Home Front

A blog about the economy and the Sacramento-area real estate market.

January 16, 2009
How the housing crash cut your library hours
I'm just back from an interesting California Research Bureau seminar explaining how the housing crash is taking down the twin pillars of sales and property taxes - and is really starting to hammer budgets of 480 cities across California. As the housing meltdown continues with no end in sight, most cities are now facing mid-year budget corrections. Estimates are they have $4 billion to $6 billion less money than their budgets say they do - because the housing crash keeps getting worse.
.
 That means they'll be cutting library hours and park maintenance so they can avoid cutting police and fire budgets.

No big surprises at this session. It was just interesting to see the links between the real estate declines that started here in Sacramento in 2005 and the budget nightmares that are now in full swing statewide as home values fall. The speakers made it especially clear that the housing crash that started in the Central Valley and the Inland Empire of Southern California is now happening everywhere in the state.

Normally,  we don't use the word "bubble" much on this site. But the seminar did start with an amusing Powerpoint slide from Michael Coleman of Californiacityfinance.com
(everything you ever wanted to know about city finances in this state): a soapbox picture of "Mr. Housing Bubble. Cleans out your life savings." We take our humor where we find it.

Some points: California sales taxes peaked in the 2005-2006 fiscal year that ended June 30, 2006 - about the height of the housing market, and have fallen fast since. And while it's true that when sales taxes begin to rise it's a signal that things are turning around, Coleman said, "We haven't seen it yet." Neither did he expect to for awhile.

 Coleman's graph showed how declines in median home values almost instantly begin to drive down sales taxes. The property tax declines that sink government budgets are always a couple years behind the actual drop in home values. So, he said, governments are now feeling the full stresses of the deflation in home values that happened in about 2006. That means the plunging values of 2007 and 2008 haven't revealed themselves yet in government treasuries.

A second speaker, Mark Paul, formerly of The Sacramento Bee and state treasurer's office and now with the New American Foundation, said it will take until 2011 for sales tax revenues in California to get back to where they were in 2007.
 
That means "worse problems with the (state) budget next year, and probably worse the year after that," he said.

About Comments

Reader comments on Sacbee.com are the opinions of the writer, not The Sacramento Bee. If you see an objectionable comment, click the "report abuse" button below it. We will delete comments containing inappropriate links, obscenities, hate speech, and personal attacks. Flagrant or repeat violators will be banned. See more about comments here.

What You Should Know About Comments on Sacbee.com

Sacbee.com is happy to provide a forum for reader interaction, discussion, feedback and reaction to our stories. However, we reserve the right to delete inappropriate comments or ban users who can't play nice. (See our full terms of service here.)

Here are some rules of the road:

• Keep your comments civil. Don't insult one another or the subjects of our articles. If you think a comment violates our guidelines click the "report abuse" button to notify the moderators. Responding to the comment will only encourage bad behavior.

• Don't use profanities, vulgarities or hate speech. This is a general interest news site. Sometimes, there are children present. Don't say anything in a way you wouldn't want your own child to hear.

• Do not attack other users; focus your comments on issues, not individuals.

• Stay on topic. Only post comments relevant to the article at hand. If you want to discuss an issue with a specific user, click on his profile name and send him a direct message.

• Do not copy and paste outside material into the comment box.

• Don't repeat the same comment over and over. We heard you the first time.

• Do not use the commenting system for advertising. That's spam and it isn't allowed.

• Don't use all capital letters. That's akin to yelling and not appreciated by the audience.

You should also know that The Sacramento Bee does not screen comments before they are posted. You are more likely to see inappropriate comments before our staff does, so we ask that you click the "report abuse" button to submit those comments for moderator review. You also may notify us via email at feedback@sacbee.com. Note the headline on which the comment is made and tell us the profile name of the user who made the comment. Remember, comment moderation is subjective. You may find some material objectionable that we won't and vice versa.

If you submit a comment, the user name of your account will appear along with it. Users cannot remove their own comments once they have submitted them, but you may ask our staff to retract one of your comments by sending an email to feedback@sacbee.com. Again, make sure you note the headline on which the comment is made and tell us your profile name.

hide comments

On October 14, The Sacramento Bee will temporarily remove commenting from sacbee.com. While we design the upgrade, we encourage you to tell us what you like and don't like about commenting on sacbee.com and other websites. We've heard from hundreds of you already and we're listening. Please continue to add your thoughts and questions here. We also encourage you to write Letters to the Editor on this and other topics.



Jim Wasserman on Twitter

Follow "jimwasserman" on Twitter

October 2013

Sun Mon Tue Wed Thu Fri Sat
    1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30 31