OK. You are right on that. There is al lot about prop 13 that I do not like. I added onto my house rather than move because of commissions and taxes.
I do not trust the politcians to properly correct it. Remember the tax simplication act in the 80’s. On the news I heard it took the tax code from around 2000 pages to 4000 pages. If the elininate prop 13 kiss your house good by.
I’m not saying that some reform wasn’t needed - just not the nuclear option we got.
The power companies didn’t build any power plants because the PUCO didn’t approve the rate hikes necessary. Again, this was all known a year in advance. They knew they would have to go to the spot market to cover the difference. The solution was to build the peak-use generators and that’s what they ended up doing… 1 year later.
We got the nuclear option because that was the only one given to us.
Gov. Reagan tried to get property tax reform through the legislature and the politions refused. He lead a effort to get property tax reform on the ballot, and he managed to get enough signatures. Then the legislature countered his move by putting the home owners exception on the same ballot. And the pushed real hard that this was a good reform and the Gov’s was bad. Their measure passed by a larger majority and became law while true reform went by the way side.
As far as being a real reform and holding or cutting traxes? I just bought a second home for $250,000, If I live there I can take $1750 off the assessed value that’s loweres it to $248,250. That is not a tax savings. In fact I bet there are home owners on this board that live in California who are not taking the excemption.
I agree prop 13 is a bad law, but if you think I trust Sacramento to give us a better law you are wrong. Please realize if we eliminate prop 13 we will be in trouble.
They also did not build power plants because everyone was yelling not in my back yard. And even after the outages it was hard to get a permit. Example Calpine power plant in San Jose.
In California, the only group that makes worse laws than the legislature are the people.
How do you feel about removing businesses from being covered by Prop. 13. That will lead to a lot more revenue without affecting granny. Yes I know businesses will scream, but the increases should come over time, with increasing property values, and not happen immediately.
Unfortunately, the worse part is I think that’s no longer true. And I speak as no friend of direct democracy.
They filed for bankruptcy in 2005 so it doesn’t sound like they were in very good shape during the power crisis.
We have rate hikes in that correspond to the need to upgrade infrastructure. And the same PUCO that approves that also smacks the utility companies down if they try to sneak something by them. This is how it should be.
We had an aging power plant in my area that was torn down and the load shifted to a larger plant down the road. To cover summer spikes in power consumption they built 3 generators as a buffer. They quickly decided they needed more so an additional 4 were built. They didn’t jerk around with this. We needed it, and they built it.
We learned a hard lesson from a nuclear plant project in the 70’s that was FUBAR’d from day 1 with poor construction. It took 20 years to sort it out and get a working coal plant in it’s place.
It is not just granny that will be affecting, but all home owners. How large of a tax increase can business take without closeing their doors. Also define business. A large business can just move but small business that are just getting by will close their doors. Remember most property’s assessed valuation is guite lower than the value today.
But no I do not have a problem increasing taxes on all at a reasonable rate. It is going to have to be done. But realise that a lot of business have closed their doors and moved to other states or moved south.
The Santa Clara valley was at its capicity for power at the time of the outages. If the state could have gotten more power it would have done us no good. The tranmission lines into the valley were running at 100+% from before sun up to after sun down. there was only 2 choices no 3. Build new power plants in the valley, build new tranmission lines, or have rolling black outs. The games that were played in the rest of the state did not effect us. Calpine is now running. But the major objection was the plant might block someone view if they were to buy a house in the south valley.
Here is some more data for CA. Prop 13 protects folks from getting screwed out of their home by rising valuations that they can not “see” without selling their home (or borrowing against it).
Take this property:
Now, the area that is in is VERY expensive. Now. It used to just be a standard, upper-middle class neighborhood.
Single story 4 + 2
Sold in 1993 for 425,000. 1998 property taxes were $5,591. Currently for sale for 1.25 million.
If we allowed property taxes to go with valuations, this homeowner would be paying close to $15k per year in property taxes. That is too much for someone who buys and holds.
