It seems that "one" of the reasons for the county budget short-fall was a lawsuit won by commercial property owners. The commercial property owners claimed their taxes were too high when compared to business loss from 9/11. Not sure how that works. Are commercial property taxes tied to business revenues? Will have to find info on the lawsuit. Generally speaking what is going to happen to entities that depend on property taxes when property values go down? The news is full of stories about a housing slowdown. Anyways here is link to full story. Again need to find out more about lawsuit
2 comments:
If that's not bad enough, there's more on the horizon...
http://biz.yahoo.com/ap/060924/retiree_health_care.html?.v=2
SAN FRANCISCO (AP) -- The bill is coming due for years of generous benefits bestowed upon the nation's public employees, and it's a stunner: hundreds of billions of dollars over the next three decades, threatening some local governments with bankruptcy and all but guaranteeing cuts in services like education and public safety.
This staggering burden is coming to light because of new accounting rules issued by the Government Accounting Standards Board. They require public agencies to disclose the future cost of health care and other benefits -- such as dental, vision and life insurance -- promised alongside traditional pensions to the nation's estimated 24.5 million active and retired state and local public employees.
Retiree health care costs have been quietly mounting for decades while public agencies have passed out generous retirement benefits during labor negotiations -- often in lieu of salary increases. But government negotiators rarely considered the long-term financial consequences of awarding such perks, according to Brian Whitworth, a retirement benefits specialist with JP Morgan Chase and Co.
"A surprising number of public entities didn't even make informal estimates of long-term costs prior to the new accounting rules," Whitworth said.
I had a chance to talk with one of the teachers being threaten with a layoff. According to her the real issue is the fiscal mismanagment of San Mateo County. The County did not anticipate the slowing of the housing market. The tax revenue cruve they used assumed a continuing rate of housing sales. When a house is sold its tax basis is reassessed. Since houses are rising in price the tax basis increases when a house is sold.
The key concept is that this happens when a house is sold. What happens when housing turnover declines? Well if you leave in San
Mateo, you get a budget CRISIS.
How many other governmetn enities are going to over "guess-ti-mate" tax revenues and face a similar crisis?
Post a Comment