemate and deadlock on key fiscal issues have become the political norm...

In the next few weeks, a blue-ribbon commission is set to recommend sweeping changes in the tax system to stabilize revenue collections. Voters last fall approved Proposition 11, which takes away the Legislature's power to draw its own districts in favor of an independent commission. Next year, as they elect a new governor, Californians also will vote on a system of "open primary" elections aimed at aiding moderates, and they also will probably decide on one or more initiatives to dump the two-thirds budget vote requirement.

California Forward, a bipartisan good government group financed by major foundations, is crafting proposals to conform government systems and processes to modern management methods. And the business-oriented Bay Area Council is pushing initiatives for a state constitutional convention, the first since 1879, to wipe the slate clean and build a new, rational structure for state government.

Monday, June 8, 2009

How would YOU end California's budget deficit?

Yes, I've been a bit remiss about blogging lately, but that's because impacts of the recession have left me personally distracted, which meant that the poor Housing Chronicles blog was temporarily sent to the corner. The income properties I have which have helped me weather the current storm also saddled me with multiple occupancies to fill as well as various maintenance items to address (new carpet, paint, repairs, etc.). Although renters always want their entire deposits returned, they seem to forget that ripping out something from a wall (and taking out plaster with it) does indeed incur a cost. At the same time, rents have softened just as more inventory (some of it shadow) has been dumped onto the marketplace.

Now as a former renter, I have a pretty good idea of what to do to attract tenants (spruce it up, advertise like mad, price under market, offer rent specials, offer unusual benefits such as free on-site laundry, be flexible), but it's hard to do all of that, run a consulting practice AND continue to blog regularly. So if you missed my snark, I do apologize, but things are now largely back under control, so blogging should resume at its normal pace today. But when I blog about changes in home prices or rents, etc., I'm also experiencing it at the same time.

So just as I've been managing my own revenue vs. surplus/deficit scenario, I learned about an interesting interactive feature on the L.A. Times Web site on the decisions YOU might make to balance the budget. I went through the exercise and managed to get a small surplus of about $800 million. Want to check it out? Click here.

Thursday, January 15, 2009

California Governor Schwarzenegger gets serious about budget in State of the State address

As politicians dither and California continues to fight a $42 billion budget deficit, California Governor Arnold Schwarzenegger has requested that lawmakers forgo getting paid until a resolution is reached. From an L.A. Times story:

Describing California's monumental budget deficit as "a rock upon our chest," Gov. Arnold Schwarzenegger broke from tradition in his State of the State address today with a blunt vow not to advance any policy agenda this year other than resolving the state's fiscal crisis.

As lawmakers sat before him in the Assembly chamber, Schwarzenegger said they had put their partisan beliefs above the interests of Californians, and he asked them to forgo own their salaries if they fail to pass the next budget by the deadline in June...


"Addressing this emergency is the first and greatest thing we can do for the people," Schwarzenegger said. "The $42-billion deficit is a rock upon our chest, that we cannot breathe until we get it off. It doesn't make any sense to talk . . . about education, infrastructure, water, healthcare reform and all those things when we have this huge budget deficit."

Click here for full story.