Why California's High Cost of Living Might Be a Good Thing ... (Sacramento: house, subsidized)
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I actually agree. We just moved to this state and are not one of these stereotypical wealthy snobs, but I can understand why the high cost of living may be the only thing keeping it from becoming more crowded than it already is. I feel that the cost is worth it for someone who truly appreciates what their area has to offer. I certainly had to make a trade and wouldn't change my decision for the world! That's the kind of attitude people who live here should have. There is plenty of country for those who don't feel it is a priority. Anyway, it is all based on supply and demand. As people flee the state because they don't want to pay the high price to live here it will free up homes and bring the prices down for those who decided to stay.
2) Therefore, only the taxpaying / income generating families (one does not necessarily follow the other in CA) who cannot afford the increased cost of living will leave.
Therefore, California will wind up as a Mexico-like dichotomy of ultra-rich people who can afford the high cost of living and a very large group of welfare class citizens or ultra-poor. Only a very small group of middle class who supports the ultra-rich will remain.
Ironically, as welfare is the sacred cow in CA, the more they spend on it, the greater the tax bill will be, and the higher cost of living occurs in CA. Thus, the widening gap in the rich and poor in CA occurs from this policy and eventually will turn CA into a third world county.
Third world country, you laugh? Open your eyes and see just how many companies are leaving, reducing, or closing it's doors in CA right now! I mean companies of ALL classes, from retail, biotech, tech, etc. CA cannot survive by just doing service related industries. Money has to come INTO the state for it to be stable.
I just don't get it. Why would an educated, well informed, person or family with non-service job skills move INTO a state with higher cost of living and declining job market? Let me get this straight. This person would say "CA has no long term employment future for a well paying non-service job and I'm going to pay more just to live here, sounds like the place for me!"
I kid you not. I left a meeting today that went something like this. "Corporate headquarters is looking for ways to cut expenses. By the way, they find that California salaries are by average more than other states." Hey, guess where do you think this is heading? Connect the dots. Higher cost of living means more reasons for companies to pull OUT of CA.
Housing prices are set on the margin. Housing costs are high in California, because the housing market in California is highly regulated and because of prop 13.
If you compare California and say Texas, in both places people expect to have local schools, libraries, police and fire departments. But California has prop 13 which limits the growth of property taxes to less than the rate of inflation. In general in California, housing doesn't pay for itself. The services required by new residents are not paid for by the property taxes on those new residents. In Texas which has higher property taxes and no prop 13, not only do new developments pay for themselves. In California the incentive is to not approve new development.
Now if housing prices shoot up high enough in California, then even with a much lower tax rate, the cost of new development will start to cover the cost of providing new government services to that development. This is part of the reason California has housing price booms and busts. For local governments to approve new developments housing prices have to get high enough where it makes sense to approve new developments. In Texas, property taxes are such that local governments will approve new developments willy nilly.
In California there is usually a shortage of buildable lots, local governments are reluctant to rezone land from agricultural uses to housing. Ag land in California sells for 10k an acre. In California they are putting up to 11 homes per acre. But when that land is rezoned from ag to housing, its not selling for less than a 1k per acre because there is an artificial shortage of buildable lots. In Texas, ag land is a bit cheaper, but residential lots are lot cheaper because local governments rezone land from ag to housing based upon demand.
When interest rates were lowered nationally, California experienced the the housing boom much more as a price spike than in Texas where the housing boom there was experienced more as a construction boom.
Before prop 13, California had fairly affordible housing. If this region wants more affordible housing it should just repeal prop 13.
But new growth need not lead to high housing costs and expensive housing. Atlanta, Dallas, and Houston are among the fastest growing regions in the country yet they have also managed to retain very affordible housing.
High housing costs in California are the results of bad housing policies in California. If you fix them, you can make housing more affordible here as well.
If this region wants more affordible (sic) housing it should just repeal prop 13? As Biden would say "is this a joke?"
The whole POINT of proposition 13 was to LOWER the OVERALL cost of housing. If there were no Prop 13, property taxes would have blown through the roof! People on fixed incomes would have left this state in droves.
The irony of this is with increased property taxes, local gov't would NOT get more revenue! This money would get sent to the state, where the money would disappear, just like all of the other tax revenue currently does.