California real estate appreciation does not support a standard annual valuation property tax scheme. I do think that Prop 13 could use some reform, along with the rest of the state’s tax system, but it was also passed for a good reason.
That is assuming that Prop 13 itself didn’t lead to the inflated home prices.
Prop 13 would not have led to that level of appreciation, IMHO. Maybe a portion of the run-up, but that STILL does not justify tripling someone’s property taxes when they are not getting triple the services and support.
I think that easy mortgages, a ton of Hong Kong and Tiawan Chinese moving into the area, and the general run-up in housing valuations were more likely the culprits (FOR the neigborhood I pointed to).
We have income taxes of 9.3% if you make over $50k, 8+ % in sales taxes depending on where you live, and property taxes of several thousand a year as well. When State and Local tax is combined, we are #6 on the list. Tax revenue is NOT the primary problem here - spending and a immovable budget is.
That’s why I said increase slowly with time as a property appreciates in value. You think a business whose sales have doubled over ten years in a building whose value has also doubled will go bust if they pay taxes on the actual value of the building? If a business is so weak that a small property tax increase will make them shut down, they’re goners anyway, especially in this economy.
All this is part of the expense of doing business, and since it applies to all equally, shouldn’t change the competitive landscape much.
And it will help competition. If you are being so sensitive to small charges, consider a startup competing with an established company. The startup, with a new building, will have to pay far more in property taxes than the old company that has been there for 20 years. If you think this discourages business, you’ll have to agree that the current system discourages innovation. That’s bad, especially here in Silicon Valley.
The way other states get around this problem is by assessing all homes every so often (we got reassessed at least twice in NJ, owning our home 10 years) and rebalancing the rate based on the new assessed values. If everyone’s home doubles in value, and the money requirements stay the same, everyone’s rate is cut in half. That reduces the unfairness factor of Prop. 13. It is true that if the government considered this a budget windfall they could keep the rates the same, but they won’t last long if they try, and the CA government does this anyhow with sales taxes. Since the increase is a one time thing, and can be discussed, there is greater likelihood of doing it right - in fact my taxes did not go up much if at all after my house got reassessed.
Retired people do deserve a break. But those not retired are likely seeing a big boost in income over a number of years, while their taxes remain constant. My property tax as a percentage of the family income has nosedived since I moved in, even as my house has just about doubled in value - even today. The amount I pay in income taxes has gone up with my salary, which is fair. Younger people moving in, earning less than I do, are making up the difference between what I pay and what I should be paying. Does that make sense?
There is an annual increase of 2% in valuation for tax purposes:
However, CA real estate has increased more than 2% per year. Perhaps it is just the 2% that should be adjusted to match the California CPI (or the COLA that Social Security uses to keep even with the pensioners).
With out prop 13 the increases were not slow. doubling and triplling each year is not slow. And with prop 13 the taxes on a new property are lower then what they would be without prop 13.
That would help. In the early '80s, with the high inflation rate (and often high salary increases) I suspect they fell way behind.
The problem was that assessments were increasing linearly with property values. Were they doubling and tripling every year? If not, then I think your claim is less than accurate.
I already gave the answer to this problem - set tax rates according to the budget, not increase the budget if tax rates increase. Other states do this with few problems.
The goal wasn’t to find the best way to solve the problem, it was to cripple government - and they succeeded, quite nicely, given that the state has often been in trouble ever since.
There is an exemption (or at least there was in LA County) that if you were over 55 you could sell your house and buy one of equal or lesser value and keep your old property tax rate. That was meant to allow empty-nesters to downsize without getting killed on property tax, thereby encouraging housing to turn over faster.
One thing they should have done with Prop 13 is to use the amount outstanding on the mortgage(s) as the assessed value, not the amount paid for the house. In other words, if you bought a house for $200k with an interest-only loan and then after a couple years of bubble-era appreciation took out a HELOC for another $200k, your property tax would double. That would have put the damper on the ridiculous second mortgages and HELOCs that caused the bulk of the foreclosures and short sales. It also would have generated more tax revenue in a fair manner and helped keep down real estate prices. But now it’s too late.