You really need to look at the history behind Proposition 13. Serrano vs. Priest dictated that local tax revenue had to be taken away from rich districts and redistributed via the state. With people not seeing their local taxes spent on local issues anymore, Proposition 13 arose. Fast forward to the present. We're #1 in taxes in many categories already, and as I type, the CA legislature is raising those taxes (now called "fees") even more!. Property taxes are the only tax which isn't #1 in CA. With all these taxes, as one journalist puts it, do you see a equivalent increase in services in CA? Uh, NO! Then why would I expect a repeal Prop 13 to change anything? Any sane person would expect things not to change with the repeal of Prop 13...
The hidden flaw in the repeal Prop 13 argument is this. If Prop 13 is repealed, would state gov't (where the money would ultimately go to) spend that money wisely? Are you kidding me?
If this region wants more affordible (sic) housing it should just repeal prop 13? As Biden would say "is this a joke?"
The whole POINT of proposition 13 was to LOWER the OVERALL cost of housing. If there were no Prop 13, property taxes would have blown through the roof! People on fixed incomes would have left this state in droves.
But it did NOT lower housing costs and made it worse overall. Doesn't matter what the point was if it never actually achieved it.
Cities would rather zone land for car dealerships, big box retailers, malls, etc... b/c those produce revenue and more than pay for themselves unlike housing. There have been many cases of cities rezoning land from residential to retail/commercial so they could get in some sales tax producing businesses like Wal Mart. That helps to reduce the supply of land available for housing and forces cities to compete with each other for revenue, helping to lead to horrible regional planning and land use patterns.
Also b/c property taxes do not cover the cost of public services cities charge a ton of developer fees that is passed on to the buyer and jacks up the cost of housing.
Prop 13 is an incredibly screwed up and unfair system. You can have two identical houses right next to each other that are worth the same but they can be paying extremely different amounts in property taxes depending on how long they have been there. It's capped at a rate below inflations so the longer you have been in a home the less you pay in property taxes, many homeowners do not pay their fair share for public services b/c of this disparity between older and newer homeowners.
People would not leave in droves like the fearmongers would like you to believe. During the recent boom property taxes were doubling in states that did not have caps and you didn't see a mass exodus of people on fixed incomes. I do think there should be a cap to prevent taxes from doubling during real estate booms like we just had and like back in the 70's when Prop 13 were passed but it should not be at a rate below inflation.
How does it make any sort of sense to cap property taxes at a rate below inflation? How is property tax revenue suppose to keep up with the cost of public services with that ridiculously low cap?
I've studies Prop 13 plenty and from REAL sources and books and not some pseudo-online encyclopedia like Wikipedia and Prop 13 is arguably the worst public policy CA has ever adopted and this state has gone downhill ever since.
If this region wants more affordible (sic) housing it should just repeal prop 13? As Biden would say "is this a joke?"
The whole POINT of proposition 13 was to LOWER the OVERALL cost of housing. If there were no Prop 13, property taxes would have blown through the roof! People on fixed incomes would have left this state in droves.
The irony of this is with increased property taxes, local gov't would NOT get more revenue! This money would get sent to the state, where the money would disappear, just like all of the other tax revenue currently does.
You really need to look at the history behind Proposition 13. Serrano vs. Priest dictated that local tax revenue had to be taken away from rich districts and redistributed via the state. With people not seeing their local taxes spent on local issues anymore, Proposition 13 arose. Fast forward to the present. We're #1 in taxes in many categories already, and as I type, the CA legislature is raising those taxes (now called "fees") even more!. Property taxes are the only tax which isn't #1 in CA. With all these taxes, as one journalist puts it, do you see a equivalent increase in services in CA? Uh, NO! Then why would I expect a repeal Prop 13 to change anything? Any sane person would expect things not to change with the repeal of Prop 13...
The hidden flaw in the repeal Prop 13 argument is this. If Prop 13 is repealed, would state gov't (where the money would ultimately go to) spend that money wisely? Are you kidding me?
If the entire point of prop 13 was to lower housing costs, than prop 13 has failed miserably and should be repealed for that reason. Since prop 13 was passed housing costs have grown far faster in California than in the rest of the country. In truth the scope of prop 13 was much more limited - to limit the growth of property taxes to less than the rate of inflation.
But prop 13 did nothing to limit the need for government services that previously had been paid by property taxes, not just schools, but the entire range of local government services (police, fire departments, libraries etc).
As far as your city manager is concerned, zoning for additional residential development in California is always a bad idea because over time the cost of providing existing residents government services continues to grow with inflation, but the funding for those services does not. Cities have tried to overcome that problem with high development impact fees, but those still don't cover the cost over time of the fact that you have a lot of people who bought homes in the state in 1977 who are paying next to nothing because of very low property tax assessements. But those people still need the same levels of fire, police and libary services that everyone else gets. Remember as long as you move with in California, in many counties you can even carry you low assessed basis to your new home so the pool of these tax payers is much larger than you might assume.
This is why so many cities started clamping down on zoning for additional housing and started doing stuff like setting up designated land trusts (like Marin and Sonoma Counties) so that there wouldn't be much space for housing and thus little need to provide it.
But if land restrictions are great enough, at some point land prices start going up. As they do eventually it starts to make sense again to zone for additional housing. At the peak of the housing boom, housing prices got up to 650k in LA. In Houston at that time housing prices were 170k. While property taxes are higher in Houston than in LA when houses cost more than 3 times as much, you were still getting more in property taxes per property owner in LA than Houston.
In California cities are reluctant to zone for additional housing unless prices are pretty high. This is why the area has a boom bust cycle in housing price levels. In Texas, housing booms are experience more as construction booms but prices stay much more flat.
If the entire point of prop 13 was to lower housing costs, than prop 13 has failed miserably and should be repealed for that reason. Since prop 13 was passed housing costs have grown far faster in California than in the rest of the country. In truth the scope of prop 13 was much more limited - to limit the growth of property taxes to less than the rate of inflation.
So you're saying I don't have to pay my property tax? Thanks, I'll take your post to the assessor! Reread my post. OVERALL cost of the house. Mortgage + property tax. If property tax goes up, the OVERALL cost of the house goes up. I'm not talking about the cost of the house itself, the total yearly expenditures to maintain it.
Quote:
Originally Posted by edwardius
But prop 13 did nothing to limit the need for government services that previously had been paid by property taxes, not just schools, but the entire range of local government services (police, fire departments, libraries etc).
Other taxes for that. Our city is doing just fine.
Quote:
Originally Posted by edwardius
As far as your city manager is concerned, zoning for additional residential development in California is always a bad idea because over time the cost of providing existing residents government services continues to grow with inflation, but the funding for those services does not. Cities have tried to overcome that problem with high development impact fees, but those still don't cover the cost over time of the fact that you have a lot of people who bought homes in the state in 1977 who are paying next to nothing because of very low property tax assessements. But those people still need the same levels of fire, police and libary services that everyone else gets. Remember as long as you move with in California, in many counties you can even carry you low assessed basis to your new home so the pool of these tax payers is much larger than you might assume.
This is why so many cities started clamping down on zoning for additional housing and started doing stuff like setting up designated land trusts (like Marin and Sonoma Counties) so that there wouldn't be much space for housing and thus little need to provide it.
But if land restrictions are great enough, at some point land prices start going up. As they do eventually it starts to make sense again to zone for additional housing. At the peak of the housing boom, housing prices got up to 650k in LA. In Houston at that time housing prices were 170k. While property taxes are higher in Houston than in LA when houses cost more than 3 times as much, you were still getting more in property taxes per property owner in LA than Houston.
In California cities are reluctant to zone for additional housing unless prices are pretty high. This is why the area has a boom bust cycle in housing price levels. In Texas, housing booms are experience more as construction booms but prices stay much more flat.
But it did NOT lower housing costs and made it worse overall. Doesn't matter what the point was if it never actually achieved it.
SOAR initiatives around the state + major population increase is what drove up housing prices way more than Prop 13. Please cite direct sources into how much Prop 13 drove up cost of housing vs. other factors (increase of population and willful restriction of building via hippy initiatives).
Quote:
Originally Posted by sav858
Cities would rather zone land for car dealerships, big box retailers, malls, etc... b/c those produce revenue and more than pay for themselves unlike housing. There have been many cases of cities rezoning land from residential to retail/commercial so they could get in some sales tax producing businesses like Wal Mart. That helps to reduce the supply of land available for housing and forces cities to compete with each other for revenue, helping to lead to horrible regional planning and land use patterns.
Look at cities like Oxnard which apparently didn't have a problem building housing. In Ventura county, SOAR did way way more to restrict available land than Prop 13 ever did.
Quote:
Originally Posted by sav858
Also b/c property taxes do not cover the cost of public services cities charge a ton of developer fees that is passed on to the buyer and jacks up the cost of housing.
Prop 13 is an incredibly screwed up and unfair system. You can have two identical houses right next to each other that are worth the same but they can be paying extremely different amounts in property taxes depending on how long they have been there. It's capped at a rate below inflations so the longer you have been in a home the less you pay in property taxes, many homeowners do not pay their fair share for public services b/c of this disparity between older and newer homeowners.
People would not leave in droves like the fearmongers would like you to believe. During the recent boom property taxes were doubling in states that did not have caps and you didn't see a mass exodus of people on fixed incomes. I do think there should be a cap to prevent taxes from doubling during real estate booms like we just had and like back in the 70's when Prop 13 were passed but it should not be at a rate below inflation.
How does it make any sort of sense to cap property taxes at a rate below inflation? How is property tax revenue suppose to keep up with the cost of public services with that ridiculously low cap?
How about generate revenue from other sources, such as sales taxes?
Quote:
Originally Posted by sav858
I've studies Prop 13 plenty and from REAL sources and books and not some pseudo-online encyclopedia like Wikipedia and Prop 13 is arguably the worst public policy CA has ever adopted and this state has gone downhill ever since.
I agree Prop 13 is not great policy, but California's budget process is far worse (now treading into illegality) and damaging to me...
2) Therefore, only the taxpaying / income generating families (one does not necessarily follow the other in CA) who cannot afford the increased cost of living will leave.
You might want to actually read the link you're posting. This is a right wing blogger ... although even he acknowledges that welfare caseloads in California are actually down from 2002.
9 percent down, in fact.
His complaint actually isn't that the number of California welfare recipients isn't down ... they are. He just thinks they should be down even more.
Although if you notice from this chart ... the number of welfare recipients in some conservative states are actually up since 2002:
Hopefully the leaders of this great state can keep us from going the way of the rust belt. It's really a catch 22, do we want jobs, a growing economy, and overcrowding, or do we want a terrible economy, no jobs to speak of, but plenty of room on the freeways for us to drive on.
Haha....the leaders of this state will bankrupt it further. What are the ivory tower liberals doing now? They are trying to rephrase "taxes" into "fees" so that they can increase the taxes...eerr...I mean fees without a 2/3 majority.
A 2.5% increase in income tax, increased fuel taxes, etc yeah.....thats how you're gong to solve the unemployment problem! Its so funny....yet so sad.
Thankful Mr. Girly man will veto it....
This state is pretty bunch going to have to go bankrupt in order to bleed all the special interest. Ultimately Californians have been asleep at the wheel and someone needs to shock them into paying attention....only then will things get done. C'mon they approved a new cho-cho when the state is about to run out of money!!! Its again...funny yet so sad.
Anyhow, you can't have one of the highest unemployment rates and one of the highest costs of living for long.....reality is going to come crushing down on California one way or another.
Who knows ... maybe the 100,000 or so people who move out each year is a good thing. It might even help solve the illegal problem.
The high cost of living is going to hit the middle class the hardest. The poor / illegals will just go on welfare. (http://www.sacbee.com/391/story/1422601.html - broken link) The rich can take the hit. That leaves the middle class to leave the state. And I've known some middle income, decent, tax paying families that recently had to leave because of the economic climate around Ventura county.
God, what a "let them eat cake attitude"! If this is the attitude of what Californians represents, then it's no wonder no other states like Californians, then. And quite frankly, I don't blame them one bit.
I've got a history lesson for those who think they are immune from CA's current budget crisis. I grew up in a steel mill town in PA and during the 70's, the steel mills were closing due to foreign steel. Thankfully, my dad retired just before they closed, but my older brothers were laid off. Anyways, I will never ever forget my dad tell me when he heard somebody say "thank God my husband isn't a steel worker" and it made him mad. Yeah, there were a bunch of lawyers, doctors, nurses, waiters / waitresses, etc who were saying then "hey, the steel workers layoffs are none of my concern!" Well, guess what happened to all of those Einstiens? 5/10 years down the road, hospitals folded, gov't buildings folded up, restaurants folded up, the whole downtown economy literally imploded into a black hole. All of those geniuses had to leave town too...
So go ahead and root for all of those illegal fees and repeal Prop 13. Think you'll be safe from the subsequent collapsing economy? Go ahead and keep dreaming... You'll be joining me in a state outside of CA sooner than you think!
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How is property tax revenue suppose to keep up with the cost of public services with that ridiculously low cap?
If this is the attitude of what Californians represents, then it's no wonder no other states like Californians, then. And quite frankly, I don't blame them one bit.
